Manage the Product Chapter Nine. 9-2 © 2012 Pearson Education, Inc. publishing as Prentice-Hall....

Manage the ProductManage the Product

Chapter NineChapter Nine

9-2© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

Chapter ObjectivesChapter Objectives

Explain the different product objectives and Explain the different product objectives and strategies a firm may choosestrategies a firm may choose

Understand how firms manage products Understand how firms manage products throughout the product life cyclethroughout the product life cycle

Discuss how branding strategies create product Discuss how branding strategies create product identityidentity

Explain how packaging and labeling contribute Explain how packaging and labeling contribute to product identityto product identity

Describe how marketers structure organizations Describe how marketers structure organizations for new and existing product managementfor new and existing product management


Real People, Real Choices: Real People, Real Choices: Decision Time at General CorporationDecision Time at General Corporation

How should General Mills position the How should General Mills position the Fiber One cereal brand in order to Fiber One cereal brand in order to reinforce a consistent and desirable reinforce a consistent and desirable brand meaning? brand meaning? • Option 1:Option 1: Own the position of “Fiber Own the position of “Fiber

Superiority”Superiority”

• Option 2:Option 2: Own the position of “Great Own the position of “Great Tasting High Fiber”Tasting High Fiber”

• Option 3:Option 3: Own the position of Own the position of “Digestive Health”“Digestive Health”


Figure 9.1Figure 9.1Steps to Manage ProductsSteps to Manage Products


Figure 9.2Figure 9.2Objectives for Single and Objectives for Single and

Multiple ProductsMultiple Products


Objectives and Strategies for Objectives and Strategies for Individual ProductsIndividual Products

Objectives and strategies for individual Objectives and strategies for individual products:products:

• Successful introduction of new Successful introduction of new productsproducts

• Taking regional products nationalTaking regional products national

• Breathing new life into mature products Breathing new life into mature products while maintaining brand personalitywhile maintaining brand personality


Importance of Product PlanningImportance of Product Planning

New products owe their success to well-executed product planning and management.


Objectives and Strategies Objectives and Strategies for Multiple Productsfor Multiple Products

Product line:Product line: Firm’s total product offering designed to Firm’s total product offering designed to satisfy a single need or desire of target satisfy a single need or desire of target customers customers

Product line strategies:Product line strategies:

• Full-line vs. limited-line strategiesFull-line vs. limited-line strategies

• Upward, downward, or two-way line stretch Upward, downward, or two-way line stretch

• Filling out or contracting a product lineFilling out or contracting a product line

Cannibalization is a riskCannibalization is a risk


Objectives and Strategies Objectives and Strategies for Multiple Productsfor Multiple Products

Product mix strategies:Product mix strategies:The total set of products a firm offers The total set of products a firm offers for sale for sale

Product mix strategies:Product mix strategies:

•Width of product mix must be Width of product mix must be consideredconsidered

• Product lines in mix usually have some Product lines in mix usually have some things in commonthings in common


Quality as a Product Objective: Quality as a Product Objective:

The Science of TQMThe Science of TQM Product quality is Product quality is

often an objectiveoften an objective A philosophy of A philosophy of

total quality total quality management management (TQM) can help (TQM) can help achieve quality achieve quality objectivesobjectives


Quality GuidelinesQuality Guidelines

ISO 9000: ISO 9000: • Standards for quality management Standards for quality management

ISO 14000: ISO 14000: • Environmental managementEnvironmental management

Six Sigma methodology: Six Sigma methodology: • Process allowing no more than 3.4 Process allowing no more than 3.4

defects per million (getting it right defects per million (getting it right 99.9997% of the time)99.9997% of the time)

Watch a YouTube video: TQM at Motorola


Figure 9.3Figure 9.3Product QualityProduct Quality


Figure 9.4Figure 9.4The Product Life CycleThe Product Life Cycle


Figure 9.5Figure 9.5Marketing Mix Strategies Marketing Mix Strategies

Through the Product Life CycleThrough the Product Life Cycle


Introduction Phase of PLCIntroduction Phase of PLC

New products that are offshoots of well-known brands have an advantage.

Many products don’t make it out of the introduction phase; poor or insufficient advertising is often the cause.

New product failures


Introduction and Growth Introduction and Growth StagesStages

Growth stage of the PLCGrowth stage of the PLC• The product is accepted and sales The product is accepted and sales

rapidly increaserapidly increase Maturity stage of the PLCMaturity stage of the PLC• Sales peak, profit margins narrowSales peak, profit margins narrow

Decline stage of the PLCDecline stage of the PLC• Sales decrease as Sales decrease as

customer needs customer needs changechange


Marketing Mature ProductsMarketing Mature Products

Marketers need to keep giving consumers new reasons to buy products in the mature stage

This may be accomplished by finding new uses for an existing product, moving into new markets, changing the product’s attributes or by introducing variations to keep consumer interest


Creating Product Identity:Creating Product Identity:Branding DecisionsBranding Decisions

Brand: Brand: A name, term, symbol, or A name, term, symbol, or any other unique element any other unique element that identifies one firm’s that identifies one firm’s product and sets it apart product and sets it apart from the competitionfrom the competition

What Brands Do The Logos Represent?


What’s in a Name or What’s in a Name or Symbol?Symbol?

