CHAPTER 9 Managing the Product M A R K E T I N G Real People, Real Choices

9-2 Chapter Objectives 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

9-3 Chapter Objectives Explain the roles packaging and labeling play in developing effective product strategies Describe how organizations are structured for new and existing product management

9-4 Steps in Managing Products Develop product objectives Individual products Product lines Design a product strategy Make tactical product decisions Branding Packaging/labeling

9-5 Criteria for Effective Objectives Measurable Clear Unambiguous Time-framed Consistent with long-term health of organization

9-6 Sample Product Objectives In the upcoming fiscal year, modify the product’s fat content to satisfy consumers’ health concerns Introduce three items to the product line to take advantage of increased consumer interest in Mexican foods During the coming fiscal year, improve chicken entrees such that consumers rate them as better tasting than the competition

9-7 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 vs. limited line –line stretch: upward, downward, or two-way –filling-out vs. contracting Cannibalization?

9-8 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

9-9 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

9-10 Quality Standards International Organization of Standardization –ISO 9000 –ISO (environmental) Six Sigma

9-11 Marketing Throughout the PLC The Product Life Cycle (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

9-12 Introduction – Product Life Cycle Full-scale launch of new product into marketplace Sales are low, high failure rate Little competition Frequent product modification Limited distribution High marketing & product costs Promotion focused on product awareness & to stimulate primary demand Intensive personal selling to retailers/wholesalers

9-13 Growth – Product Life Cycle Sales grow at an increasing rate Many competitors enter market Large companies may acquire small pioneering firms Profits are healthy Promotion emphasizes brand advertising & comparative ads Wider distribution Toward end of growth stage, prices fall Sales volume creates economies of scale

9-14 Maturity – Product Life Cycle Sales continue to increase but at a decreasing rate Marketplace is approaching saturation Typified by annual models of products with an emphasis on style rather than function Product lines are widened or extended Marginal competitors drop out Heavy promotions - sales promotions Prices & profits fall

9-15 Decline – Product Life Cycle 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

9-16 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

9-17 Good Brand Names Easy to say Easy to spell Easy to read Easy to remember Fit the target market Fit the product’s benefits Fit the customer’s culture Fit legal requirements

9-18 Packaging and Labeling Decisions Packaging functions Effective packaging designs Labeling regulations

9-19 Packaging Functions Protect the product Communicate brand personality –Style, color, picture Provide specific information –UPC Code, Warnings, Nutrition Make the package more user-friendly –Easier to open –Portability

9-20 Designing Effective Packaging How are competing brands packaged? How might the package enhance brand image? What possible environmental impact might the package have? How might package shape communicate brand image? What graphic information should the package show?