PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Part 4 Focusing on the Customer: Marketing Growth Strategies Product and Supply Chain Management

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 14–2 Looking Ahead After studying this chapter, you should be able to: 1. Explain the challenges associated with growth in a small firm. 2. Explain the role of innovation in a firm’s growth. 3. Identify stages in the product life cycle and the new product development process. 4. Describe the building of a firm’s total product. 5. Explain product strategy and the alternatives available to small businesses. 6. Describe the legal environment affecting product decisions. 7. Explain the importance of supply chain management. 8. Specify the major considerations in structuring a distribution channel.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 14–3 The Challenges of Growth Growth sufficient to maintain the status quo is a goal of some entrepreneurs. Growing a business too quickly can be stressful for the small firm. A growth trap may occur when a firm’s growth soaks up cash faster than it can be generated. Growth also puts pressure on a small firm’s personnel.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 14–4 Innovation’s Role in the Growth of a Firm Coming up with and perfecting new products or services is often not easy. The risk of failure increases when innovation is the goal. Innovation is a means by which a firm can sustain its competitive advantage.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 14–5 The Product Life Cycle The product life cycle portrays a product from introduction through growth and maturity to sales decline. The new product development process is a four-stage approach: –idea accumulation –business analysis –development of the product –product testing

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 14–6 Building the Total Product The brand identity of a firm and/or product has an important intangible image component. The name is a critical component of a product; it should be easy to pronounce and remember, descriptive, eligible for legal protection, full of promotional possibilities, and useful on several product lines. Packaging is a significant tool for increasing total product value. A label is an important informative tool, providing instructions on product use, care, and disposal. A warranty can be valuable for achieving customer satisfaction.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 14–7 Product Strategy Product strategy describes how a product is used to achieve a firm’s goals. There are six major product strategy alternatives which are based on the nature of the firm’s product offering and the number of target markets.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 14–8 The Legal Environment Federal legislation regarding labeling and product safety was designed to protect consumers. The legal system provides protection for a firm’s marketing assets through trademarks, patents, copyrights, and trade dress.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 14–9 Supply Chain Management Effective supply chain management can potentially lower the costs of inventory, transportation, warehousing, and packaging. Distribution encompasses both the physical movement of products and the establishment of relationships to guide the movement of products from producer to user. Intermediaries provide an efficient means of distribution if customers are widely dispersed or if special packaging and storage are needed.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 14–10 Distribution Channels A distribution channel can be either direct or indirect; some firms successfully employ more than one channel of distribution. Costs, coverage, and control are the three main considerations in building a channel of distribution. Transportation, storage, materials handling, delivery terms, and inventory management are the main components of a physical distribution system.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 14–11 Key Terms sustainable competitive advantage product life cycle brand brand name brand mark trademark service mark warranty product strategy product item product line product mix product mix consistency product patent utility patent design patent plant patent copyright trade dress supply chain management distribution physical distribution (logistics) channel of distribution merchant middlemen agents/brokers direct channel indirect channel dual distribution common carriers contract carriers private carriers