Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Product Management 1 Product management concerns three key areas: 1.The internal organization structure for managing current products. 2.The allocation of resources for developing new products. 3.Dealing with changing market conditions as products progress through their life cycles.

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Systems for Managing Products 2 An organization has several options or combinations of options for managing its product lines. Brand Management: (Product manager) Category Management Regional Management Target-Market Management Continental and Global Management

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Brand/Category Management 3 V.P. Marketing Category Manager Category Manager Brand Manager Brand Manager Brand Manager Brand Manager

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Regional Management 4 V.P. Marketing B.C. Prairies Ontario Quebec Atlantic

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Target Market Management 5 V.P. Marketing ConsumerSmallMediumEnterprise V.P. Marketing YouthWomenEthnic Bell Canada Bell Mobility

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Continental/Global Management 6 Global V.P. Marketing North America Europe Australia Latin America “Wherever possible U.S. strategies will be implemented in Canada.” --Kraft Inc.--

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Product Management Decisions 7 All aspects of the marketing mix are managed to maximize profit. Key product decisions embrace:  Product Modifications  Product Mix (Stretching)  Brand Design and Packaging  Maintenance or Withdrawal

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Product modification

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Product Mix

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Brand Design and Packaging

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Maintenance or Withdrawal

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Product Life Cycle 12

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Product Life Cycle 13 Unique conditions in each stage of the life cycle necessitate different marketing strategies in each stage.  Introduction  Growth  Maturity  Decline

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Extending the Product Life Cycle 14 As products age the manager introduces rejuvenation (innovation) strategies to extend the life cycle. Search for New Markets: Attract competitors customers, Entering new segments, Converting non users to users Offer Product Improvements: Quality Improvements, Feature improvements, style improvements

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Extending the Product Life Cycle Introduce New Lines: Different flavors or scents in order to try the product Change Other Marketing Mix Elements: Pricing Advertising Sales promotion Distribution

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Extending the Life Cycle 16

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Extending: Add New Markets 17 There are several options for adding new markets. Attract competitor’s customers Enter new market segments Convert non-users

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Extending: Alter the Product 18 Product improvements can refresh a tired brand; possibly give it a new look. Improve the quality Improve the features of the product Improve the style (product design or package)

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Extending: Add New Lines 19 Depending on the product category numerous options are considered. Some examples: New flavours or scents Introduce new product format Introduce new sizes

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Extending: Alter Other Mix Elements 20 Changes unrelated to the product itself can have an impact on sales at any stage of the life cycle. 1.Assess pricing strategy in context of competitors and consumer expectations. 2.Assess marketing communications strategies and reallocate budgets to more suitable activities. 3.Examine distribution strategy to make product available in new or non-traditional locations.

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Adoption and Diffusion 21 Adoption Diffusion Stages a consumer passes through on the way to purchasing a brand regularly. Gradual acceptance of a product from introduction to market saturation.

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Stages of Adoption 22 Awareness Interest Evaluation Trial Adoption Consumer learns of product Consumer receptive to messages and information Consumer reviews benefits in relation to needs Consumer makes initial purchase Satisfaction results in ongoing purchases

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Adopter Categories 23 Innovators Early Adopters Early Majority Late Majority Laggards Some people adopt a product quickly; others take much more time.

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Product Life Cycle Length 24 Consumer acceptance has a direct impact on how long a product lasts.  Instant Bust  Fad  Fashion Brand Acceptance Wall: A barrier that stops most products from further consumer acceptance. It occurs due to lack of acceptance or uncoordinated marketing strategy.

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada Product Life Cycle Length 25

Chapter 9: Product Management Copyright © 2010 Pearson Education Canada New Product Development Idea Generation 2. Screening 3. Concept Development and Testing 4. Business Analysis 5. Product Development 6. Test Marketing 7. Commercialization