Chapter 10 Product Issues in Channel Management

Marketing Mix Resources Objective 1: 10 Marketing Mix Resources By understanding how the other marketing mix variables interface with the channel variable, and the implications of such, the channel manager could coordinate all strategic components to create the synergy needed to meet customers’ needs.

Product-Channel Management Interfaces Objective 2: Product-Channel Management Interfaces 10 New product planning & development The product life cycle 3 Major areas of product management Strategic product management

Objective 3: New Product Planning 10 What input, if any, can channel members provide into new product planning? What has been done to assure that new products will be acceptable to the channel members? Do the new products fit into the present channel members’ assortments? Will any special education or training be necessary to prepare the channel members to sell the new products effectively? Will the product cause the channel members any special problems?

Encouraging Member Input 10 Solicit ideas for new products. Gather feedback on product size or on packaging. Solicit feedback during the test-marketing or commercialization stage.

Member Acceptance of New Products 10 Member Acceptance of New Products Determining Factors How the product will sell Whether the product is easy to stock & display Whether the product will be profitable

Adding Products to the Assortment 10 Key Considerations: Will existing channel members view the new product as appropriate to add to their assortments? Will channel members feel competent to handle the new product?

Educating Channel Members 10 Manufacturer goal: To sell new products successfully Educate or train channel members in the product’s use and the special features to emphasize in sales presentations Method:

Trouble-Free New Products 10 Care in new product planning = New product problems

Product Life Cycle 10 Sales ($) Sales curve Introduction Profit curve Objective 4: Product Life Cycle 10 Sales ($) Sales curve Introduction Profit curve Time Growth Maturity Decline

Introduction 10 Assure sufficient number of channel members for adequate market coverage Assure adequate supply on channel members’ shelves

Growth 10 Assure sufficient number of channel member inventories for adequate market coverage Monitor the effects of competitive products on channel member support

Maturity 10 Extra emphasis on motivating channel members to mitigate competitive impact Investigate possibility for changes in channel structure to extend maturity stage & possibly foster new growth stage

Decline 10 Phase out marginal channel members Investigate impact of product deletion on channel members

Strategic Product Management Objective 5: Strategic Product Management 10 Successful product strategies depend on: Product quality, innovativeness, or technological sophistication Capabilities of managers overseeing product line Firm’s financial capacity & willingness to provide promotional support Channel members’ role in implementing product strategies

Product Strategies 10 Product differentiation Product positioning Objective 6: Product Strategies 10 Product differentiation Product positioning Product line expansion & contraction Trading up & trading down Product brand strategy

Product Differentiation 10 Creating a differential product involves getting consumers to perceive a difference. Implications for channel management: • Channel managers should try to select & help develop members who fit the product image when product differentiation strategy is affected by who will be selling the product. • Channel managers should provide retailers with the kind of support needed to properly present the product when this strategy is influenced by how the product is sold at retail.

Product Positioning 10 The manufacturer’s attempt to have consumers perceive the product in a particular way relative to competitive products Implications for channel management: • Possible interfaces between the product positioning strategy and where the product will be displayed and sold to consumers should be considered before the strategy is implemented. • Elicit retailer support before attempting to implement strategy. • Maintain backup supply of retailer incentives

Product Line Expansion & Contraction 10 Manufacturers often engage in both expansion and contraction simultaneously. Implications for channel management: • Difficult to balance channel member satisfaction & Support for reshaped product lines • Channel members are making increasing demands on Manufacturers to have the right mix of products

Trading Down, Trading Up 10 Adding lower-priced products or product lines, or higher-priced products or product lines, to a product mix Implications for channel management: • Whether existing channel members provide adequate coverage of high-end or low-end market segments to which trade-up or trade-down product is aimed • Whether the channel members have confidence in the manufacturer’s ability to successfully market the trade-up or trade-down product

Product Brand Strategy 10 When manufacturers sell under both national and private brands, direct competition with channel members may result Implications for channel management: • Do not sell both national & private brand versions of products to the same channel members. • Sell national and private brand versions in different geographical territories. • Physically vary products enough to minimize direct competition.

Product Service Strategy Objective 6: 10 It is the role of the marketing channel to provide necessary service along with the product to the final user Manufacturers should provide after-sale service • by offering it directly at the factory • through their own network of service centers • through channel members • through authorized independent service centers • by some combination of the above