1. Managing the Product

2. 2 Chapter Objectives Explain the different product objectives and strategies a firm may choose Explain how firms manage products throughout the product life cycle Discuss how branding creates product identity and describe different types of branding strategies Explain the roles packaging and labeling play in developing effective product strategies Describe how organizations are structured for new and existing product management

3. 3 Real People, Real Choices Grendha Shoes Corp. (Angelo Daros) 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

4. 4 Product Planning: Taking the Next Step Today, successful product management is more important than ever. Products are created, grow, reach maturity, and decline at faster and faster speeds.

5. 5 Using Product Objectives to Decide on a Product Strategy Objectives must be measurable, clear, unambiguous, and feasible and must indicate a specific time frame. Objectives and strategies for individual products:  --Successful introduction of new products  --Breathing new life into mature products

6. 6 Objectives and Strategies for Multiple Products Product line: Firm’s total product offering designed to satisfy a single need or desire of target customers Product mix: The total set of all products a firm offers for sale

7. 7 Objectives and Strategies for Multiple Products Product-Line Strategies  Full-line versus limited-line strategies  Upward, downward, or two-way line stretch  Filling out or contracting a product line Product-Mix Strategies  Width of product mix: the number of different product lines produced by firm

8. 8 Quality as a Product Objective Product quality: overall ability of 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

9. 9 ISO Quality Standards ISO 9000: voluntary standards for quality management set by International Organization for Standardization (ISO) ISO 14000: concentrate on environmental management Six Sigma methodology: no more than 3.4 defects per million (getting it right 99.9997% of the time)

10. 10 Adding 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 firm)

11. 11 Dimensions of Product Quality Degree of pleasure Product safety Ease of use Satisfies needs Durable Reliable Precision Versatile

12. 12 Marketing Throughout the Product Life Cycle Product life cycle: the way products go through four distinct stages from birth to death -- introduction, growth, maturity, and decline.

13. 13 The Introduction Stage First stage in the product life cycle, in which 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.

14. 14 The Growth Stage Second stage in the product life cycle, during which 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.

15. 15 The Maturity Stage Third and longest stage in the product life cycle, during which sales peak and profit margins narrow. --Competition grows intense. --Firm resorts to price reductions and reminder advertising.

16. 16 The Decline Stage Final stage in the product life cycle, during which 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.

17. 17 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.

18. 18 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). Is easy to say, spell, read, and remember. Fits the target market, product benefits, customer’s culture, and legal requirements.

19. 19 Trademarks Legal term for a brand name, brand mark, or trade character --Trademarks legally registered by a government obtain protection for exclusive use in that country. --Symbol in the U.S.: ® --Common-law protection: the firm has used the name and established it over a period of time.

20. 20 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 Brand meaning: the beliefs and associations a consumer has about the brand

21. 21 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 Brand extensions: new products sold with the same brand name

22. 22 Branding Strategies Individual brands vs. family brands National and store brands Generic brands: no branding

23. 23 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 Co-branding: combines two brands

24. 24 Creating Product Identity: Packaging and Labeling Decisions Package: the covering or container for a product that provides product protection, facilitates product use and storage, and supplies important marketing communication

25. 25 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

26. 26 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

27. 27 Labeling Regulations Federal Fair Packaging and Labeling Act of 1966 aims at making labels more helpful to consumers by providing useful information. 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.

28. 28 Organizing for Effective Product Management Management of Existing Products  Brand managers  Product category managers  Market managers

29. 29 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

30. 30 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.

31. 31 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?

32. 32 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