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Managing the Product
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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
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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 versionOption 2: position Rider as an “after sport footwear”
brandOption 3: position Rider more specifically as an “after
soccer” brand
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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.
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Using Product Objectives toDecide 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
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Objectives and Strategies forMultiple 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
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Objectives and Strategies forMultiple Products
• Product-Line StrategiesFull-line versus limited-line strategiesUpward, downward, or two-way line stretch Filling out or contracting a product line
• Product-Mix StrategiesWidth of product mix: the number of different product
lines produced by firm
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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
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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)
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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)
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Dimensions of Product Quality
• Degree of pleasure
• Product safety
• Ease of use
• Satisfies needs
• Durable
• Reliable
• Precision
• Versatile
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Marketing Throughoutthe Product Life Cycle
• Product life cycle: the way products go through four distinct stages from birth to death -- introduction, growth, maturity, and decline.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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
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Branding Strategies
• Individual brands vs. family brands
• National and store brands
• Generic brands: no branding
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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
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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
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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
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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
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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.
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Organizing for Effective Product Management
• Management of Existing ProductsBrand managers Product category managers Market managers
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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
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Real People, Real Choices
• Grendha Shoes Corporation (Angelo Daros)
• Angelo chose option 2: position Rider as an “after sport footwear” brandGrendha adapted the same strategy in over 85
countries around the world and now sells millions of pairs globally.
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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?
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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