1 MARKETING CHANNELS Product Management Strategy Berman Chapter 8 Version 3.0

2 Overview of Product Management Strategy A. New Product Planning B. Product Life Cycle C. Reverse Channels –recall and recycling D. Packaging E. Legal Aspects

3 A. New Product Planning Process Sequence –idea generation –product screening –concept testing –business analysis –product development –test marketing –commercialization

4 “Channel Considerations” New Product Plng –other channel members wholesalers, retailers, facilitators –new product sales forecast –channel overlap new, existing –test marketing –willingness to stock and display

5 Justification Channel members –generate new ideas –evaluate new product concepts –closer to market, customers, competitors –purchasing agents for customers –essential for success –unbiased response vs subordinates –parts, – suppliers expertise

6 Existing Channels / New Product Fit Functional Fit ability to store, sell, repair and service channel overlap incremental costs, new products vs existing established customer relationships incremental quantities, coop opportunities single source suppliers reduce order costs compatibility problems incremental expense of new members, suppliers

7 B. Channel Mgnt and Product Life Cycle wholesaler/retailer by PLC stage different strategies at each stage –training at introduction –reduced sales at decline –service experience and product life –boutique, specialty store, department store, discount store, direct marketing wholesaler/retailer control –gatekeepers, change agents derived demand sources

8 Wholesaler Retailer Roles –at introduction diffusers, gatekeepers, scouts, troops pioneer brand, follower brands slotting allowances, pay-to-stay, failure fee –at growth reevaluation and adjustment expansion of channel member responsibilities –at maturity reevaluate coverage, increase enthusiasm shelf space, private label strategies new market segments, extend stage –at decline reduce members, discontinue, develop new markets

9 Evaluation of The Product Life Cycle –variance between categories, forms and brands –self fulfilling prophesy –cycle variances in length –cycle variances in intensity –recycling

10 C. Reverse Channels returned goods - credit, repair product recall product recycling –final consumer to manufacturer backhaul opportunity –accumulate quantities vs sorting –combine categories vs separation (grades, color, sizes) –large quantities of manufacturers (customers) –unauthorized suppliers, customers, buyers charities, schools

11 Product Recall measurement = completion rate –cost reductions during recalls contacting customers notification time period reduce lost business

12 Product recycling –waste - postconsumer, comparable, preconsumer –ways to promote - government, laws,financial incentives, disincentives, educational programs, –strategies to reduce waste, increase recycling design for ease of disposal innovative packaging closed loop recycling products with high recycling rates

13 D. Packaging and Channels –Contain and Protect Products –Promote Products –Facilitate product storage, use and convenience –Facilitate recycling –Reducing environmental damage

14 E. Legal Aspects of Channel Management –exclusive dealing –tying arrangements –full line forcing –reciprocity –refusal to deal –private label –slotting allowances