2Marketing Mix Resources Objective 1:10Marketing Mix ResourcesChannel System SynergyCritical 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.
3The Product/Channel Management Interface Objective 2:10The Product/ChannelManagement Interface3 Major Areas of Product Management:New product planning & development (NPD)The product life cycle (PLC)Strategic product management (SPM)
4Planning & Development Objective 3:10New ProductPlanning & Development5 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?
510Member InputChannel members can provide valuable feedback during the product planning & development stage.Members can…Offer explicit new ideas for developmentExplain the value in offering particular sizes, colors, or the use of packagingAssist in gathering customer feedback during test-marketing or early commercialization
6Member Acceptance of New Products 10Member Acceptance ofNew ProductsLikely 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?
7Educating Channel Members 10Educating Channel MembersThe channel manager’s goal is to sell the new product(s) as successfully as possibleThus,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.*
8Trouble-Free New Products 10Trouble-Free New ProductsAn 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.
9The Product Life Cycle 10 Sales ($) Sales Profits Time Introduction Objective 4:10The Product Life CycleSales($)SalesProfitsTimeIntroductionGrowthMaturityDecline
10The Introduction Phase 10The Introduction PhaseChannel Managers must…Ensure there’s a sufficient number of channel members to gain market coverageEnsure there’s an adequate supply of product on channel members’ shelvesRemember profits are negative in this phase due to negative economies of scale, so immediate sales growth is critical*
11Channel managers must… 10The Growth PhaseChannel managers must…Ensure sufficient number of channel members’ inventories are adequate to cover sales growthMonitor the entry and effects of competitive products on channel membersRemember that sales growth is extremely rapid here & increasing profits will drive competitors to enter the market, so member support is critical for profit longevity.*
12Channel managers must… 10The Maturity PhaseChannel managers must…Provide extra emphasis on motivating channel members to curtail competitive attacksInvestigate the possibility for changes in the channel’s structure to extend maturity or possibly create a new PLCRemember market-share peaks here & profits fall as competitive attacks ensue. Members are critical here to slow pace.*
13Channel managers must… 10The Decline PhaseChannel managers must…Phase out marginal channel members and streamline their overall channelInvestigate 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.*
14Strategic Product Management Objective 5:10Strategic Product ManagementSuccessful product strategies depend on…The product’sQuality (or value proposition*), innovativeness, or technological sophisticationThe manager’sAbility to oversee the product line & future needsThe firm’sFinancial capacity & willingness to provide promotional supportThe other member’sWillingness to implement the channel manager’s strategies (i.e., motivation ~ Ch. 9)
15Possible product strategies include… Objective 6:10Product StrategiesPossible product strategies include…Product differentiationProduct positioningProduct line expansion or contractionTrading up or downBranding strategies
16Product Differentiation 10Product DifferentiationDifferentiation revolves around perception of its ability to solve a problemImplications for channel management…Select & support members who “fit” the imageParticularly when image is affected by who is sellingProvide support/training to retailers to sell “properly”Particularly when either a “search” or “experience” good that requires personal selling
17Positioning focuses on perception in relation to competitive products 10Product PositioningPositioning focuses on perception in relation to competitive productsImplications for channel management…“Match” between positioning efforts & possible seller must be considered before implementationMust have retailer “buy-in” to maintain positioning & understand the attractiveness of certain incentives (Ch. 9) to different retailers.
18Product Line Expansion or Contraction 10Product Line Expansion or ContractionRefers to the overall breadth (or assortment) of a product lineImplications for channel management…Expansion & contraction can occur simultaneously (e.g., in a line’s depth*), but not in the same lineDifficult to balance member satisfaction & support as each wants their “right” merchandise mix
19Implications for channel management… 10Trading Up or DownRefers to the adding higher- (or lower-) priced lines of product to one’s mixImplications 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 targetedRetailers must provide appropriate salesmanship to trade-up or -down customers based upon manufacturer’s promotional support
20Implications for channel management… 10Branding StrategiesRefers to the choice of selling both under a national, as well as a private, brand nameImplications for channel management…Direct competition with channel members may resultSell national & private brand versions in different geographical marketsPhysically vary the products enough to minimize direct competition
21Product Service Strategy Objective 7:10Product Service StrategyRemember 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, orSome combination of the above