Chapter 10Chapter 10

Product Issues in Channel Management

Marketing Mix ResourcesMarketing Mix Resources 1100

Objective 1:

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.

1010Product-ChannelProduct-ChannelManagement InterfacesManagement Interfaces

Objective 2:

New product planning & development

The product life cycle

Strategic product management

3 Majorareas ofproductmanagement

1010New Product PlanningNew Product Planning

Objective 3:

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

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

3. Do the new products fit into the present channel members’ assortments?

4. Will any special education or training be necessary to prepare the channel members to sell the new products effectively?

5. Will the product cause the channel members any special problems?

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

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

3. Do the new products fit into the present channel members’ assortments?

4. Will any special education or training be necessary to prepare the channel members to sell the new products effectively?

5. Will the product cause the channel members any special problems?

1010Encouraging Member InputEncouraging Member Input

Solicit ideas fornew products.

Solicit feedbackduring the test-marketing

or commercialization stage.

Gather feedbackon product sizeor on packaging.

1010Member Acceptance ofMember Acceptance ofNew 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

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?

1010Educating 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

Trouble-Free New ProductsTrouble-Free New Products 1010

New product problems

Care in new product planning

=

1100Product Life CycleProduct Life Cycle

Objective 4:

Introduction

Growth

Sales($)

Sales curve

Maturity

Profit curve

TimeDecline

1010IntroductionIntroduction

1. Assure sufficient number of channelmembers for adequate market coverage

2. Assure adequate supply on channel members’ shelves

GrowthGrowth 1010

1. Assure sufficient number of channel member inventories for adequate market coverage

2. Monitor the effects of competitive productson channel member support

1010MaturityMaturity

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

1010DeclineDecline

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

• Capabilities of managers overseeing product line

• Firm’s financial capacity & willingness to provide promotional support

• Channel members’ role in implementing product strategies

• Product quality, innovativeness, or technological sophistication

• Capabilities of managers overseeing product line

• Firm’s financial capacity & willingness to provide promotional support

• Channel members’ role in implementing product strategies

Successful product strategies depend on:

Objective 5:

Objective 6: 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.

• Maintain backup supply of retailer incentives

1010Product Line Expansion & Product Line Expansion & ContractionContraction

Manufacturers often engage in both expansion and contraction simultaneously.

Implications for channel management:

• Difficult to balance channel member satisfaction &Support for reshaped 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:

• Whether existing channel members provide adequatecoverage of high-end or low-end market segments to which trade-up or trade-down product is aimed

• Whether the channel members have confidence in the manufacturer’s ability to successfully market thetrade-up or trade-down product

1010

When manufacturers sell under both national andprivate 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

1010Product Service StrategyProduct Service Strategy

Objective 6:

It is the role of the marketing channel to providenecessary service along with the product

to 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