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Chapter 10Chapter 10
Product Issues in Channel Management
1100
By understanding how the other marketingmix variables interface with the channelvariable, and the implications of such,
the channel manager could coordinate allstrategic components to create the synergy
needed to meet customers’ needs.
By understanding how the other marketingmix variables interface with the channelvariable, and the implications of such,
the channel manager could coordinate allstrategic components to create the synergy
needed to meet customers’ needs.
Why Do Some Products Fail While Others Succeed?
• Degree of innovativeness
• Price/Quality Relationship
• Customer Demand• Competition• Timing• CHANNEL MEMBER
SUPPORT
How Can We Get Channel Member Support for Our
Products?• Consider how the
decisions about our product strategy affect our channel members
1010Product Strategy-Channel Product Strategy-Channel StrategyStrategy
InteractionsInteractions
New product planning & development
The product life cycle
Strategic product management
3 Majorareas ofproductmanagement
1010New Product Planning:New Product Planning:Encouraging Member InputEncouraging Member Input
Solicit ideas fornew products.
Solicit feedbackduring the test-marketing
or commercialization stage.
Gather feedbackon product sizeor on packaging.
1010New Product Planning: New Product Planning: Member Acceptance ofMember Acceptance of
New ProductsNew Products
Determining Factors
• How the product will sell• Whether the product is easy to stock & display• Whether the product will be profitable
• How the product will sell• Whether the product is easy to stock & display• Whether the product will be profitable
1100
New Product Planning:New Product Planning:Adding Products to the Adding Products to the
AssortmentAssortment
Will existing channel members view the new product as appropriate to add to their
assortments?
Will existing channel members view the new product as appropriate to add to their
assortments?
Key Considerations:
Will channel members feel competent to handle the new product?
Will channel members feel competent to handle the new product?
1010New Product Planning:New Product Planning:Educating Channel MembersEducating Channel Members
Manufacturer goal:
To sell new productssuccessfully
Method:Educate or train
channel members in theproduct’s use and the
special features to emphasize in sales
presentations
New Product Planning:New Product Planning:Trouble-Free New ProductsTrouble-Free New Products
1010
New product problems
Care in new product planning
=
1100Product Life CycleProduct Life Cycle
Introduction
Growth
Sales($)
Sales curve
Maturity
Profit curve
TimeDecline
1010Product Life Cycle: IntroductionProduct Life Cycle: Introduction
1. Assure sufficient number of channelmembers for adequate market coverage
2. Assure adequate supply on channel members’ shelves
Product Life Cycle: GrowthProduct Life Cycle: Growth 1010
1. Assure sufficient number of channel member inventories for adequate market coverage
2. Monitor the effects of competitive productson channel member support
1010Product Life Cycle: MaturityProduct Life Cycle: Maturity
1. Extra emphasis on motivating channel membersto mitigate competitive impact
2. Investigate possibility for changes in channelstructure to extend maturity stage & possiblyfoster new growth stage
1010Product Life Cycle: DeclineProduct Life Cycle: Decline
1. Phase out marginal channel members
2. Investigate impact of product deletion on channel members
Strategic Product ManagementStrategic Product Management1010
• Product quality, innovativeness, or technological sophistication
• Managerial expertise• Firm’s financial capacity & willingness to
provide promotional support • Channel members’ role in implementing
product strategies
• Product quality, innovativeness, or technological sophistication
• Managerial expertise• Firm’s financial capacity & willingness to
provide promotional support • Channel members’ role in implementing
product strategies
Successful product strategies depend on:
1010Product StrategiesProduct Strategies
Product differentiation
Product positioning
Product line expansion & contraction
Trading up & trading down
Product brand strategy
Product DifferentiationProduct Differentiation 1010
Implications for channel management:
• Channel managers should try to select & help develop members who fit the product image when product differentiation strategy is affected by who will be selling the product.
• Channel managers should provide retailers with the kind of support needed to properly present the product when this strategy is influenced by how the product is sold at retail.
Creating a differential product involves gettingconsumers to perceive a difference.
Product PositioningProduct Positioning 1010
The manufacturer’s attempt to have consumers perceive the product in a particular way relative to
competitive products
Implications for channel management:
• Possible interfaces between the product positioning strategy and where the product will be displayed and sold to consumers should be considered before the strategy is implemented.
• Elicit retailer support before attempting to implement strategy.
1010Product Line Expansion & Product Line Expansion & ContractionContraction
Manufacturers often engage in both expansion and contraction simultaneously.
Implications for channel management:
•Channel members may not be in favor of redesign of product lines
• Channel members are making increasing demands on Manufacturers to have the right mix of products
1010Trading Down, Trading UpTrading 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:
• Do existing channel members provide adequatecoverage of high-end or low-end market segments?
• Do current channel members have confidence in the manufacturer’s ability to successfully market thetrade-up or trade-down product?
1010
When manufacturers produce and sell under both national and private brands, direct competition with
channel members may result
Implications for channel management:
• Do not sell both national & private brand versions of products to the same channel members.
• Sell national and private brand versions in different geographical territories.
• Physically vary products enough to minimize direct competition.
Product Brand StrategyProduct Brand Strategy
Private LabelsGuess what famous cosmetic company makes this brand for Kohl’s
1010Product Service StrategyProduct Service Strategy
It is the role of the marketing channel to provide
necessary service along with the productto the final user
Manufacturers should provide after-sale service
• by offering it directly at the factory• through their own network of service centers• through channel members• through authorized independent service centers• by some combination of the above
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