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

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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?

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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