1 topic 8 product issues in channel management by dr. songporn hansanti
TRANSCRIPT
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Topic 8Topic 8
Product Issues in Channel Management
By
Dr. Songporn Hansanti
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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.
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1010Product-ChannelProduct-ChannelManagement InterfacesManagement Interfaces
Objective 2:
New product planning & development
The product life cycle
Strategic product management
3 Majorareas ofproductmanagement
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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?
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1010Encouraging Member InputEncouraging Member Input
Solicit ideas fornew products.
Solicit feedbackduring the test-marketing
or commercialization stage.
Gather feedbackon product sizeor on packaging.
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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
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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?
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Categories of New Products
New-To-The-WorldNew-To-The-World
New Product LinesNew Product Lines
Product Line AdditionsProduct Line Additions
Improvements/RevisionsImprovements/Revisions
Repositioned ProductsRepositioned Products
Lower-Priced ProductsLower-Priced Products
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The New-Product Development Process
New ProductNew ProductSuccessSuccessFactorsFactors
New ProductNew ProductSuccessSuccessFactorsFactors
Long-Term CommitmentLong-Term Commitment
New Product StrategyNew Product Strategy
Capitalize on ExperienceCapitalize on Experience
Establish an EnvironmentEstablish an Environment
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New-Product Development Process
New-Product StrategyNew-Product Strategy
Idea GenerationIdea Generation
Idea ScreeningIdea Screening
Business AnalysisBusiness Analysis
DevelopmentDevelopment
Test MarketingTest Marketing
CommercializationCommercialization
New ProductNew Product
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Idea GenerationCustomersCustomers
EmployeesEmployees
DistributorsDistributors
CompetitorsCompetitors
R & DR & D
ConsultantsConsultants
Creative ThinkingCreative Thinking
Sources ofSources ofNew-ProductNew-Product
IdeasIdeas
Sources ofSources ofNew-ProductNew-Product
IdeasIdeas
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Brainstorming
BrainstormingBrainstorming
The process of getting a group to think of unlimited ways to
vary a product or solve a problem.
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Idea Screening
ScreeningScreening
The first filter in the product
development process, which eliminates ideas that are inconsistent with
the organization’s new-product strategy or are inappropriate for some
other reason.
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Concept Test
Concept TestConcept Test
A test to evaluate a
new-product idea, usually before any prototype has been created.
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Business Analysis
Considerations Considerations in in
Business Business Analysis StageAnalysis Stage
Considerations Considerations in in
Business Business Analysis StageAnalysis Stage
Demand
Cost
Sales
Profitability
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Development
Creation of prototype
Marketing strategy
Packaging, branding, labeling
Manufacturing feasibility
Final government approvals if needed
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Simultaneous Product Development
Simultaneous Product DevelopmentSimultaneous Product Development
A new team-oriented approach to new-product
development where all relevant functional areas and
outside suppliers participate in the development process.
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Introductory Stage
• High failure rates
• Little competition
• Frequent product modification
• Limited distribution
• High advertising and production costs
• Negative profits
• Promotion focuses on awareness and information
• Intensive personal selling to channels
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Test Marketing
Test MarketingTest Marketing
The limited introduction of a product
and a marketing program to determine
the reactions of potential customers in a
market situation.
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Alternatives to Test Marketing
• Single-source research using supermarket scanner data
• Simulated (laboratory) market testing
• Online test marketing
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CommercializationProductionProduction
Inventory BuildupInventory Buildup
Distribution ShipmentsDistribution Shipments
Sales TrainingSales Training
Trade AnnouncementsTrade Announcements
Customer AdvertisingCustomer Advertising
Steps in Steps in Marketing a Marketing a New Product New Product
Steps in Steps in Marketing a Marketing a New Product New Product
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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
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Trouble-Free New ProductsTrouble-Free New Products 1010
New product problems
Care in new product planning
=
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Product Life Cycle
Time
Do
llar
s
Profits
SalesSales
IntroductoryIntroductoryStageStage
GrowthGrowthStageStage
MaturityMaturityStageStage
DeclineDeclineStageStage
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Growth Stage
• Increasing rate of sales
• Entrance of competitors
• Market consolidation
• Initial healthy profits
• Aggressive advertising of the differences between brands
• Wider distribution
• Prices normally fall
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Maturity Stage
• Sales increase at a decreasing rate
• Saturated markets
• Annual models appear
• Lengthened product lines
• Service and repair assume important roles
• Heavy promotions to dealers and consumers
• Marginal competitors drop out
• Prices and profits fall
• Niche marketers emerge
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Decline Stage
• Long-run drop in sales
• Large inventories of unsold items
• Elimination of all nonessential marketing expenses
• “Organized abandonment”
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1100Product Life CycleProduct Life Cycle
Objective 4:
Introduction
Growth
Sales($)
Sales curve
Maturity
Profit curve
TimeDecline
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1010IntroductionIntroduction
1. Assure sufficient number of channelmembers for adequate market coverage
2. Assure adequate supply on channel members’ shelves
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GrowthGrowth 1010
1. Assure sufficient number of channel member inventories for adequate market coverage
2. Monitor the effects of competitive productson channel member support
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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
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1010DeclineDecline
1. Phase out marginal channel members
2. Investigate impact of product deletion on channel members
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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:
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Objective 6: 1010Product StrategiesProduct Strategies
Product differentiation
Product positioning
Product line expansion & contraction
Trading up & trading down
Product brand strategy
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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.
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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
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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
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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
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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
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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