1. Chapter 10
Product Issues in
Channel Management

2. Marketing Mix Resources
Objective 1: 10
Marketing Mix Resources
Channel System Synergy
Critical for the channel manager to understand how all marketing mix variables are independent, yet interdependent in order to create the synergy necessary for meeting the customers’ needs & wants.

3. The Product/Channel Management Interface
Objective 2: 10
The Product/Channel
Management Interface
3 Major Areas of Product Management:
New product planning & development (NPD)
The product life cycle (PLC)
Strategic product management (SPM)

4. Planning & Development
Objective 3: 10
New Product
Planning & Development
5 Questions Channel Managers Must Ask:
What input, if any, can channel members provide in new product planning?
What has been done to ensure that the new products will be acceptable to channel members?
Do the new products fit into the present channel members’ assortments?
Will any special education/training be needed for members to sell the new products effectively?
Will the product cause the channel members any special problems?

5. 10
Member Input
Channel members can provide valuable feedback during the product planning & development stage.
Members can…
Offer explicit new ideas for development
Explain the value in offering particular sizes, colors, or the use of packaging
Assist in gathering customer feedback during test-marketing or early commercialization

6. Member Acceptance of New Products10
Member Acceptance of
New Products
Likely key considerations for channel members’ acceptance of new product…
How will the product sell?
Is the product easy to stock and display?
Will the product be profitable to sell?
Does the product fit with one’s existing positioning efforts and/or merchandise mix?

7. Educating Channel Members10
Educating Channel Members
The channel manager’s goal is to sell the new product(s) as successfully as possible
Thus,
One must educate & train members in the product’s use, special features to emphasize during sales, and how it fits in with the members’ existing merchandise mixes.*

8. Trouble-Free New Products10
Trouble-Free New Products
An increase in the care taken during the planning & development stages of the new product (including which members would likely desire the product and the necessary features for their handling of the product) will always decrease the number of potential problems associated with a new product offering.

9. The Product Life Cycle 10 Sales ($) Sales Profits Time Introduction
Objective 4: 10
The Product Life Cycle
Sales
($)
Sales
Profits
Time
Introduction
Growth
Maturity
Decline

10. The Introduction Phase10
The Introduction Phase
Channel Managers must…
Ensure there’s a sufficient number of channel members to gain market coverage
Ensure there’s an adequate supply of product on channel members’ shelves
Remember profits are negative in this phase due to negative economies of scale, so immediate sales growth is critical*

11. Channel managers must…10
The Growth Phase
Channel managers must…
Ensure sufficient number of channel members’ inventories are adequate to cover sales growth
Monitor the entry and effects of competitive products on channel members
Remember that sales growth is extremely rapid here & increasing profits will drive competitors to enter the market, so member support is critical for profit longevity.*

12. Channel managers must…10
The Maturity Phase
Channel managers must…
Provide extra emphasis on motivating channel members to curtail competitive attacks
Investigate the possibility for changes in the channel’s structure to extend maturity or possibly create a new PLC
Remember market-share peaks here & profits fall as competitive attacks ensue. Members are critical here to slow pace.*

13. Channel managers must…10
The Decline Phase
Channel managers must…
Phase out marginal channel members and streamline their overall channel
Investigate the impact of product deletion on channel members’ needs & problems (Ch. 9)
Remember that although a product may begin to appear a “dog”, members may need to maintain the product to ensure their image & merchandise mix are complete.*

14. Strategic Product Management
Objective 5: 10
Strategic Product Management
Successful product strategies depend on…
The product’s
Quality (or value proposition*), innovativeness, or technological sophistication
The manager’s
Ability to oversee the product line & future needs
The firm’s
Financial capacity & willingness to provide promotional support
The other member’s
Willingness to implement the channel manager’s strategies (i.e., motivation ~ Ch. 9)

15. Possible product strategies include…
Objective 6: 10
Product Strategies
Possible product strategies include…
Product differentiation
Product positioning
Product line expansion or contraction
Trading up or down
Branding strategies

16. Product Differentiation10
Product Differentiation
Differentiation revolves around perception of its ability to solve a problem
Implications for channel management…
Select & support members who “fit” the image
Particularly when image is affected by who is selling
Provide support/training to retailers to sell “properly”
Particularly when either a “search” or “experience” good that requires personal selling

17. Positioning focuses on perception in relation to competitive products10
Product Positioning
Positioning focuses on perception in relation to competitive products
Implications for channel management…
“Match” between positioning efforts & possible seller must be considered before implementation
Must have retailer “buy-in” to maintain positioning & understand the attractiveness of certain incentives (Ch. 9) to different retailers.

18. Product Line Expansion or Contraction10
Product Line Expansion or Contraction
Refers to the overall breadth (or assortment) of a product line
Implications for channel management…
Expansion & contraction can occur simultaneously (e.g., in a line’s depth*), but not in the same line
Difficult to balance member satisfaction & support as each wants their “right” merchandise mix

19. Implications for channel management…10
Trading Up or Down
Refers to the adding higher- (or lower-) priced lines of product to one’s mix
Implications for channel management…
Retailers must provide adequate coverage of either high- and/or low-end market segments for which the trade-up or trade-down is targeted
Retailers must provide appropriate salesmanship to trade-up or -down customers based upon manufacturer’s promotional support

20. Implications for channel management…10
Branding Strategies
Refers to the choice of selling both under a national, as well as a private, brand name
Implications for channel management…
Direct competition with channel members may result
Sell national & private brand versions in different geographical markets
Physically vary the products enough to minimize direct competition

21. Product Service Strategy
Objective 7: 10
Product Service Strategy
Remember that we no longer simply focus on the transaction because we’re not just selling products…we’re making value propositions.
Service is part of the “problem solution” sold.
Manufacturers must ensure that service is provided after the sale…
By offering it directly (at factory or own service center)
Offering it through its channel members (e.g., retailers)
Endorsing authorized, independent service centers, or
Some combination of the above