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Transcript of 9-1 Chapter 9 Managing the Product Product Mix (Lines, etc.) Quality Concerns Product Life Cycle ...
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9-19-1
Chapter 9 Managing the Product
Product Mix (Lines, etc.) Quality Concerns Product Life Cycle Branding Strategies Packaging Careers in Product/Brand Management
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9-2
Steps to Manage Products
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9-3
Product Planning Developing product line and product mix strategies
Product line: – Firm’s total product offering designed to satisfy a single need or
desire of target customers • P&G’s line of dish detergents: Dawn, Ivory, Joy
Product-Line Strategies– Line extensions
Product mix: – The total set of all products that a firm offers for sale
Product-Mix Strategies– Width of product mix:
• How many different product lines produced by firm
Cannibalization concerns: – Within each line
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9-49-4
Line 1xxxx
Line 2xx
Line 3xxx
x x x
Breadth
Length
Example: P&G offers dish soap, toilet paper, shampoo, window cleaners, and more.
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9-5
Quality as a Product Objective
Product quality as an objective: – Product quality is the overall ability of a product to
satisfy customer’s expectations
Total Quality Management (TQM):– Company-wide dedication to the development,
maintenance, and continuous improvement of all aspects of the company’s operations
– Uniform ISO quality standards exist to offer guidance
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9-6
ISO Quality Standards
ISO 9000: – Voluntary standards for quality set by International
Organization for Standardization ISO 14000:
– Concentrates on environmental management Six Sigma Methodology:
– Process allowing no more than 3.4 defects per million (getting it right 99.9997% of the time)
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9-7
Adding a Dose of 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 it’s convenient for the firm)
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9-8
Product Quality
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9-9
Product Life Cycle
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9-10
Marketing Mix Strategies Over the Product Life Cycle
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9-1111
The Introduction Stage
First stage in the product life cycle– 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
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9-1212
The Growth Stage
Second stage in the product life cycle– 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
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9-1313
The Maturity Stage Third and longest stage in the product life cycle
– Sales peak and profit margins narrow– Competition grows intense
Marketers need to keep giving consumers new reasons to buy products in the mature stage– Find new uses for an existing product, move into new
markets, or add/change the product’s attributes
Firm resorts to price reductions and reminder advertising.
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The Decline Stage
Final stage in the product life cycle: – Sales decrease as customer needs change.
Market as a whole begins to shrink, profits decline, fewer product variations exist, and suppliers pull out
Firm’s major decision is whether to keep product at all. – Do you have a Cash Cow or a Dog? BCG Matrix
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9-1515
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
Creates a positive connotation Customer perspective:
– An emotional connection that is part of the relationship between product/company and customer
– Brand personality/customer identity
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9-16
The Importance of Branding
Brand equity provides competitive advantage– Brands with strong equity capture and hold onto a
larger share of the market – Brands with strong equity sell at prices with higher
profit margins
Brand extensions– New products sold with the same brand name
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Benefits of a Strong Brand Name To company
– *Share of mind ~= market share
– Higher margin – *Advertising efficiencies– Efficiencies in brand
extensions
To consumers* – Decision heuristic
• Simplifies decision making
– “Safe” purchase • “No one ever got fired
for buying IBM”
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Good Brand Names
Easy to say Easy to spell Easy to read Easy to remember
Fit the target market Fit the product’s
benefits Fit the customer’s
culture Fit legal
requirements
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9-19
MERKUR
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9-2020
Trademarks / Service Marks
Legal terms for a brand name, brand mark, or trade character– Trademark = TM– Service mark = SM
Common-law protection: the firm has used the name and established it over a period of time—within a specific product category
Legally registered trademarks / service markets by a government obtain protection for exclusive use in that country – Symbol in the U.S. ®
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What Makes a Brand Successful? Delivers benefits
customers truly want Stays relevant Pricing based on
consumer perceptions of value
Properly positioned Consistent Good fit between brand
portfolio and hierarchy
Coordinates marketing activities to build equity
Understanding of what brand means to consumers
Brand is given proper support
Company monitors sources of brand equity
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Branding Strategies: Individual Brands vs. Family Brands Individual
– Pros: “Clear” identity– Cons: More expensive to introduce– Example: P&G products are branded individually
(Cheer, Tide, Joy, Crest, Fresh Step, etc.)
Family/umbrella – Pros: Less expensive to introduce– Cons: If new product fails, can “pollute” family name– Example: Arm & Hammer products are all branded with
Arm & Hammer brand (Arm & Hammer cat litter, Arm & Hammer toothpaste, A&H deodarent, etc.)
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Branding Strategies: National and Store Brands
National: – Manufacturer’s (producer’s) brand
Store: – Private-label (retailer’s) brand
• Costco – Kirkland, Safeway – Safeway Select, Walmart – Great Value
–
Questions:
(1) Who makes the retailer’s products?
(2) What is the margin picture for retailers?
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9-2424
Branding Strategies (cont’d)
Licensing: – one firm sells the right to use a legally
protected brand name for a specific purpose and for a specific period of time
• Disney• UM Grizzlies
Co-branding: – combines two brands– ingredient branding is increasing
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Packaging Functions Contain and/or protect the product Communicate brand personality
– Awareness, trial
Provide specific information – Specific attributes– Sales promotion offers
Make the package more user-friendly – Use and storage
Support retailer needs– Easy to store, compact in sales space
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9-26
Designing Effective Packaging
Effective packaging considers: – Can package be used to enhance brand image or
competitive advantage? – Packaging of other brands in same product category– Choice of packaging material and image it projects– Environmental impact of packaging– Shape and color influences on image– Graphic information to be portrayed
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9-27
Organizing for Effective Product Management
Management of existing products– A single marketing manager typically handles the
entire marketing function in small firms– Larger firms may have a number of managers who
perform different functions• Brand managers • Product category managers • Market managers
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9-28
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