Chapter Nine - Managing the Product
Effective product planning is guided by a continuous process of product management
Steps to Mange Products
: Develop Product Objectives . Individual products - Product lines and mixes Design product strategies Make tactical product decisions - Product branding . Packaging and labelling design Organise for product management
Getting Product Objectives Right
Clearly stated product objective provide focus and direction - Should support broader marketing objectives of business unit Should be consistent with the firm's overall mission To be effective, objectives must be: : Measurable Clear Realistic Indicate a specific time frame
Individual Products
Multiple Products
Introduce new products
Product Line Extensions
Product Mix
Regional product: Introduce nationally
Stretching: Adding new items to line
Filling: Adding sizes or styles
Contracting a product line: Dropping items
Increase width of product mix
Mature product: Increase consun enthusiasm for the
Upward
Downward
Two-way
Objectives and Strategies for Multiple Products
Firms must plan for its entire product portfolio - Product line strategies - Product mix strategies
Product Mix: Set of all products offered
: Product mix breadth (variety & number of product lines offered: product categories and their relationship to each other) Product Line Depth (# of items in each given product line)
Product Mix Width
In which businesses should the firm compete? Factors driving decision: - To offset expected future losses from another related business - To leverage a key underlying asset of current products - Provide a fuller mix to become a "one stop shop"
Product Line Depth (# of different items in the line)
: Product line depth is driven by segments differentiated either - Vertically based on price/performance requirement : Upward line stretch (higher price & performance/features) Downward line stretch (lower priced items) Inserting items filling gaps between existing different price/performance levels Horizontally (customer tastes for different products)
Quality as a Product Objective: TQM and Beyond
: Product quality is often a key objective
quality objectives
Quality Guidelines
: ISO 9000 - Standards for quality management : IS0 14000 - Standards for environmental management : Six Sigma methodology
Marketing Throughout the Product Life Cycle
: The PLC explains how features change over the life of a product : Marketing strategies must change and evolve as a product moves through the PLC : The PLC relates to a product category (not to a specific brand)
Introduction Sales Stage and Profits company is
Maturity Stage Sales peak
Stage Profits and peak
Market shrinks: Sales fall
Sales
Profit
Profits fall
Profits
Time
Characteristic
Introduction
Growth
Maturity
Dedine
Number of variations reduced
Product
produces single product
the market creating new variations of the duct
sales are mostly replacement oroducts
Get first-time buyers to try the new product
Encourage brand loyalty
Attract new users
Remain profitable decide whether to keep or phase out product
Goals
Sales
Increase at a steady but slow pace
Rapid increase
Peak, then level off.
Continue to decline
Negative
Increase and peak
Profit margins narrow
Declining
Profits
High:recover R&D costs Lowattract large iumbers ofcustomers
May