9-1 Chapter 9 Managing the Product  Product Mix (Lines, etc.)  Quality Concerns  Product Life Cycle  Branding Strategies  Packaging  Careers in Product/Brand Management

9-2 Steps to Manage Products

9-3 Product Planning Developing product line and product mix strategies  Product line: –Firm’s total product offering designed to satisfy a single need or desire of target customers P&G’s line of dish detergents: Dawn, Ivory, Joy  Product-Line Strategies –Line extensions  Product mix: –The total set of all products that a firm offers for sale  Product-Mix Strategies –Width of product mix: How many different product lines produced by firm  Cannibalization concerns: –Within each line

9-4 Line 1 x Line 2 x Line 3 x Breadth Length Example: P&G offers dish soap, toilet paper, shampoo, window cleaners, and more.

9-5 Quality as a Product Objective  Product quality as an objective: –Product quality is the overall ability of a product to satisfy customer’s expectations  Total Quality Management (TQM): –Company-wide dedication to the development, maintenance, and continuous improvement of all aspects of the company’s operations –Uniform ISO quality standards exist to offer guidance

9-6 ISO Quality Standards  ISO 9000: –Voluntary standards for quality set by International Organization for Standardization  ISO 14000: –Concentrates on environmental management  Six Sigma Methodology: –Process allowing no more than 3.4 defects per million (getting it right % of the time)

9-7 Adding a Dose of Quality to the Marketing Mix  Product: –Improve customer service  Place: –Involve suppliers and customers in improving on-time delivery  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 the firm)

9-8 Product Quality

9-9 Product Life Cycle

9-10 Marketing Mix Strategies Over the Product Life Cycle

The Introduction Stage  First stage in the product life cycle –slow growth follows the introduction of a new product in the marketplace  Goal is to get first-time buyers to try product  Firm does not usually make a profit during this stage

The Growth Stage  Second stage in the product life cycle –the product is accepted and sales rapidly increase.  Goal is to encourage brand loyalty  Firm introduces product variations to attract market segments and increase market share

The Maturity Stage  Third and longest stage in the product life cycle –Sales peak and profit margins narrow –Competition grows intense  Marketers need to keep giving consumers new reasons to buy products in the mature stage –Find new uses for an existing product, move into new markets, or add/change the product’s attributes  Firm resorts to price reductions and reminder advertising.

The Decline Stage  Final stage in the product life cycle: –Sales decrease as customer needs change.  Market as a whole begins to shrink, profits decline, fewer product variations exist, and suppliers pull out  Firm’s major decision is whether to keep product at all. –Do you have a Cash Cow or a Dog? BCG Matrix

Creating Product Identity: Branding Decisions  Brand –a name, term, symbol, or any other unique element that identifies one firm’s product and sets it apart from the competition  Creates a positive connotation  Customer perspective: –An emotional connection that is part of the relationship between product/company and customer –Brand personality/customer identity

9-16 The Importance of Branding  Brand equity provides competitive advantage –Brands with strong equity capture and hold onto a larger share of the market –Brands with strong equity sell at prices with higher profit margins  Brand extensions –New products sold with the same brand name

9-17 Benefits of a Strong Brand Name  To company –*Share of mind ~= market share –Higher margin –*Advertising efficiencies –Efficiencies in brand extensions  To consumers* –Decision heuristic Simplifies decision making –“Safe” purchase “No one ever got fired for buying IBM”

9-18 Good Brand Names  Easy to say  Easy to spell  Easy to read  Easy to remember  Fit the target market  Fit the product’s benefits  Fit the customer’s culture  Fit legal requirements

9-19 MERKUR

Trademarks / Service Marks  Legal terms for a brand name, brand mark, or trade character –Trademark = TM –Service mark = SM  Common-law protection: the firm has used the name and established it over a period of time—within a specific product category  Legally registered trademarks / service markets by a government obtain protection for exclusive use in that country –Symbol in the U.S. ®

9-21 What Makes a Brand Successful?  Delivers benefits customers truly want  Stays relevant  Pricing based on consumer perceptions of value  Properly positioned  Consistent  Good fit between brand portfolio and hierarchy  Coordinates marketing activities to build equity  Understanding of what brand means to consumers  Brand is given proper support  Company monitors sources of brand equity

9-22 Branding Strategies: Individual Brands vs. Family Brands  Individual –Pros: “Clear” identity –Cons: More expensive to introduce –Example: P&G products are branded individually (Cheer, Tide, Joy, Crest, Fresh Step, etc.)  Family/umbrella –Pros: Less expensive to introduce –Cons: If new product fails, can “pollute” family name –Example: Arm & Hammer products are all branded with Arm & Hammer brand (Arm & Hammer cat litter, Arm & Hammer toothpaste, A&H deodarent, etc.)

9-23 Branding Strategies: National and Store Brands  National: –Manufacturer’s (producer’s) brand  Store: –Private-label (retailer’s) brand Costco – Kirkland, Safeway – Safeway Select, Walmart – Great Value Questions: (1) Who makes the retailer’s products? (2) What is the margin picture for retailers?

Branding Strategies (cont’d)  Licensing: –one firm sells the right to use a legally protected brand name for a specific purpose and for a specific period of time Disney UM Grizzlies  Co-branding: –combines two brands –ingredient branding is increasing

9-25 Packaging Functions  Contain and/or protect the product  Communicate brand personality –Awareness, trial  Provide specific information –Specific attributes –Sales promotion offers  Make the package more user-friendly –Use and storage  Support retailer needs –Easy to store, compact in sales space

9-26 Designing Effective Packaging  Effective packaging considers: –Can package be used to enhance brand image or competitive advantage? –Packaging of other brands in same product category –Choice of packaging material and image it projects –Environmental impact of packaging –Shape and color influences on image –Graphic information to be portrayed

9-27 Organizing for Effective Product Management  Management of existing products –A single marketing manager typically handles the entire marketing function in small firms –Larger firms may have a number of managers who perform different functions Brand managers Product category managers Market managers

9-28 Organizing for New-Product Development  Venture teams –Specialists in different areas who work together to focus on new-product development  “Skunk works” –Small and isolated group in remote location that functions with minimal supervision