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Channel issues in product Management

Distribution strategy
What are the various interface between distribution and product strategies?

Integrating distribution and product strategy ‡ new product planning ‡ product life cycle planning ‡ strategic product decisions ± ± ± ± ± ± differentiation positioning product line planning trading up or trading down branding support services .

What has been done to assure that new products will be acceptable to the channel members? Fostering Channel Member Acceptance of New Products . if any. can be provided by channel members into new product planning? Encouraging Channel Member Input into New Product Planning Stages and feasibility 2. What input.New Product Planning and Channel Management 1.

whether it will be profitable. Do the new products fit into the present channel members¶ assortments? Fitting the New Product into Channel Member Assortments A key consideration on the marketing side of this evaluation should be whether existing channel members will view the new product as an appropriate one to add to their assortments. 3.Final users are most concerned about how the product will perform when used. whether it will be easy to stock and display. and most important. channel members are much more interested in how the product will sell. .

4. Will any special education or training be necessary to prepare the channel members to do an effective selling job for the new products? Educating Channel Members about New Products Product display to Product 5. Will the product cause the channel members any special problems? Making Sure New Products Are Trouble Free .

The Product Life Cycle Sales Sales curve Maturity Decline Introduction Growth Time Profit curve .

Breakdowns in planning and coordination are common.The Product Life Cycle and Channel Management The Introductory Stage Strong promotional efforts are needed to launch the product. Assure that channel members can provide adequate market coverage for the product. .

To ensure that product availability provided to the market by channel members is adequate so as not to inhibit growth 2. To carefully monitor channel member actions with respect to competitive products already handled by them and keep an eye out for potential competitors who are attempting to ³break into´ the channel .The Product Life Cycle and Channel Management The Growth Stage Two important challenges: 1.

.The Product Life Cycle and Channel Management The Growth Stage Basic approach for dealing with this problem is through monitoring the product flow as it moves through the channel. is of equal importance to monitoring one¶s own products. monitoring the channel members¶ actions with respect to competitive products. Second problem.

Extra emphasis should be put on making sure the product is more desirable for channel members. At the same time. possible changes in channel structure. 2. Comprehensive and long-term channel strategy for the maturity stage is to change the channel structure through which the product is distributed. should be investigated to forestall the decline stage and possibly create a new growth stage. particularly the selection of different types of intermediaries. .The Product Life Cycle and Channel Management The Maturity Stage Strategic emphases: 1.

The Product Life Cycle and Channel Management The Decline Stage 1. Will dropping the product cause an adverse reaction on the part of existing channel members? . Can marginal outlets be phased out quickly to avoid further profit erosion? 2.

Assure adequate supply on channel members¶ shelves 1. Investigate impact of product deletion on channel members . Same as 1 in introductory stage but emphasis on adequacy of channel member inventories 2. Extra emphasis on motivating channel members to mitigate competitive impact 2. Investigate possibility for changes in channel structure to extend maturity stage and possibly foster new growth stage 1. Assure sufficient number of channel members for adequate market coverage 2.Stages of the Product Life Cycle and Their Implications for Channel Management Sales Maturity Decline Introduction Growth 1. Phase out marginal channel members 2. Monitor the effects of competitive products on channel member support 1.

or some combination of these factors. Product Differentiation and Channel Management The manufacturer¶s attempt to portray a product or products as being different from competitive products and therefore more desirable to purchase even though the price may be higher. Product differentiation is not necessarily based on differences in physical characteristics. It can also be created by putting different names on products. . packaging them differently. using certain advertising appeals.Strategic Product Management and Channel Management 1. selling them through different stores.

A channel manager should provide the channel member with support of proper merchandise presentation. The type of stores selling the product and how they display and promote the product are important.2. Product Positioning and Channel Management Refers to a manufacturer¶s attempt to have consumers perceive the products in a particular way relative to competitive products. display and also incentives to do so. .

As product differentiation is affected by who is selling the product.The are 2 important implications for channel management. the channel members should fit the product image. Product differentiation strategy is influenced by how the product is sold at the retail. . the retailer should be able to present the product accordingly. 1. The channel manager should motivate and also support the channel members to do so. 2.

Second. retailers indulge in Product category management. The manufacturer should try to provide adequate advance notice of significant product line changes to channel members to allow them sufficient time to prepare for such changes. Product Line Expansion/Contraction and Channel management While manufacturers do product line management. the manufacturer should attempt to explain to channel members the rationale underlying product line expansion or deletion strategies.3. Often this may require little more than seeking the opinion of some key accounts about prospective product line additions and deletions. .

(2) new competitors it has not faced before. Trading Down. Trading Up. whereas trading down is essentially the opposite--adding lower-priced products to the line than is typical. . High-risk strategies because the manufacturer may now face (1) new markets about which it may know very little. and (3) quite possibly new channel members and/or new problems with existing channel members. and Channel Management Trading up refers to adding products to the line that are substantially more expensive than other products in the line.4.

Is there adequate coverage of the new markets. When a manufacturer strays from its normal range of product offerings (either up or down) it must gain the confidence of those through whom it will attempt to sell the product. Ignoring this requirement almost assures lackluster follow through by the channel members in promoting the new product. and whether the channel members perceive the manufacturer has the ability to do. .

(3) under private brands. or (4) under both national and private brands. (2) under several national brands (a ³family´ of brands).5. . Product Brand Strategy and Channel Management (1) under one national brand.

6. Product Service Strategy and channel management The manufacturer of products should provide after sales service either directly at their factory. through their own network of service centres. through authorised independent service centres . through channel members.