Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix Slides prepared by Angela Tasevski 8–18–1 Chapter

Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix

Slides prepared by Angela Tasevski8–1

Chapter 8

Product-Management Strategies



Product mix and product line

• Product mix—the full set of products by type, brand, size, style, and colour sold by a firm.

• A product mix has dimensions both of breath and depth.

• Breadth—the number of product lines.• Depth—variety of sizes, colours and models

(see Figure 8.1, p. 286).• Product line—a group of products sold together

or intended for the same general use.



Product mix strategies

Product mix strategies involve:• expansion of the product mix• alterations of existing products• product mix contraction• trading up, trading down.



Expansion of the product mix

• Line extension—an extension can be related or unrelated.

• Aims to appeal to more market segments with the same basic product, and to increase usage rates.

• Related—an increase in depth of the product.• Unrelated—an increase in the breadth or product

range.



Alterations of existing products

• Types of alterations:

– redesign

– modification

– packaging.



Product mix contraction

• Eliminating an entire product line– deleting non-profitable product lines.

• Simplifying the product assortment– specialising in a smaller range of products.



Trading up, trading down

• Marketers add:– Higher priced item

To increase perception of product prestige and attract the higher income market.

– Lower priced item To increase perception of product prestige and attract

the lower income market.



Risks in trading up, trading down

• negligible net gain, buyer confusion• sales generated at expense of older products

—cannibalisation• hurt or affect firm’s reputation• change firm’s image.• confuse new and current target market owing

to change in product positioning.



Branding

• A brand name is a term, sign and/or special design which is intended to identify the goods or services of one seller and distinguish them from all others, e.g. Uncle Tobys.



Reasons for branding

• Easy identification of product.• Assures consumer of comparable quality.• Stops confusion and helps seller control their

market.• Helps sellers to control their market.• Adds to product differentiation as a measure of

distinction.



Reasons for not branding

• Cost of maintaining market presence, including:– promotions– brand quality– product cannot be differentiated– physical nature of product, e.g. fruit and

vegies.



A good brand name

• suggests characteristics, benefits, use or action (See Table 8.1, p. 274)

• easy to recognise and pronounce• is distinctive• adaptable to new products that might be

added to the product line.



Protecting a brand name

• Product counterfeiting—refers to placing a brand name on a product even though the rights to the product or name are not owned by that firm.

• Generic usage—when a brand name is so common it describes the category, e.g. Aspirin is a brand that also signifies a ‘headache tablet’.



Branding strategies

• Marketing under producer’s own brand—includes entire output, e.g. IBM.

• Branding or fabricating parts and materials—used to develop market preference, e.g. Intel.

• Marketing under intermediaries’ brands—generates additional sales volume and profit, e.g. Farmland or No-Frills.



Types of brands

• Separate name (individual brand)—a brand name given to individual products, leaving out the manufacturer’s name, e.g. Rinso, OMO, and Lux all made by Unilever.

• Family branding (blanket)—brands that take on the manufacturer’s name, e.g. Mars Bar.

• Combined-brand strategy—the combination of the manufacturer’s name with a product, e.g. Kellogg’s Special K.



Multi-brand strategy

• Multi-branding—firm using more than one brand name for similar products in its range in an attempt to reach different market segments, e.g. Dynamo and Fab washing products.



Brand equity

• Brand equity is the value a brand adds to a product. Having brand equity benefits a product by:

– becoming a differential advantage– creating barriers for companies entering the market– helping products survive changes in the operating

environment– creating strong potential for trademark or brand licensing– maintaining product quality– supporting positioning (through promotional message)– maintaining open two-way communication with

customers.



Packaging

• Packaging can be defined as all the activities of designing and producing the container or wrapping for a product.

• Packaging performs several marketing functions: protects the product and the people handling and using it; provides information; and helps promote the product.



Uses for packaging

• Protecting the product and the purchaser to– protect against damage.

• Gaining acceptance of the product by intermediaries, i.e.

– wholesalers and retailers.

• Helping persuade consumers to purchase the product by providing

– clear identification of the product.



Packaging strategies

• Family packaging– family resemblance.

• Changing the packaging– redesign of package.

• Re-use packaging– glass jars re-used as a glass– refill containers– re-usable envelopes.

• Multiple packaging:– the practice of placing several units in one container– used to increase consumer’s consumption of products

(e.g. toilet roll six pack).



Criticisms of packaging

• Packaging is deceptive.• Packaging depletes our natural resources.• Packaging is excessively expensive.• Packaging poses environmental hazards.



Labelling

• A label is the part of a product that carries information about the product itself, or about the seller. It is used to communicate useful information to customers.



Design

• Design benefits:– improves marketability– significantly differentiates a product– adds promotional appeal– can be protected under the Designs Act, e.g.

furniture or prestige pen.



Warranty and product liability

• Warranties give consumers assurance that they will be compensated if a product does not perform according to reasonable expectations.

• Product liability—responsibility producers have to safeguard the interests of the consumers of their products.

• Implied warranty—the idea that warranty was intended by the seller even though it was not stated.



Service provision

• A common consumer complaint is that manufacturers and retailers do not provide adequate repair services for the product they sell.

• Providing effective post-sales service such as advice, training, maintenance and repairs has become more essential as products become more complex.

Documents

Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix Slides prepared by Angela Tasevski 8–18–1 Chapter