Manage the Product

Manage the Product

Chapter Nine

Chapter ObjectivesExplain the different product objectives and

strategies a firm may chooseUnderstand how firms manage products

throughout the product life cycleDiscuss how branding strategies create

product identityExplain how packaging and labeling

contribute to product identityDescribe how marketers structure

organizations for new and existing product management

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Product LinesProduct Line: A firm’s

total product offerings designed to satisfy a single need of the target market

Product Line Length: The number of separate items within the same category

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The Product MixProduct Mix: A firm’s

total products offered for sale (Proctor & Gamble)

Product Mix Width: The number of different product lines the firm makes

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Figure 9.1Steps to Manage Products

Step 1

Step 3

Step 2

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Figure 9.21-Objectives for Single & Multiple Products

1a-Objectives and Strategies for Individual Products

Objectives and strategies for individual products:Successful introduction of new productsTaking regional products nationalBreathing new life into mature products

while maintaining brand personality

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1b-Objectives and Strategies for Multiple Products

Product line: Firm’s total product offering designed to satisfy a single need or desire of target customers

Product line strategies:Full-line vs. limited-line strategiesUpward, downward, or two-way line

stretch Filling out or contracting a product line

Cannibalization is a risk: loss of sales when a new (similar) item is introduced (iPhone 5S)

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1b-Objectives and Strategies for Multiple Products

Product mix strategies:The total set of products a firm offers for sale

Product mix strategies:Width of product mix must be consideredProduct lines in mix usually have some

things in common

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Quality as a Product Objective: The Science of TQM

Product quality is often an objective

A philosophy of total quality management (TQM) can help achieve quality objectives

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Quality GuidelinesISO 9000:

Standards for quality management ISO 14000:

Environmental managementSix Sigma methodology:

Process allowing no more than 3.4 defects per million (getting it right 99.9997% of the time)

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The Product Life Cycle: A concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death).

A familiar concept in marketing and a useful marketing management tool.

The PLC concept can be used to analyze a brand, product form or product category.

Some critics have challenged the basis & value of the PLC.

2-Design Product Strategies The Product Life Cycle

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Figure 9.4The Product Life Cycle

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Figure 9.5Marketing Mix Strategies Through the PLC

Introductory Stage High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits with slow sales increases Promotion based on awareness &

information Communication challenge is to stimulate

primary demand

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Growth Stage Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Aggressive advertising of the

differences between brands Wider distribution

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Maturity Stage Sales increase at a decreasing rate Saturated markets Annual models appear Lengthened product lines Service and repair assume important

roles Heavy promotions to consumers and

dealers Marginal competitors drop out Niche marketers emerge

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Decline Stage Long-run drop in sales Large inventories of

unsold items Elimination of all nonessential

marketing expenses “Organized abandonment”

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3-Creating Product Identity:Branding Decisions

Brand: A name, term, symbol, or any other unique element that identifies one firm’s product and sets it apart from the competition

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What’s in a Name or Symbol?A “good” brand name:

Maintains relationships with customersPositions a product by:

Portraying an image, orDescribing how the product works

Is easy to say, spell, read, and remember

Fits the target market, product benefits, customer’s culture, and legal requirements

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TrademarksTrademark

The legal term for a brand name, brand mark, or trade character

The trademark symbol used in the U.S. ®Trademarks legally registered by a government

obtain protection for exclusive use in that country

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Why Brands MatterBrand equity:

A brand’s value to its organization over and above the value of the generic version of the product

Brand equity provides competitive advantageBrand equity results in brand loyal

consumers and attachment

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Why Brands MatterBrand storytelling:

Marketers seek to engage consumers with compelling stories about brands

Characteristics of world class brandsBrand extensions:

New products sold with the same brand name

Sub-branding:Creating a secondary brand within a main

brand that can help differentiate a product line

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Figure 9.6Branding Strategies

Branding StrategiesIndividual brands vs.

family brands

Individual brand: A unique brand for each item in the product line

Family brand: A brand that a group of products or brands share

Campbell’s provides an umbrella under which multiple products can be marketed

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Branding Strategies

National vs. store brandsStore brands (private label brands)

are exclusive to a given retailerGeneric brandsLicensing:

One firm sells the right to another to use a legally protected brand name for a specific purpose and for a specific period of time

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Branding StrategiesCo-branding:

Two brands combine to create a new product

Provides greater recognition or other strengths than either could achieve alone

Ingredient branding is increasing

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Brand MetricsApproaches to measuring brand equity:

Customer mind-set metricsProduct-market outcomes metricsFinancial market metricsRevenue premium metric

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Figure 9.7Functions of Packaging

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Figure 9.7Functions of Packaging

• Functions of packaging:• A cover or container for a product• Helps create a competitive advantage for

the brand• Provides protection during transit• Facilitates consumer’s handling of the

product• Communicates the brand’s personality via

the use of color, words, shapes, designs, and pictures

• Supplies important information, such as nutritional information, ingredients, benefits, recipes, directions, warnings, toll-free phone numbers, and the UPC code

Designing Effective PackagingEffective packaging

considers: Packaging of other

brands in same product category

Package should standout and be different from the competition

Store brands attempt to mimic other brands as close as legally possible

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Designing Effective PackagingEffective packaging also considers:

Choice of packaging material and image it projects

Environmental impact of packagingShape, color and graphic information to be

portrayed

Takes into account labeling regulationsFederal Fair Packaging & Labeling Act of 1966 Nutrition Labeling & Education Act of 1990

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