Chapter 10
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Chapter 10. Product Issues in Marketing Channel Management. 10. Ch. 10: Major Topics. Marketing Mix in Channels Meaning of a Product Interface between Marketing Channel and Product** New Product Launch (ex: Vitamin Water article) Product Life Cycle (ex: Movie marketing channel video)

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Chapter 10

Chapter 10

Product Issues in

Marketing Channel Management


Ch 10 major topics

10

Ch. 10: Major Topics

  • Marketing Mix in Channels

  • Meaning of a Product

  • Interface between Marketing Channel and Product**

    • New Product Launch (ex: Vitamin Water article)

    • Product Life Cycle (ex: Movie marketing channel video)

    • Strategic Product Management

      - Product Strategies**


The marketing mix

The Marketing Mix

The means by which product, price, promotion and place variables can be assembled to meet channel needs.


The product ingredient of marketing mix

The Product Ingredient of Marketing Mix

  • Product:a unique bundle of tangible and intangible attributes offered en masse to customers.

    • Fusion of attributes

    • Value satisfaction

    • Product evolution


Fusion of attributes

Fusion of Attributes

  • Tangible attributes

  • Intangible attributes

    • Often more important

    • Marketing Channels (When is this important?)

    • Ex) LG vs. Samsung


Value satisfaction

Value Satisfaction

  • Perception of benefits derived from owning and consuming a product.

    • Assess customer value

    • Provide customer value

    • Communicate customer value

    • Dividing up the benefit

  • Ex) VARs in computer industry


Product evolution

Product Evolution

  • Core Product

     Actual Product

     Augmented Product*

  • Product Evolution

  • Channel Evolution

    Ex) PC industry; Movie industry


Levels of product

Augmented

Product

Installation

Levels of Product

Packaging

Features

Brand

Name

Delivery

& Credit

After-

Sale

Service

Core

Benefit

or

Service

Quality

Level

Design

Warranty

Core

Product

Actual

Product


Product channel management interfaces

Product-ChannelManagement Interfaces*

10

1. New product planning

& development

2. The product life cycle

3 Major

Areas of

Product-channel

management

3. Strategic product

management


I new product planning

10

I. New Product Planning*

  • What input, if any, can channel members provide into new product planning?

  • What has been done to assure that new products will be acceptable to thechannel members?*

  • Do the new products fit into the present channel members’ assortments?*

  • Will the product cause the channel members any special problems?


1 encouraging channel member input

1. Encouraging Channel Member Input

10

Solicit ideas for

new products.

Gather feedback

on product size

or on packaging.

Solicit feedback

during the test-marketing

or commercialization stage.


2 member acceptance of new products

10

2. Member Acceptance ofNew Products

Determining Factors

  • How the product will sell  Turnover

  • Whether the product is easy to stock & display

  • Whether the product will be profitable*  Margin

Ex) How to increase reseller acceptance?


3 adding products to the reseller s product assortment

3.Adding Products to the Reseller’s Product Assortment

10

Key Considerations:

Will existing channel members view the new product as appropriate to add to their assortments?

Will channel members feel competent

to handle the new product?

Ex) Vitamin Water Case  New product category


4 trouble free new products

4. Trouble-Free New Products

10

Care in new product planning

=

New product problems


Ii product life cycle and marketing channel

II. Product Life Cycle and Marketing Channel*

10

Sales

($)

Sales curve

Profit curve

Introduction

Time

Growth

Maturity

Decline


Introduction stage and marketing channel

Introduction Stage and Marketing Channel

10

Recruit sufficient number of channel

members for adequate market coverage

Assure adequate supply on channel

members’ shelves


Growth stage and marketing channel

Growth Stage and Marketing Channel

10

Assure sufficient number of channel member

inventories for adequate market coverage

Monitor the effects of competitive products

on channel member support


Maturity stage and marketing channel

Maturity Stage and Marketing Channel

10

Extra emphasis on motivating channel members

to mitigate competitive impact

Investigate possibility for changes in channel

structure to extend maturity stage & possibly

foster new growth stage


Decline stage and marketing channel

Decline Stage and Marketing Channel

10

Phase out marginal channel members

Investigate impact of product deletion

on channel members


Iii strategic product management

10

III. Strategic Product Management

Successful product strategies depend on:

  • Product quality, innovativeness, or technological sophistication

  • Capabilities of managers overseeing product line

  • Firm’s financial capacity & willingness to provide promotional support

  • Channel members’ role in implementing product strategies*


Product strategy issues

Product Strategy Issues*

10

1. Product differentiation

2. Product positioning

3. Product line expansion & contraction

4. Trading up & trading down

5. Product brand strategy*


Product differentiation

Product Differentiation*

10

Creating a differential product involves getting

consumers to perceive a difference.

Implications for channel management:

• Select & help develop members who fit the product image when product differentiation strategy is affected by who will be selling the product.

• Provide retailers with the kind of support needed to properly present the product when this strategy is influenced by how the product is sold at retail.

Ex) Fashion Apparel industry in Japan; Nike


Product positioning

Product Positioning

10

The manufacturer’s attempt to have consumers perceive the product in a particular way relative to competitive products

Implications for channel management:

•Consider interfaces between the product positioning strategy and where the product will be displayed and soldbefore the strategy is implemented.

• Elicit retailer support before attempting to implement strategy.

• ex) Vitaminwater positioning; NES positioning


Product line expansion contraction

Product Line Expansion & Contraction

10

Manufacturers often engage in both expansion and contraction simultaneously.

Implications for channel management:

• Difficult to balance between channel members’

Satisfaction with current product line & channel member

support for reshaped product lines

• Channel members are making increasing demands on

Manufacturers to have the right mix of products

 Retailer Power & Category Management


Trading down trading up

Trading Down, Trading Up

10

Adding lower-priced products or product lines,

or higher-priced products or product lines,

to a product mix

Implications for channel management:

• Can existing channel members provide adequate

coverage of high-end or low-end market segments?

Ex) Lexus of Toyota; Apple Stores

• Do channel members have confidence in

the manufacturer’s ability to successfully market the

trade-up or trade-down product?


Product brand strategy

Product Brand Strategy

10

When manufacturers sell under both national and

private brands, direct competition with channel members

may result

  • Implications for channel management:

  • • Do not sell both national & private brand versions of products to the same channel members.

  • • Sell national and private brand versions in different geographical territories or physically vary products.

  • Dealing with Private Brand issue*


Product service strategy

Product Service Strategy

7

It is the role of the marketing channel to provide necessary service along with the product to the final user

  • Manufacturers should provide after-sale service:

  • by offering it directly at the factory

  • through their own network of service centers

  • through channel members

  • through authorized independent service centers

  • by some combination of the above


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