Manage the Product Chapter Nine Chapter Objectives Explain

Manage the Product Chapter Nine

Chapter Objectives �Explain the different product objectives and strategies a firm may choose �Understand how firms manage products throughout the product life cycle �Discuss how branding strategies create product identity �Explain how packaging and labeling contribute to product identity �Describe how marketers structure organizations for new and existing product management 9 -2

Product Lines �Product 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 9 -3

The Product Mix �Product Mix: A firm’s total products offered for sale (Proctor & Gamble) �Product Mix Width: The number of different product lines the firm makes 9 -4

Figure 9. 1 Steps to Manage Products Step 1 Step 2 Step 3 9 -5

Figure 9. 2 1 -Objectives for Single & Multiple Products 9 -6

1 a-Objectives and Strategies for Individual Products �Objectives and strategies for individual products: �Successful introduction of new products �Taking regional products national �Breathing new life into mature products while maintaining brand personality 9 -7

1 b-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 strategies �Upward, 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 (i. Phone 5 S) 9 -8

1 b-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 considered �Product lines in mix usually have some things in common 9 -9

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 9 -10

Quality Guidelines �ISO 9000: �Standards for quality management �ISO 14000: �Environmental management �Six Sigma methodology: �Process allowing no more than 3. 4 defects per million (getting it right 99. 9997% of the time) 9 -11

2 -Design Product Strategies 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). Ø A familiar concept in marketing and a useful marketing management tool. Ø The PLC concept can be used to analyze a brand, product form or product category. Ø Some critics have challenged the basis & value of the PLC. 5

Figure 9. 4 The Product Life Cycle 9 -13

Figure 9. 5 Marketing Mix Strategies Through the PLC 9 -14

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 5

Growth Stage Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Aggressive advertising of the differences between brands § Wider distribution § § § 5

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 § § § 5

Decline Stage § Long-run drop in sales § Large inventories of unsold items § Elimination of all nonessential marketing expenses § “Organized abandonment” 5

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 9 -19

What’s in a Name or Symbol? �A “good” brand name: �Maintains relationships with customers �Positions a product by: � Portraying an image, or � Describing how the product works �Is easy to say, spell, read, and remember �Fits the target market, product benefits, customer’s culture, and legal requirements 9 -20

Trademarks �Trademark �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 9 -21

Why Brands Matter �Brand equity: �A brand’s value to its organization over and above the value of the generic version of the product �Brand equity provides competitive advantage �Brand equity results in brand loyal consumers and attachment 9 -22

Why Brands Matter �Brand storytelling: �Marketers seek to engage consumers with compelling stories about brands �Characteristics of world class brands �Brand 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 9 -23

Figure 9. 6 Branding Strategies 9 -24

Branding Strategies �Individual 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 9 -25

Branding Strategies �National vs. store brands �Store brands (private label brands) are exclusive to a given retailer �Generic brands �Licensing: �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 9 -26

Branding Strategies �Co-branding: �Two brands combine to create a new product �Provides greater recognition or other strengths than either could achieve alone �Ingredient branding is increasing 9 -27

Brand Metrics �Approaches to measuring brand equity: �Customer mind-set metrics �Product-market outcomes metrics �Financial market metrics �Revenue premium metric 9 -28

Figure 9. 7 Functions of Packaging 9 -29

Figure 9. 7 Functions 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 9 -30

Designing Effective Packaging �Effective 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 9 -31

Designing Effective Packaging �Effective packaging also considers: �Choice of packaging material and image it projects �Environmental impact of packaging �Shape, color and graphic information to be portrayed �Takes into account labeling regulations �Federal Fair Packaging & Labeling Act of 1966 �Nutrition Labeling & Education Act of 1990 9 -32