A “good” brand name:A “good” brand name:• Maintains relationships with customersMaintains relationships with customers

• Positions a product by:Positions a product by:Portraying an image, orPortraying an image, orDescribing how the product worksDescribing how the product works

• Is easy to say, spell, read, and rememberIs easy to say, spell, read, and remember

• Fits the target market, product benefits, Fits the target market, product benefits, customer’s culture, and legal customer’s culture, and legal requirementsrequirements


It’s DebatableIt’s DebatableClass Discussion QuestionClass Discussion Question

How do V8 and How do V8 and the Skinny Cow the Skinny Cow Truffle Bar Truffle Bar brand names brand names stack up against stack up against the criteria that the criteria that distinguish a distinguish a “good” brand “good” brand name?name?


TrademarksTrademarks

TrademarkTrademark The legal term for a brand name, brand The legal term for a brand name, brand mark, or trade charactermark, or trade character• Trademarks legally registered by a Trademarks legally registered by a

government obtain protection for government obtain protection for exclusive use in that country exclusive use in that country

• ® is the trademark symbol used in the ® is the trademark symbol used in the U.S.U.S.

Visit the United States Patent and Trademark Office


Why Brands MatterWhy Brands Matter

Brand equity:Brand equity: A brand’s value to its organization over A brand’s value to its organization over and above the value of the generic and above the value of the generic version of the productversion of the product

Brand equity provides competitive Brand equity provides competitive advantageadvantage

Brand equity results in brand loyal Brand equity results in brand loyal consumers and attachmentconsumers and attachment


Table 9.1Table 9.1Dimensions of Brand MeaningDimensions of Brand Meaning


Why Brands MatterWhy Brands Matter

Brand storytelling:Brand storytelling:

• Marketers seek to engage consumers with Marketers seek to engage consumers with compelling stories about brandscompelling stories about brands

Characteristics of world class brandsCharacteristics of world class brands Brand extensions: Brand extensions:

• New products sold with the same New products sold with the same brand namebrand name

Sub-branding:Sub-branding:

• Creating a secondary brand within a main Creating a secondary brand within a main brand that can help differentiate a product linebrand that can help differentiate a product line


Figure 9.6Figure 9.6Branding StrategiesBranding Strategies


Branding StrategiesBranding Strategies

Individual brands Individual brands vs. family brandsvs. family brands• Family brands Family brands

such as such as Campbell’s Campbell’s provide an provide an umbrella under umbrella under which multiple which multiple products can be products can be marketed marketed



National vs. store brandsNational vs. store brands

• Store brands (private label brands) are Store brands (private label brands) are exclusive to a given retailerexclusive to a given retailer

Generic brandsGeneric brands Licensing: Licensing:

• One firm sells the right to another to One firm sells the right to another to use a legally protected brand name for a use a legally protected brand name for a specific purpose and for a specific specific purpose and for a specific period of timeperiod of time



Co-branding: Co-branding:

• Two brands combine Two brands combine to create a new to create a new productproduct

• Provides greater Provides greater recognition or other recognition or other strengths than either strengths than either could achieve alonecould achieve alone

• Ingredient branding Ingredient branding is increasingis increasing


Brand MetricsBrand Metrics

Approaches to measuring brand equity:Approaches to measuring brand equity:

• Customer mind-set metricsCustomer mind-set metrics

• Product-market outcomes metricsProduct-market outcomes metrics

• Financial market metricsFinancial market metrics

• Revenue premium metricRevenue premium metric


Figure 9.7Figure 9.7Functions of PackagingFunctions of Packaging


Designing Effective Designing Effective PackagingPackaging

Effective Effective packaging packaging considers: considers:

• Packaging of Packaging of other brands other brands in same in same product product categorycategory


Designing Effective PackagingDesigning Effective Packaging

Effective packaging also considers: Effective packaging also considers:

• Choice of packaging material and image Choice of packaging material and image it projectsit projects

• Environmental impact of packagingEnvironmental impact of packaging

• Shape and color influences on imageShape and color influences on image

• Graphic information to be portrayedGraphic information to be portrayed


Labeling RegulationsLabeling Regulations

Federal Fair Packaging and Labeling Act of Federal Fair Packaging and Labeling Act of 1966: 1966:

• Aims at making labels more helpful to Aims at making labels more helpful to consumers by providing useful informationconsumers by providing useful information

Nutrition Labeling and Education Act of 1990Nutrition Labeling and Education Act of 1990

• Require food labels to state how much fat, Require food labels to state how much fat, saturated fat, cholesterol, calories, saturated fat, cholesterol, calories, carbohydrates, protein, and vitamins are in carbohydrates, protein, and vitamins are in each product servingeach product serving


Figure 9.8Figure 9.8Three Types of Product Three Types of Product

ManagementManagement


Organizing for New-Product Organizing for New-Product DevelopmentDevelopment

Venture teams: Venture teams:

• Specialists in different areas who work Specialists in different areas who work together to focus on new-product together to focus on new-product development development

““Skunk works”: Skunk works”:

• Small and isolated group in remote Small and isolated group in remote location that function with minimal location that function with minimal supervisionsupervision


Real People, Real Choices: Real People, Real Choices: Decision Made at General MillsDecision Made at General Mills

David chose option 2 David chose option 2

•Why do you think that David chose to Why do you think that David chose to position Fiber One as a great-tasting, position Fiber One as a great-tasting, fiber product?fiber product?


Keeping It Real:Keeping It Real: Fast-Forward to Fast-Forward to Next Class Decision Time at 76ersNext Class Decision Time at 76ers

Meet Lara Price, Sr. VP of Business Meet Lara Price, Sr. VP of Business Operations for the Philadelphia 76ersOperations for the Philadelphia 76ers

The 76ers are a professional basketball The 76ers are a professional basketball team within the NBAteam within the NBA

The decision to be made: The decision to be made: What method should be used to What method should be used to compile more detailed information compile more detailed information about the customer base? about the customer base?


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