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

2. Steps in Managing Products
Develop product objectives
Design a product strategy
Make tactical product decisions
Adidas 1

3. Criteria for Effective Objectives
Measurable
Clear & Unambiguous
Time-framed
Consistent with long-term health of organization
E.g. Organization objective: become a market leader in cars in five years. Product Objective: Introduce two models every year over the next five years

4. 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

5. 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)
Length of line vs. width of product mix

6. Fabrics & Home Care (32)
Beauty Care (37)
Health, Baby & Family Care (23)
Snacks & Beverages (6)
Ace
Aussie
Bounty
Folgers
Ariel
Camay
Charmin
Pringles
Bold
Clairol
Crest
Sunny Delight
Bounce
Cover Girl
Fixodent
Torengos
Cascade
Head & Shoulders
Iams
Cheer
Hugo Boss
Luvs
Downy
Lacoste
Pampers
Dryel
Max Factor
Pepto-Bismol
Febreeze. etc.
Noxzema, etc.
Scope, etc

7. Product Lines Possible line strategies:
full line (P&Gs beauty care line) vs. limited line (Rolls Royce 3 models of cars)
line stretch: upward (Hyundai’s XG 300), downward (Rolex?), or two-way (Mariott Hotels – Fairfield Inns and Courtyard at lower end and Mariott Marquis & JW Mariott at upper end)
filling-out (Nabisco’s bite sized versions of Oreos) vs. contracting (Heinz and “Bite me” brand of frozen pizza snacks)

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. 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
Which product’s quality would you judge by each of these dimensions?

10. Quality Standards TQM – Malcolm Baldrige Quality Award
International Organization of Standardization (Geneva)
ISO 9000 (standards for quality management)
ISO (standards for environmental management)
Six Sigma (no more than 3.4 defects per million – getting it right % of the time)

11. Marketing Throughout the PLC
The Product Life Cycle (PLC) explains how products progress over their lives
Marketing strategies must change and evolve as a product moves through the PLC
The PLC relates to a product category

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 and product costs
Promotion focused on product awareness and to stimulate primary demand
Intensive personal selling to retailers/wholesalers
Examples of products? Spicy Beers

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 and comparative ads
Wider distribution
Toward end of growth stage, prices fall
Sales volume creates economies of scale
Examples of products: Mp3 players, LCD TVs

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 and profits fall (CD / DVD players)

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
Examples: VCRs

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

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

18. Trademarks Legal term for a brand name, brand mark, or trade character
® is used when registered with the USPTO; ™ is used when a name or mark has not been legally registered but the user is claiming ownership
Trademarks established by the Lanham Act of 1946 and updated by the Trademark Revision Act of 1989
Only protects in U.S. - if a firm wants multinational recognition, it must register in each country

19. 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

20. What Makes a Brand Successful?
Delivers benefits customers truly want
Stays relevant
Pricing based on consumer perceptions of value
Properly positioned
Consistent
Good fit between brand portfolio and hierarchy
Coordinates marketing activities to build equity
Understanding of what brand means to consumers
Brand is given proper support
Company monitors sources of brand equity

21. Branding Strategy
Leveraging the power of the brand name to cover the market more effectively
Why do we do it?
Phenomenally expensive to create and promote a new brand name (at least 100 – 150 million dollars)
Too many brands out there
Increase productivity of current marketing programs

22. Sub-branding
Creating new brands which are part of the parent brand family – expressed as suffixes of the parent brand.
e.g Nike Air Jordan is a sub-brand of Nike which is the parent brand. Air Trigo, Air Mohawk are sub-brands of Nike Air.
Apple I-Pod, I-Pod Mini, I-Pod Shuffle and now the I-Pod Nano

23. Flanker Brand
Different brand name – same product line
Purpose: Pre-empt competition, cover the market more completely (protect your flanks)
Problem: some cannibalization is expected.
E.g. Thums Up and Coca Cola in India
Hallmark and Ambassador cards

24. Brand Extension
Same brand name, new product line e.g. Reebok shoes and Reebok water. Nike shoes and Nike casuals. Chevy cars and Chevy men’s cologne. Hooters restaurants and Hooters airline
The concept of congruence determines the success of a brand extension strategy. E.g. Johnson’s baby powder and Johnson’s baby oil – high congruence. But imagine Lysol toilet bowl cleaner and Lysol toothpaste!!!

25. Ingredient Branding
Branding an ingredient of the main brand, which is often manufactured by a different company.
E.g. Intel Inside is an ingredient brand on IBM, Dell, Compaq, etc. computers; Breyers Chocolate Ice Cream with Hershey’s pieces / M & Ms; Breyers icecream with Splenda
Can be used to reach out to a different target audience

26. Co-branding
When two or more mutually reinforcing brands get together to jointly promote themselves (one is not an ingredient of another).
Also called complementary branding
E.g. co-branded credit cards like Chase MasterCard, OR Harley Davidson and Ford Explorer.
Used to penetrate the market even better

27. Packaging and Labeling Decisions
Packaging functions
Protect and preserve the product
Ease of transportation and handling
Brand identity
Advertising
Legal requirements
User-friendly
Instructions for use, UPC, etc.

28. Effective packaging
Effective packaging designs
Green packaging
Labeling regulations
The Federal Fair Packaging and Labeling Act 1966
The Nutrition Labeling and Education Act 1990
Trans Fats (Jan )

29. 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?

30. Management of Existing Products
Brand Manager
Product Category Managers
Market Managers