MKTG2201 Re view for exam 2 Chapter 9 Manage the Product Objective 1 Product planning Using Product Objectives to decide on a product strategy Product Planning plays a big role in the firm s marketing planning Strategies the product plan outlines spell out how the firm expects to develop a value proposition that will meet marketing objectives Product planning is guided by the continual process of product management which is the systematic and usually team based approach to coordinating all aspects of a product s marketing mix In some company product management is sometimes also called brand management the same thing Developing product objectives strategy effective product management Product benefits Features Styling Branding Labeling Packaging focus and direction eg Focus on ROI builing market share Product related objectives measurable clear unambiguous and feasible time frame Planners must keep in touch with customers so that objectives accurately respond to their needs Up to date knowledge of competitive product innovations also is important to develop product objectives Objectives and Strategies for individual Products Objectives and Strategies for Multiple Products A small firm might get away with a focus on one product a larger firm often sells a set of related products which means that the strategic decisions affect two or more products simultaneously The firm must think in terms of its entire portfolio of products Product planning means developing product line and product mix strategies to encompass multiple offerings A product line is a firm s total product offering to satisfy a group of target customers 1 The product line length is determined by the number of separate items within the same category 2 A large number of variations in a product line as a full line that targets many customer segments to boost sales potential 3 A limited line strategy with fewer product variations can improve the firm s image If customers perceive it as a specific with a clear specific position in the market Organizations may decide to extend their product line by adding more brands or models when they develop product strategies If a firm s current product line includes middle and lower end items an upward line stretch adds new items higher priced entrants that claim better quality or that offer more bells and whistles Conversely a downward line stretch augments a line when it adds items at the lower end The firm must take care not to blur the images of its higher priced upper end offerings A filling out strategy adds sizes or styles not previously available in a product line to meet the competition or take advantage of new opportunities Whatever a manufacturer extends a product line or a product family there is risk of cannibalization Cannibalization The loss of sales of an existing brand when a new item in a product line or product family is introduced Product Mix Strategies Product Mix The total set of all products a firm offers for sale Product Mix Width The number of different product lines the firm produces If a firm develops different product lines a firm reduces the risk of putting all its eggs in one basket Normally firms develop a mix of product lines that have some things in common Quality as a Product Objective The Science of TQM Product quality The overall ability of the product to satisfy customers expectations It is one way that marketing adds value to customers Total Quality Management TQM A management philosophy that focus on satisfying customers through empowering employees to be an active part of continuous quality improvement Quality Guidelines ISO 9000 Criteria developed by the International Organization for Standardization to regulate product quality in Europe It is a broad set of guidelines that establishes voluntary standards for quality management ISO 14000 Standards of the International Organization for Standardization concerned with environmental management aimed at minimizing harmful effects on environment Six Sigma A process whereby firms work to limit product defects to 3 4 per million or fewer One way that companies can use to improve quality This method involves a five step process called DMAIC define measure analyze improve and control Product Quality 1 Durability 2 Reliable 3 Versatile 4 Satisfies needs 5 High degree of precision 6 Ease of use maintenance and repair 7 Product safety 8 The degree of aesthetic 9 The degree of pleasure Objective 2 Marketing throughout the Product Life Cycle Product Life Cycle PLC Introduction Growth Maturity Decline 1 Introduction Stage The first stage of the product life cycle in which slow growth follows the introduction of a new product in the marketplace Goal get first time buyers to try the product Sales hopefully increase at a steady but slow pace Have no profit during this stage because research and development costs and heavy spending for ads and promotional efforts cut into revenue Price may be high to cover the R D costs demand permitting or low to attract a large numbers of consumers How long does the introduction stage last Depends on marketplace acceptance and producer s willingness to support its product during start up Many products never make it past the introduction stage Marketing during introduction stage must focuses on informing consumers about the product how to use it and its promised benefits 2 The Growth Stage Sales increase rapidly Profits increase and peak Goal encourage brand loyalty by convincing the market that this brand is superior to others increase market share Marketing strategies introduction of product variations to attract market segments and When competitors appear on the scene marketers must heavily rely on advertising and other forms of promotion Price competition may develop which drives profits down 3 The Maturity Stage longest Sales peak and then begin to level off and even decline while profit margins narrow Competition gets intense when remaining competitors fight for their share of a shrinking pie Price reduction and reminder advertising to maintain market share Most customers have accepted the product they tend to buy to replace a worn out item or to take advantage of product improvements During this stage firms try to sell their product through as many outlets as possible because availability is crucial in a competitive market Consumers will not go far to find one particular brand if satisfactory alternatives are close at hand outlet To remain competitive and maintain market