PRODUCT AND DISTRIBUTION

1. PRODUCT AND DISTRIBUTION Module 6

2. PRODUCT CONCEPTS

3. OUTLINE • Positioning • Branding • New Product Development • Product Elimination

4. THE KEY TO PRODUCT SUCCESS……POSITIONING

5. POSITIONING • …placing your product in that part of the market where it will receive a favorable reception compared to competing products (Jain, 1996).

6. BRANDING

7. BRAND • ...a term, symbol, or design that identifies a seller’s products and differentiates them from the competitor’s products.

8. OBJECTIVES OF BRANDING • Identification • Differentiation • Repeat Sales • New Product Sales

9. BRANDING STRATEGIES • Individual branding • Private labels • Corporate or manufacturer’s brands • Generic brands • Family brands

10. INDIVIDUAL BRANDING • Provide each product with a distinctive name • Reduces a company’s risk that a failure is not associated with its other products

11. PRIVATE LABELS • It creates store loyalty • They are profitable • Middlemen can sometimes be avoided

12. MANUFACTURERS’ BRANDS • Advertising expenditures are reduced • Well-known brands can attract new customers to the store

13. GENERIC BRANDS • “No-name” products • Decline in popularity

14. FAMILY BRANDING • The same name is used to cover a group of products • Reduced costs • Transfer of customer satisfaction

15. PLANNING FOR NEW PRODUCTS

16. NEW PRODUCT STRATEGIES • ...firms are better able to sustain competitive pressures on their existing products and make headway.

17. THE ROLE OF TOP MANAGEMENT • Establish policies and broad strategic directions • Create the organizational climate needed to stimulate innovation • Get involved!

18. NEW PRODUCT DEVELOPMENT • Product improvement/modification • Product imitation • Product innovation

19. PRODUCT IMPROVEMENT / MODIFICATION • Typically in the maturity phase of the product life cycle. • Improvements are achieved through redesigning , remodeling, or reformulating the product to satisfy customer needs more fully.

20. PRODUCT IMITATION • Imitators design and produce products not very different from an innovator’s product. • This strategy reduces risk

21. PRODUCT INNOVATION • An innovation strategy sees the introduction of a new product to replace an existing product in order to provide a new approach to satisfying an existing need.

22. ENCOURAGING INNOVATION • Keep divisions small • Tolerate failure • Motivate champions • Maintain liaison with customers • Share technology throughout firm • Sustain projects despite initial discouraging results

23. THE PRODUCT INNOVATION PROCESS • Idea generation • Screening and evaluation • Business analysis • Development and testing • Test marketing • Commercialization

24. IDEA GENERATION • Search • Marketing Research • Internal and External Development • Suggestion Systems

25. BUSINESS ANALYSIS • Preliminary market plan • Revenue forecasting • Cost estimation • Profit projections

26. DEVELOPMENT AND TESTING • Development of a prototype

27. TEST MARKETING • Simulated test marketing • Conventional test marketing

28. COMMERCIALIZATION • Continuous monitoring

29. PRODUCT ELIMINATION

30. ALTERNATIVES • Divestment • Harvesting (Controlled Divesting) • Line Simplification

31. PRODUCT LINE STRATEGY

32. DISTRIBUTION

33. OUTLINE • Introduction • Distribution Scope Strategies • Channel Strategies • Power and Conflict

34. CHANNELS OF DISTRIBUTION • “What is a channel?” • “A channel is an organized structure of buyers and sellers that bridge the gap of time and space between the manufacturer and the customer.”

35. MARKETING IS AN EXCHANGE PROCESS • Concentration • Dispersion

36. WHOLESALING TRENDS • Low margins • Producers bypass wholesalers • Acquisitions and mergers • Increase of value added services

37. RETAILING TRENDS • Innovation • Growth of large chains • Increase in scrambled merchandising • Internet

38. DISTRIBUTION SCOPE STRATEGIES • Exclusive • Intensive • Selective

39. EXCLUSIVE DISTRIBUTION • One retailer serving an area is granted sole rights to carry a product • Relevant for products that individuals seek out.

40. ADVANTAGES OF EXCLUSIVE DISTRIBUTION • Dealer loyalty and sales support • Retailer control • Forecasting and inventory control

41. DISADVANTAGES OF EXCLUSIVE DISTRIBUTION • Lost volume • “Eggs in one basket”

42. INTENSIVE DISTRIBUTION • Product is available to all possible retail outlets • Convenience goods

43. ADVANTAGES OF INTENSIVE DISTRIBUTION • Increased sales • Wider customer recognition • Impulse buying

44. DISADVANTAGES OF INTENSIVE DISTRIBUTION • Quick turnaround required • Control is difficult to maintain

45. SELECTIVE DISTRIBUTION • Several outlets in a given area distribute a product • Shopping goods

46. DISADVANTAGES OF SELECTIVE DISTRIBUTION • Not adequately covering the market

47. CHANNEL ALTERNATIVES • Conventional • Vertical marketing system (VMS) • (channel is managed as a coordinated or programmed system)

48. VMS CHARACTERISTICS • Channel captain • Three types • Ownership • Contractual • Administered

49. POWER • Power reflects the degree to which one firm can influence the actions and decisions of another firm

50. SOURCES OF POWER • Reward power • Coercive power • Expertise power • Referent power • Legitimate power