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Chapter 10

Product Issues in

Marketing Channel Management

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10

Ch. 10: Major Topics

1. Marketing Mix in Channels

2. Product

3. Interface between Marketing Channel and Product**

1. New Product Launch

2. Product Life Cycle

3. Strategic Product Management

- Product Strategies**

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3

The Marketing Mix

The means by whichproduct, price, promotionand place variables canbe assembled to meetchannel needs.

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4

TheProductIngredient of Marketing Mix

Product:a unique bundle of tangible and

intangible attributes offered en masse to

customers.

1. Fusion of attributes

2. Value satisfaction

3. Product evolution

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5

Fusion of Attributes

Tangible attributes

Intangible attributes

Often more important Marketing Channels (When is this

important?)

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6

Value Satisfaction

Perception of benefits derived fromowning or consuming a product.

Assess customer value

Provide customer value

Communicate customer value

Ex) VARs in computer industry

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7

Product Evolution

Core Product Actual Product

Augmented Product*

Product Evolution

Channel Evolution

Ex) PC industry; Movie

industry

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Levels of Product

Brand

Name

Quality

Level

Packaging

Design

Features

Delivery

& Credit

Installation

Warranty

After-Sale

Service

Core

Benefitor

Service

Actual

Product

Core

Product

Augmented

Product

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10Product-Channel

Management Interfaces*

1. New product planning

& development

2. The product life cycle

3. Strategic product

management3 Major

areas of

Product-channel

management

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10I. New Product Planning*

1. What input, if any, can channel members provideinto new product planning?

2. What has been done to assure that new productswill be acceptable to the channel members?*

3. Do the new products fit into the present channelmembers assortments?*

4. Will the product cause the channel members anyspecial problems?

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101. Encouraging Channel Member Input

Solicit ideas for

new products.

Solicit feedback

during the test-marketingor commercialization stage.

Gather feedback

on product size

or on packaging.

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102. Member Acceptance of

New Products

Determining Factors

How the product will sell

Whether the product is easy to stock& display

Whether the product will beprofitable*

Ex) How to increase reseller acceptance?

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103.Adding Products to

the Resellers Product Assortment

Will existing channel members view the new

product as appropriate to add to their assortments?

KeyConsiderations:

Will channel members feel competent

to handle the new product?

Ex) Vitamin Water Case

New product category

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4. Trouble-Free New Products10

New product problems

Care in new product planning

=

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10II. Product Life Cycle and

Marketing Channel*

Introduction

Growth

Sales($)

Sales curve

Maturity

Profit curve

TimeDecline

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10Introduction Stage and

Marketing Channel

1. Recruit sufficient numberof channel

members foradequate market coverage

2. Assure adequate supply on channel

members shelves

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Growth Stage and Marketing Channel 10

1. Assure sufficient number of channel member

inventories for adequate market coverage

2. Monitor the effects of competitive products

on channel member support

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10Maturity Stage and Marketing Channel

1. Extra emphasis on motivating channel members

to mitigate competitive impact

2. Investigate possibility forchanges in channel

structure to extend maturity stage & possibly

foster new growth stage

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10Decline Stage and Marketing Channel

1. Phase out marginal channel members

2. Investigate impact of product deletion

on channel members

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III. Strategic Product Management10

Product quality, innovativeness, or

technological sophistication

Capabilities of managers overseeingproduct line

Firms financial capacity & willingness to

provide promotional support Channel members role in implementing

product strategies*

Successful product strategies depend on:

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10

Product Strategy Issues*

1. Product differentiation

2. Product positioning

3. Product line expansion & contraction

4. Trading up & trading down

5. Product brand strategy*

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Product Differentiation* 10

Implications for channel management:

Select & help develop members who fittheproduct image when product differentiation strategy

is affected by who will be selling the product.

Provide retailers with the kind of support neededto properly present the product when this strategy is

influenced by howthe product is sold at retail.

Ex) Fashion Apparel industry in Japan

Creating a differential product involves getting

consumers toperceive a difference.

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Product Positioning10

The manufacturers attempt to have consumers

perceive the product in a particular way relative tocompetitive products

Implications for channel management:

Consider interfaces between the product positioningstrategy and where the product will be displayed and

sold before the strategy is implemented.

Elicit retailer support before attempting to implementstrategy.

ex) Vitaminwater positioning; NES positioning

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10Product Line Expansion & Contraction

Manufacturers often engage in both

expansion and contraction simultaneously.

Implications for channel management:

Difficult to balance between channel members

Satisfaction with current product line & channel member

support for reshaped product lines

Channel members are making increasing demands on

Manufacturers to have the right mix of products

Retailer Power & Category Management

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10Trading Down, Trading Up

Adding lower-priced products or product lines,

or higher-priced products or product lines,

to a product mix

Implications for channel management:

Can existing channel members provide adequate

coverage of high-end or low-end market segments?

Ex) Lexus of Toyota; Apple Stores

Do channel members have confidence in

the manufacturers ability to successfully market the

trade-up or trade-down product?

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10

When manufacturers sell under both national and

private brands, direct competition with channel membersmay result

Implications for channel management:

Do not sell both national & private brand versionsof products to the same channel members.

Sell national and private brand versions in

different geographical territories or physically varyproducts.

Dealing with Private Brand issue*

Product Brand Strategy