Chapter 10

Product Issues in Marketing Channel Management

Ch. 10: Major Topics


1. Marketing Mix in Channels 2. Product 3. Interface between Marketing Channel and Product**
1. New Product Launch 2. Product Life Cycle 3. Strategic Product Management
- Product Strategies**

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

1. Fusion of attributes 2. Value satisfaction 3. Product evolution 4 .The Product Ingredient of Marketing Mix • Product:a unique bundle of tangible and intangible attributes offered en masse to customers.

Fusion of Attributes • Tangible attributes • Intangible attributes – Often more important – Marketing Channels (When is this important?) 5 .

Value Satisfaction • Perception of benefits derived from owning or consuming a product. – Assess customer value – Provide customer value – Communicate customer value • Ex) VARs in computer industry 6 .

Product Evolution • Core Product  Actual Product  Augmented Product* • Product Evolution Channel Evolution Ex) PC industry. Movie industry 7 .

Levels of Product Installation Packaging Brand Name Augmented Product Delivery & Credit Quality Level Core Benefit or Service Features AfterSale Service Design Warranty Actual Product Core Product .

Strategic product management 3 Major areas of Product-channel management . The product life cycle 3.Product-Channel Management Interfaces* 1. New product planning & development 10 2.

What input.I. New Product Planning* 1. Do the new products fit into the present channel members’ assortments?* 4. What has been done to assure that new products will be acceptable to the channel members?* 3. can channel members provide into new product planning? 2. Will the product cause the channel members any special problems? 10 . if any.

Gather feedback on product size or on packaging. Solicit feedback during the test-marketing or commercialization stage.1. . Encouraging Channel Member Input 10 Solicit ideas for new products.

Member Acceptance of New Products Determining Factors 10 • How the product will sell • Whether the product is easy to stock & display • Whether the product will be profitable* Ex) How to increase reseller acceptance? .2.

3.Adding Products to the Reseller’s Product Assortment Key Considerations: Will existing channel members view the new product as appropriate to add to their assortments? 10 Will channel members feel competent to handle the new product? Ex) Vitamin Water Case  New product category .

4. Trouble-Free New Products 10 Care in new product planning = New product problems .

Product Life Cycle and Marketing Channel* Sales ($) Sales curve 10 Introduction Profit curve Growth Maturity Decline Time .II.

Assure adequate supply on channel members’ shelves . Recruit sufficient number of channel members for adequate market coverage 2.Introduction Stage and Marketing Channel 10 1.

Monitor the effects of competitive products on channel member support . Assure sufficient number of channel member inventories for adequate market coverage 2.Growth Stage and Marketing Channel 10 1.

Investigate possibility for changes in channel structure to extend maturity stage & possibly foster new growth stage .Maturity Stage and Marketing Channel 10 1. Extra emphasis on motivating channel members to mitigate competitive impact 2.

Phase out marginal channel members 2. Investigate impact of product deletion on channel members .Decline Stage and Marketing Channel 10 1.

Strategic Product Management Successful product strategies depend on: • Product quality. 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* .10 III. innovativeness.

10 Product Strategy Issues* 1. Product line expansion & contraction 4. Trading up & trading down 5. Product differentiation 2. Product positioning 3. Product brand strategy* .

Product Differentiation* Creating a differential product involves getting consumers to perceive a difference. Ex) Fashion Apparel industry in Japan . 10 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.

Product Positioning 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 10 strategy and where the product will be displayed and sold before the strategy is implemented. • Elicit retailer support before attempting to implement strategy. NES positioning . • ex) Vitaminwater positioning.

Product Line Expansion & Contraction Manufacturers often engage in both expansion and contraction simultaneously. Implications for channel management: • Difficult to balance between channel members’ 10 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 .

Apple Stores • Do channel members have confidence in the manufacturer’s ability to successfully market the trade-up or trade-down product? . Trading Up Adding lower-priced products or product lines. or higher-priced products or product lines.Trading Down. to a product mix Implications for channel management: 10 • Can existing channel members provide adequate coverage of high-end or low-end market segments? Ex) Lexus of Toyota.

direct competition with channel members may result Implications for channel management: • Do not sell both national & private brand versions 10 of products to the same channel members.Product Brand Strategy When manufacturers sell under both national and private brands. •Dealing with Private Brand issue* . • Sell national and private brand versions in different geographical territories or physically vary products.

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