Transcript Chapter 8

Chapter 8
Product Management Strategies
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–1
Product mix and product line
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Product mix—the full set of products by type, brand,
size, style, 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 (Fig.
8.1, Rix 5e).
Product line—a group of products sold together or
intended for the same general use.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–2
Product mix strategies
• Expansion of the product mix.
• Alterations of existing products.
• Product mix contraction.
• Trading up, trading down.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–3
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.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–4
Alterations of existing products
• Types of alterations:
Redesign.
 Modification.
 Packaging.

Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–5
Product mix contraction
• Eliminating an entire product line
– Deleting non-profitable product lines.
• Simplifying the product assortment
– Specialising in a smaller range of
products.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–6
Trading up, trading down
• Marketers add:
– Higher priced item
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To increase perception of product prestige and attract
the higher income market.
Lower priced item
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To increase perception of product prestige and attract
the lower income market.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–7
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.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–8
Branding
• A brand name is a term, sign and/or special design
that is intended to identify the goods or services of
one seller and distinguish them from all others.
• E.g. Uncle Toby’s.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–9
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.
• Differentiation…a measure of distinction.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–10
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.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–11
A good brand name
• Suggests characteristics,
benefits, use or action.
• Easy to recognise and pronounce.
• Is distinctive.
• Adaptable to new products that might be
added to the product line.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–12
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 ‘headache tablet’.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–13
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.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–14
Types of brands
• Separate name (individual brand)—a brand name
given to individual products, leaving out the
manufacturer’s name.
• 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.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–15
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 &
Fab washing products.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–16
Brand equity
• Brand equity is the value a brand adds to a
product. Brand equity benefits:
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Become a differential advantage.
Create barriers for companies entering the market.
Help products survive changes in the operating
environment.
Strong potential for trademark or brand licensing.
Maintaining product quality.
Support positioning (through promotional message).
Maintain open two-way communication with customers.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–17
Packaging
• Defined as all the activities of designing and
producing the container or wrapping for a product.
• Packaging performs several marketing functions:
protection of the product and the people handling
and using it; providing information; helping promote
the product.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–18
Uses for packaging
• Protecting the product and the purchaser
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Protect against damage.
• Gaining acceptance of the product by
intermediaries
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Wholesalers and retailers.
• Helping persuade consumers to purchase the
product
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Clear identification of product.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–19
Packaging strategies
• Family packaging
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Family resemblance.
• Changing the packaging
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Redesign of package.
• Re-use packaging
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Glass jars re-used as a glass.
Refill containers.
Re-usable envelopes.
• Multiple packaging:
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The practice of placing several units in one container.
Used to increase consumer’s consumption of products
(e.g. toilet roll six pack).
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–20
Criticisms of packaging
• Packaging is deceptive.
• Packaging depletes our natural
resources.
• Packaging is excessively
expensive.
• Packaging poses environmental
hazards.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–21
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.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–22
Design
• Design benefits:
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Improves marketability.
Significantly differentiates product.
Promotional appeal.
Can be protected under Designs Act.
E.g. furniture or prestige pen.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–23
Warranty and product liability
• Warranties give consumers assurance that
they will be compensated if a product does not
perform according to reasonable expectation.
• 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.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–24
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.
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides Prepared by: Joe Rosagrata
8–25