Managing the Product

2 Chapter Objectives product objectives & strategies managing products  throughout the product life cycle branding  creating product identity  types of branding strategies

3 Chapter Objectives packaging and labeling how organizations are structured  new product management  existing product management

4 Product Planning : Taking the Next Step product management = very important. at faster and faster speeds Products are created, grow, reach maturity, decline. LEXUS HYBRID

5 Figure 9.1: Steps in Managing Products

6 Product Objectives =Product Strategy Objectives must be: measurable, clear, unambiguous, feasible indicate a specific time frame. MINIUSA.COM

7 Product Objectives =Product Strategy Objectives & strategies for individual products: -- introduction of new products --Breathing life into mature products MINIUSA.COM

8 Figure 9.2: Objectives for Single and Multiple Products

9 Objectives and Strategies for Multiple Products Product line : Firm’s total product offering designed to satisfy a single need or desire of target customers

10 Objectives and Strategies for Multiple Products Product mix: The total set of all products a firm offers for sale

11 Product Development Product line  desire for growth  position in marketplace  use of resources  exploit Product Life Cycle

12 Objectives and Strategies for Multiple Products Product-Line Strategies  Full-line vs. limited-line strategies  Upward, downward, or two-way line stretch  Filling out a product line  contracting a product line Swiss Army Video

13 Product Mix Characteristics  Length = # different products firms sells  Width – # product lines  Depth – variations in each product  consistency

14 Objectives and Strategies for Multiple Products Product-Mix Strategies  Width of product mix:  the number of different product lines  produced by firm Swiss Army Video

15 Product Mix Strategies (extensions & diversity)  wider  longer  deeper  more/less consistent

16

17 Quality as a Product Objective Product quality: overall ability of product to satisfy customer’s expectations MALCOLM BRIDGE AWARD WINNERS!

18 Quality as a Product Objective Total Quality Management (TQM): company-wide dedication to the development, maintenance, continuous improvement of all aspects of the company’s operations MALCOLM BaldRIDGE AWARD WINNERS!

19 ISO Quality Standards ISO 9000: voluntary standards for quality management set by International Organization for Standardization (ISO)

20 ISO Quality Standards ISO 14000: concentrate on environmental management

21 ISO Quality Standards Six Sigma methodology : no more than 3.4 defects  per million (getting it right % of the time)

22 Adding Quality to the Marketing Mix Product:  improve customer service Place:  involve suppliers and customers  in improving on-time delivery

23 Adding Quality to the Marketing Mix 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 firm)

24 Dimensions of Product Quality Figure 9.4

PRODUCT LIFE CYCLE

26 Marketing Throughout the Product Life Cycle Product life cycle: the way products go through four distinct stages from birth to death –  introduction, growth,  maturity, decline.

27 The Product Life Cycle Figure 9.5

28 The Introduction Stage First stage,  in which slow growth  follows the introduction of a new product  in the marketplace. --Goal = get 1 ST time buyers to try product. --little or no profit during this stage.

29 The Growth Stage Second stage  product is accepted  sales rapidly increase. --Goal = encourage brand loyalty. --product variations introduced  to attract market segments  increase market share.

30 The Maturity Stage Third & longest stage  sales peak  profit margins narrow. --Competition grows intense. --price reductions --reminder advertising.

31 The Decline Stage Final stage, sales decrease  as customer needs change. Market begins to shrink, profits decline, fewer product variations exist, suppliers pull out. major decision = to keep product or not. OLDTIMECANDY.COM

32 Extending the PLC Ways  frequency of use  number of users  find new uses  product improvement Deletion decisions  harvest  divest  reasons

33 Extending the PLC (next chapter)

BRANDING

35 Creating Product Identity: Branding Decisions Brand: a name, term, symbol, or unique element that identifies one firm’s product sets it apart from the competition.

36 A Good Brand Name: Creates a positive connotation. Is memorable. Positions a product  by conveying image or personality (Ford Mustang)  or describing how it works (Drano).

37 A Good Brand Name: easy to  say, spell, read, & remember. Fits:  target market,  product benefits,  customer’s culture,  legal requirements.

38 Trademarks Legal term  for a brand name, brand mark, or trade character legally registered by a government  obtain protection for exclusive use in that country. --

39 Trademarks Symbol in the U.S.: ® Common-law protection:  the firm has used the name &  established it over a period of time.

