CHAPTER 10

Product Issues in
Channel
Management
New Product Planning and Channel
Management
Development of new products is a challenge faced by virtually
all producers and manufacturers serving both consumer and
industrial markets. New technologies, changing customer
preferences and competitive forces all contribute to the need to
introduce new products.
Encouraging Channel Member Input
for New Product Planning
One way of promoting increased enthusiasm and acceptance for new products
by channel members is by obtaining some input from them for new product
planning.

Fostering Channel Member

Acceptance of New Products
For a new product to be successful it must, of course, be accepted by the final users
whether they are industrial customers or final customers. But success is also dependent
upon acceptance of the new product by channel members through whom it passes in
reaching final customers.
Fitting the New Product into
Channel Member Assortments
The particular mix of products carried by any given channel
member is his assortment. All of the products carried by a
supermarket, department store, home-improvement store,
plumbing supply wholesaler and so on constitute assortments of
products they handle and depend on to generate sales.
Educating Channel Members about
New Products
The type and level of special education will, of course, vary depending on
the type of industry involved and the technical complexity of the product.

Making Sure New Products Are

Trouble-Free
This applies to channel problems that may arise while the product is still in
the channel member’sinventory as well as to those that may appear soon
after the product is sold to a customer.
The Product Life Cycle
and Channel Management
The product life cycle (PLC) is a
model for describing the states
through which a productpasses. We
will briefly review the four stages to
provide a sharper focus for our
forthcomingdiscussion on the
implications of the product life
cycle for channel management.
The Introductory Stage
and Channel Management

Strong promotional efforts are needed to launch a product.

Thus, during this stage it is imperative for the channel
manager to assure that channel members can provide
adequate market coverage for the product.
The Growth
Stage and As the product enters the
Channel growth stage, rapid
Manage- market growth begins.
ment
The Maturity Stage and
Channel Management
1. Extra emphasis should be put on making sure the product remains
desirable for channel members.

2. At the same time, possible changes in channel structure,

particularly the selection of different types of intermediaries, should
be investigated to forestall the decline stage and possibly create a new
growth stage.
The
Decline • Can marginal outlets be phased
out quickly to avoid further profit
Stage and erosion?
Channel • Will dropping the product cause
Manage- an adverse reaction on the part of
existing channel members?
ment
Strategic Product
Management and Channel
Management
Strategic management of the product line is a challenge faced by
virtually all manufac- turers. No product line can be simply left alone
to remain fixed in time—certainly not if it is to remain a viable and
profitable product line.
Successful product strategies depend on a variety of factors such as
the quality, innovativeness or technological sophistication of the
products themselves, the power of the brand, the capabilities of the
managers charged with overseeing the product line, the financial
capacity and willingness of the firm to provide the promotional sup-
port often necessary to implement product strategies and several other
factors. One of these other factors, and a frequently overlooked one, is
the role played by channel members in implementing product
strategies.
Product Differentiation and Channel
Management
Product differentiation is probably the most widely used product
strategy. In essence, product differentiation represents 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 Positioning and Channel
Management
Product positioning is another widely used product strategy.
Basically, product position- ing refers to a manufacturer’s attempt
to have consumers perceive products in a particu- lar way relative
to competitive products. If this is accomplished, the product is then
“positioned” in consumers’ minds as an alternative to other
products that they currently use.
Product Line Expansion/Contraction and
Channel Management

Such product line expansion and pruning strategies can create problems in dealing with
channel members because it is very difficult to find a “perfect” blend of products in the line
that will satisfy all channel members. When the product line is expanded, some of the channel
members may complain about product proliferation, which increases their inventory costs and
complicates their selling job. When products are dropped from the line, other channel
members (or even the same ones who complained about the proliferation of products) may
carp about losing pro- ducts for which they still have plenty of customers.
Trading Down, Trading Up
and Channel Management
Trading down refers to adding lower-priced pro- ducts or a different product line to a
product mix than had typically been offered in the past.

Trading up is essentially the opposite—adding products or a product line that are

substantially more expensive than other products in the line or mix
.
Trading down is the manufacturer’s attempt to use product strategy to appeal to the low end
of the market, while trading up is the use of product strategy to reach the high end of the
market. Accordingly, trading down and trading up are also often referred to as going “down
market” or “up market,” respectively.
Product Brand Strategy and
Channel Management
Most manufacturers have several options when considering product
brand strategies.
They might sell all their products
(1) under one national brand;
(2) under several national brands (a “family” of brands);
(3) under private brands or
(4) under both national and private brand
Product Service Strategy and
Channel Management
Many products in both the consumer and industrial spheres require
service after the sale. Thus, manufacturers of these products should
make some provisions for after-sale ser- vice, either by offering it
directly at the factory, through their own network of service
centers, through channel members, through authorized independent
service centers or by some combination of these organizations.
Thank you!