Product Issues in Channel Management

Product Issues in Channel ManagementPart 3: management the marketing channelHan, Tran Ngoc GiaThien, Hoang Thi NgocNhan, Vo Thuy ThanhUyen, Phan Vu PhuongCONTENTSNew product planning and Channel managementThe product life cycle and Channel managementStrategic product management and Channel managementTrading down, Trading up and Channel managementProduct-Channel Management Interfaces3 Majorareas ofproductManagement

New product planning & developmentThe Product Life CycleStrategic Product ManagementNew Product PlanningWhat input, if any, can channel members provide into new product planning?What has been done to assure that new products will be acceptable to the channel members?Do the new products fit into the present channel members assortments?Will any special education or training be necessary to prepare the channel members to sell the new products effectively?Will the product cause the channel members any special problems?

6 roles of retailer6 roles of wholesalersInterpreting customer demand

Henkel Consumer Adhesives

Customer feedbackNew lines of productTremendous sells and profit.Henkels retailerSolicit ideas fornew products.Solicit feedbackduring the test-marketingor commercialization stage.Gather feedbackon product sizeor on packaging.Encouraging Member InputMember Acceptance ofNew ProductsFactors that pre-determine acceptance of new products by channel partners:

How the product will sell TurnoverWhether the product is easy to stock & displayWhether the product will be profitable MarginsAdding Products to the AssortmentWill existing channel members view the new product as appropriate to add to their assortments?Will channel members feel competent to handle the new product?Educating Channel MembersManufacturer goal:To sell new productssuccessfullyMethod:Educate or trainchannel members in theproducts use and thespecial features to emphasize in salespresentationsTrouble-Free New ProductsProducts problem can happen anytime. During displays or post purchase.New products problemsCare in new product planningProduct Life CycleIntroductoryGrowthSales($)Sales curveMaturityProfit curveTimeDeclineIntroductoryAssure sufficient number of channel members for adequate market coverage

Assure adequate supply on channel members shelvesGrowthAssure sufficient number of channel member inventories for adequate market coverage

Monitor the effects of competitive productson channel member supportMaturityExtra emphasis on motivating channel membersto mitigate competitive impact

Investigate possibility for changes in channelstructure to extend maturity stage & possiblyfoster new growth stageDeclinePhase out marginal channel members

Investigate impact of product deletion on channel membersStrategic Product ManagementSuccessful Product Strategies: Product quality, innovativeness, or technological sophistication Capabilities of managers overseeing product line Firms financial capacity & willingness to provide promotional support Channel members role in implementing product strategies

Product StrategyProduct differentiationProduct positioningProduct line expansion & contractionTrading up & trading downProduct brand strategyProduct DifferentiationCreating a differential product involves getting consumers to perceive a difference.

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.Product Differentiation

Product DifferentiationProduct PositioningThe manufacturers attempt to have consumers perceive the product in a particular way relative to competitive products

Product Line Expansion & ContractionManufacturers often engage in both expansion and contraction simultaneously.

Implications for channel management:Difficult to balance channel member satisfaction & support for reshaped product linesChannel members are making increasing demands on manufacturers to have the right mix of products

Product Line Expansion

Product Line Contraction

Trading up, Trading downAdding lower-priced products or product lines,or higher-priced products or product lines, to a product mixImplications for channel management:Whether existing channel members provide adequate coverage of high-end or low-end market segments to which trade-up or trade-down product is aimedWhether the channel members have confidence in the manufacturers ability to successfully market the trade-up or trade-down product.

PNJ & PNJ Silver

Product Brand StrategyImplications 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

When manufacturers sell under both national and private brands, direct competition with channel members may result

Product Service Strategy

It is the role of the marketing channel to provide necessary service along with the product to the final user

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