Consumers Rule

1
Managing the Product
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
• Explain the roles packaging and labeling play in
  developing effective product strategies
• Describe how organizations are structured for new
  and existing product management

3
Product PlanningTaking the Next Step

• Today, successful product management is more
  important than ever.
• Products are created, grow, reach maturity, and
  decline at faster and faster speeds.

4
Figure 9.1Steps in Managing Products
5
Using Product Objectives toDecide on a Product
Strategy

• Objectives must be measurable, clear,
  unambiguous, and feasible and must indicate a
  specific time frame.
• Objectives and strategies for individual
  products
• --Successful introduction of new products
• --Breathing new life into mature products
• e.g. in the coming fiscal year eliminate the
  products trans fat to satisfy customer needs.
• e.g. introduce three new items this quarter to
  the product line to take advantage of increased
  customer interest in Mexican foods.

6
Figure 9.2 Objectives for Single and Multiple
Products
7
Objectives and Strategies forMultiple Products

• Product line Firms total product offering
  designed to satisfy a single need or desire of
  target customers
• Product mix The total set of all products a firm
  offers for sale

8
Objectives and Strategies forMultiple Products

• Product-Line Strategies
• Full-line versus limited-line strategies
• Upward, downward, or two-way line stretch
• Filling out or contracting a product line
• Product-Mix Strategies
• Width of product mix the number of different
  product lines produced by firm

Swiss Army Video
9
Group Activity

• Think of your college or university as an
  organization that offers a line of different
  educational products.
• Develop alternatives it might consider and
  describe how each might be accomplished and
  evaluated
• Upward product stretch
• Downward product stretch
• Two-way stretch
• Filling-out strategy

10
Quality as a Product Objective

• Product quality overall ability of product to
  satisfy customers expectations
• Total Quality Management (TQM) company-wide
  dedication to the development, maintenance, and
  continuous improvement of all aspects of the
  companys operations

11
ISO Quality Standards

• ISO 9000 voluntary standards for quality
  management set by International Organization for
  Standardization (ISO)
• ISO 14000 concentrate on environmental
  management
• Six Sigma methodology no more than 3.4 defects
  per million (getting it right 99.9997 of the
  time)

12
Adding Quality to the Marketing Mix

• Product improve customer service
• Place involve suppliers and customers in
  improving on-time delivery
• Price lower costs and improve service at same
  time
• Promotion give customers information when they
  want and need it (not when its convenient for
  firm)

13
Dimensions of Product Quality
Figure 9.4
14
Discussion

• Quality can mean different things for different
  products. What does it mean for the following?
• Automobile
• Pizza
• Running shoes
• Hair dryer
• Deodorant
• College education

15
Marketing Throughoutthe Product Life Cycle

• Product life cycle the way products go through
  four distinct stages from birth to death --
  introduction, growth, maturity, and decline.

16
The Product Life Cycle
17
The Introduction Stage

• First stage in the product life cycle, in which
  slow growth follows the introduction of a new
  product in the marketplace.
• --Goal is to get first-time buyers to try
  product.
• --Firm does not usually make a profit during this
  stage.

18
The Growth Stage

• Second stage in the product life cycle, during
  which the product is accepted and sales rapidly
  increase.
• --Goal is to encourage brand loyalty.
• --Firm introduces product variations to attract
  market segments and increase market share

19
The Maturity Stage

• Third and longest stage in the product life
  cycle, during which sales peak and profit margins
  narrow.
• --Competition grows intense.
• --Firm resorts to price reductions and reminder
  advertising.

20
The Decline Stage

• Final stage in the product life cycle, during
  which sales decrease as customer needs change.
• --Market as a whole begins to shrink, profits
  decline, fewer product variations exist, and
  suppliers pull out.
• --Firms major decision is whether to keep
  product at all.

21
Creating Product IdentityBranding Decisions

• Brand a name, term, symbol, or any other unique
  element that identifies one firms product and
  sets it apart from the competition.

22
A Good Brand Name

• Creates a positive connotation.
• Is memorable.
• Positions a product by conveying image or
  personality (Ford Mustang) or describing how it
  works (Drano).
• Is easy to say, spell, read, and remember.
• Fits the target market, product benefits,
  customers culture, and legal requirements.

23
Trademarks

• Legal term for a brand name, brand mark, or trade
  character
• --Trademarks legally registered by a government
  obtain protection for exclusive use in that
  country.
• --Symbol in the U.S.
• --Common-law protection the firm has used the
  name and established it over a period of time.

24
The Importance of Branding

• Brand equity a brands value to its organization
  over and above the value of the generic version
  of the product
• Brand meaning the beliefs and associations a
  consumer has about the brand
• Self-concept
• Nostalgic
• Interdependence
• Love

25
Figure 9.7The Brand Equity Pyramid
26
The Importance of Branding (contd)

• Brand equity provides competitive advantage the
  power to capture and hold onto a larger share of
  the market and to sell at prices with higher
  profit margins
• Brand extensions new products sold with the same
  brand name

27
Discussion

• Brand equity means a brand enjoys customer
  loyalty, perceived quality, and brand-name
  awareness.
• --What brands are you loyal to?
• --What element of the product creates brand
  loyalty and thus brand equity?

28
Branding Strategies

• Individual brands vs. family brands
• National and store brands
• Generic brands no branding

29
Branding Strategies (contd)

• Licensing one firm sells the right to use a
  legally protected brand name for a specific
  purpose and for a specific period of time
• Co-branding combines two brands

30
Creating Product IdentityPackaging and Labeling
Decisions

• Package the covering or container for a product
  that provides product protection, facilitates
  product use and storage, and supplies important
  marketing communication

31
Packaging and Labeling Decisions (contd)

• Universal Product Code (UPC) set of black bars
  or lines printed on the side/bottom of most items
  sold in stores creates a national system of
  product identification

32
Designing Effective Packaging

• Effective packaging considers
• Packaging of other brands in same product
  category
• Choice of packaging material
• Environmental impact
• Shape and color
• Graphic information

33
Labeling Regulations

• Federal Fair Packaging and Labeling Act of 1966
  aims at making labels more helpful to consumers
  by providing useful information.
• Food and Drug Administration requires food labels
  to tell how much fat, saturated fat, cholesterol,
  calories, carbohydrates, protein, trans fats, and
  vitamins are in each product serving.

34
Group Activity

• For each of the following, discuss any problems
  you have with the packaging of the brand you use.
  Think of ways to improve the package.
• Dry cereal
• Laundry detergent
• Frozen orange juice
• Gallon of milk
• Potato chips
• Loaf of bread

35
Organizing for Effective Product Management

• Management of Existing Products
• Brand managers
• Product category managers
• Market managers

36
Organizing for New-Product Development

• Venture teams specialists in different areas who
  work together to focus on new-product development
  
• Skunk works small and isolated group in remote
  location that functions with minimal supervision