©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Chapter 10 Managing the Product

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Chapter Objectives_1  Explain the different product objectives and strategies a firm may choose  Explain how firms manage products throughout the product life cycle  Discuss how branding creates product identity and describe different types of branding strategies

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Chapter Objectives _2  Explain the roles packaging and labeling play in developing effective product strategies  Describe how organizations are structured for new and existing product management

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Objectives and Strategies for Multiple Products  Firms must plan for its entire product portfolio –Product line strategies –Product mix strategies

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Product Line Strategies  A product line is a firm’s total product offering designed to satisfy a single need for target customers (e.g., P&G’s line of dish detergents: Dawn, Ivory, Joy)  Possible line strategies: –full line versus limited line –line stretch: upward, downward, or two-way –filling-out versus contracting

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Product Mix Strategies  A product mix is a firm’s entire range of products (e.g., Gillette offers shaving products, deodorants, writing instruments, toothbrushes…)  Strategic mix decisions usually relate to the width of the product mix - how many different product lines are produced by the firm

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Quality as a Product Objective  Product quality is the overall ability of a product to satisfy customer expectations  Dimensions of product quality –durability –reliability –precision –ease of use –product safety –aesthetic pleasure

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Key Aspects of Quality  Level –determined by comparison with other brands in same product category  Consistency –customers experience the same level of quality in product time after time

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Marketing Throughout the Product Life Cycle  The PLC explains how features change over the life of a product  Marketing strategies must change and evolve as a product moves through the PLC  The PLC relates to a product category

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Introduction  Full-scale launch of new product  Sales are low, high failure rate  Little competition  Frequent product modification  Limited distribution  High marketing and product costs  Focus on awareness and primary demand  Intensive personal selling to channel members

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Growth  Sales grow at an increasing rate  Many competitors enter market  Profits are healthy  Promotion emphasizes brand advertising and comparative ads  Wider distribution  Toward end of growth stage, prices fall  Sales volume creates economies of scale

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Maturity  Sales continue to increase but at a decreasing rate  Marketplace is approaching saturation  New models emphasize style, not function  Product lines are widened or extended  Marginal competitors drop out  Heavy promotions - sales promotions  Prices and profits fall

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Decline  Signaled by a long-run drop in sales  Rate of decline is governed by how rapidly consumer tastes change or how rapidly substitute products are adopted.  Falling demand forces many out of market  Few specialty firms left

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Branding Decisions  A brand is a name, term, symbol, or any other unique element of a product that identifies one firm’s product(s) and sets it apart from competition  Brands should –be memorable –have a positive connotation –convey a certain image

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Brand Equity  Brand’s value to its organization  Brand equity provides customer loyalty, perceived quality, brand name awareness, competitive advantage  Brand equity can be used to establish brand extensions –Alka Seltzer, Alka Seltzer Morning Relief

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Branding Strategies  Individual brands versus family brands  National and store brands  Generic brands  Licensing  Co-branding

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Packaging and Labeling Decisions  Packaging functions  Effective packaging designs  Labeling regulations

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Management of Existing Products  Brand Manager - responsible for positioning of brands, developing brand equity  Product Category Managers - responsible for coordinating the mix of product lines within the more general product category  Market Managers - focus on customer groups rather than on the products made by the firm