pricing issues in channel management

1. Chapter 10
Product Issues in
Channel Management

2. Marketing Mix Resources
10
Objective 1:
By understanding how the other marketing
mix variables interface with the channel
variable, and the implications of such,
the channel manager could coordinate all
strategic components to create the synergy needed
to meet customers’ needs.

3. 10
Product-Channel
Management Interfaces
Objective 2:
New product planning
& development
The product life cycle
Strategic product
management
3 Major
areas of
product
management

4. 10
New 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?

5. 10
Encouraging Member Input
Solicit ideas for
new products.
Solicit feedback
during the test-marketing
or commercialization stage.
Gather feedback
on product size
or on packaging.

6. 10
Member Acceptance of
New Products
Determining Factors
• How the product will sell
• Whether the product is easy to stock & display
• Whether the product will be profitable

7. 10
Adding Products to the Assortment
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?

8. 10
Educating Channel Members
Manufacturer
goal:
To sell new products
successfully
Method:
Educate or train
channel members in the
product’s use and the
special features to
emphasize in sales
presentations

9. Trouble-Free New Products
10
New product problems
Care in new product planning
=

10. 10
Product Life Cycle
Objective 4:
Introduction
Growth
Sales
($)
Sales curve
Maturity
Profit curve
Time
Decline

11. 10
Introduction
1. Assure sufficient number of channel
members for adequate market coverage
2. Assure adequate supply on channel
members’ shelves

12. Growth 10
1. Assure sufficient number of channel member
inventories for adequate market coverage
2. Monitor the effects of competitive products
on channel member support

13. 10
Maturity
1. Extra emphasis on motivating channel members
to mitigate competitive impact
2. Investigate possibility for changes in channel
structure to extend maturity stage & possibly
foster new growth stage

14. 10
Decline
1. Phase out marginal channel members
2. Investigate impact of product deletion
on channel members

15. Strategic Product Management
10
• 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:

16. Objective 6: 10
Product Strategies
Product differentiation
Product positioning
Product line expansion & contraction
Trading up & trading down
Product brand strategy

17. Product Differentiation 10
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 getting
consumers to perceive a difference.

18. Product Positioning
10
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

19. 10
Product Line Expansion &
Contraction
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

20. 10
Trading 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 adequate
coverage 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 the
trade-up or trade-down product

21. 10
When manufacturers sell under both national and
private 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 Strategy

22. 10
Product Service Strategy
Objective 6:
It is the role of the marketing channel to provide
necessary 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