CHAPTER 9 Managing the Product

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

3
Chapter Objectives

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

4
Steps in Managing Products

• Develop product objectives
• Individual products
• Product lines
• Design a product strategy
• Make tactical product decisions
• Branding
• Packaging/labeling

5
Criteria for Effective Objectives

• Measurable
• Clear
• Unambiguous
• Time-framed
• Consistent with long-term health of organization

6
Sample Product Objectives

• In the upcoming fiscal year, modify the products
  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

7
Product Line Strategies

• A product line is a firms total product offering
  designed to satisfy a single need for target
  customers (e.g., PGs line of dish detergents
  Dawn, Ivory, Joy)
• Possible line strategies
• full line vs. limited line
• line stretch upward, downward, or two-way
• filling-out vs. contracting
• Cannibalization?

8
Product Mix Strategies

• A product mix is a firms 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

10
Quality Standards

• International Organization of Standardization
• ISO 9000
• ISO 14000 (environmental)
• Six Sigma

11
Marketing Throughout the PLC

• The Product Life Cycle (PLC) explains how
  features change over the life of a product
• 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 product costs
• Promotion focused on product awareness to
  stimulate primary demand
• Intensive personal selling to retailers/wholesaler
  s

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
  comparative ads
• Wider distribution
• Toward end of growth stage, prices fall
• Sales volume creates economies of scale

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 profits fall

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

16
Branding Decisions

• A brand is a name, term, symbol, or any other
  unique element of a product that identifies one
  firms 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 products benefits
• Fit the customers culture
• Fit legal requirements

18
Packaging and Labeling Decisions

• Packaging functions
• Effective packaging designs
• Labeling regulations

19
Packaging Functions

• Protect the product
• Communicate brand personality
• Style, color, picture
• Provide specific information
• UPC Code, Warnings, Nutrition
• Make the package more user-friendly
• Easier to open
• Portability

20
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?