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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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Fusion of Attributes
Tangible attributes
Intangible attributes
Often more important Marketing Channels (When is this
important?)
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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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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