40 The Importance of Branding Brand equity:  a brand’s value to its organization  over and above the value of the generic version of the product

41 Top 100 Global Brands Scoreboard The table that follows ranks 100 global brands that have a value greater than $1 billion. The brands were selected according to two criteria. 1)global in nature, deriving 20% or more of sales from outside their home country. 2) publicly available marketing and financial data on which to base the valuation Brand Rank 2005 Brand Rank Brand Name Brand Name Parent Company Parent Company 2005 Bran d Valu e ($Mil ) 2005 Bran d Valu e ($Mil ) 2004 Brand Value ($Mil) 2004 Brand Value ($Mil) 1 Coca- Cola 67, ,394 2 Microsof t 59, ,372 3IBM International Business Machines Corporation 53, ,791 4GE 46, ,111 5Intel 35, ,499

42 The Importance of Branding Brand meaning:  the beliefs and associations  a consumer has about the brand

43 Figure 9.7: The Brand Equity Pyramid

44 The Importance of Branding (cont’d) Brand equity provides competitive advantage:  the power to capture and hold onto a larger share of the market and  to sell at prices with higher profit margins

45 The Importance of Branding (cont’d) Brand extensions : new products sold with the same brand name

46 Branding Strategies Individual brands family brands National & store brands Generic brands :  no branding

47 Branding Strategies (cont’d) Licensing: one firm sells the right to use a legally protected brand name for a specific purpose for a specific period of time

48 Branding Strategies (cont’d) Co-branding: combines 2 brands

Packaging & labeling

50 Creating Product Identity: Packaging and Labeling Decisions Package : the covering or container for a product that provides product protection, facilitates product use and storage, supplies important marketing communication

51 Packaging and Labeling Decisions (cont’d) Universal Product Code (UPC): set of black bars or lines printed on the side/bottom  of most items sold in stores; creates a national system  of product identification

52 Designing Effective Packaging Effective packaging considers : Packaging of other brands  in same product category Choice of packaging material Environmental impact Shape and color Graphic information

53 Labeling Regulations Federal Fair Packaging and Labeling Act of 1966 aims at making labels more helpful  to consumers by providing useful information.

54 Labeling Regulations Food and Drug Administration requires food labels to tell how much fat, saturated fat, cholesterol, calories, carbohydrates, protein, trans fats, and vitamins are in each product serving.

55 Effective Product Management Managing Existing Products  Brand managers  Product category managers  Market managers

56 New-Product Development Venture teams: specialists in different areas who work together to focus on new-product development

57 New-Product Development “Skunk works”: small and isolated group in remote location that functions with minimal supervision

58 The end

59 Real People, Real Choices Grendha Shoes Corp. (Angelo Daros)Grendha Shoes Corp. (Angelo Daros) Launching the Rider brand in the United States, Angelo needed a plan to position the brand.Launching the Rider brand in the United States, Angelo needed a plan to position the brand.  Option 1: position U.S. Rider the same way as the Brazilian version  Option 2: position Rider as an “after sport footwear” brand  Option 3: position Rider more specifically as an “after soccer” brand

60 Real People, Real Choices Grendha Shoes Corporation (Angelo Daros) Angelo chose option 2: position Rider as an “after sport footwear” brand Grendha adapted the same strategy in over 85 countries around the world and now sells millions of pairs globally. GRENDA SHOE CORPORATION

61 Marketing Plan Exercise Dr. Pepper is the oldest soft-drink brand in the United States.  What are some product-line strategies Dr. Pepper might consider?  How important is TQM, and product quality in general, to a brand like Dr. Pepper?  What realistic opportunities for brand extensions exist for Dr. Pepper?  Does Dr. Pepper have high brand equity? What can it do to enhance its brand equity?

62 Marketing in Action Case: You Make the Call What is the decision facing Sony? What factors are important in understanding this decision situation? What are the alternatives? What decision(s) do you recommend? What are some ways to implement your recommendation?

63 Keeping It Real: Fast Forward to Next Class Decision Time at Universal Studios Meet Robyn Eichenholz, senior brand manager at Universal Orlando. Upcoming Donna Summer concert would attract many customers The decision: How to plan for the Donna Summer concert

64 Group Activity Think of your college or university as an organization that offers a line of different educational products. Develop alternatives it might consider and describe how each might be accomplished and evaluated:  Upward product stretch  Downward product stretch  Two-way stretch  Filling-out strategy

65 Group Activity Conduct a brief focus group of students and find out whether consumers complain to each other about poor product quality.  --Have they ever used a Web site to express displeasure over product quality?  --If so, what was the result?

66 Discussion Quality can mean different things for different products. What does it mean for the following?  Automobile  Pizza  Running shoes  Hair dryer  Deodorant  College education

67 Discussion Brand equity means a brand enjoys customer loyalty, perceived quality, and brand-name awareness.  --What brands are you loyal to?  --What element of the product creates brand loyalty and thus brand equity?

68 Discussion What are some examples of brand extensions that have damaged the parent brand’s equity? What are some that have enhanced it?

69 Group Activity For each of the following, discuss any problems you have with the packaging of the brand you use. Think of ways to improve the package.  Dry cereal  Laundry detergent  Frozen orange juice  Gallon of milk  Potato chips  Loaf of bread