Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 7

INTRODUCING AND MANAGING THE PRODUCT

First, a

manufacturer's branding policy can be followed. This would mean that

the producer refuses to manufacture

under brands other than his own, although

he may sell seconds or irregulars on an unbranded basis.

Second, an exclusive distributors brands policy could be followed. In this case, the

producer does not have a brand of his own but agrees to sell his products only to a partic-

ular distributor and

his brand name (private brands).

The final opinion is a mixed brand policy, which includes elements of both extremes

and leads to the production of manufacturer's as well as distributor's brands. For example,

Firestone sells some tires under their own brand names and some under private labels.

For most companies, both brand names and trademarks are vital in the identifica-

tion of

The design process should be guided by research; often the advertising

agency is brought in to help. Brand names are mandatory if the manufacturer or distrib-

utor intends to use mass advertising. Brand names also make word-of-mouth advertising

effective. Without them, repeat purchases of a particular product would be virtually impos-

sible. Product identification through the brand name is a most important element in the

product plan.

Related Services

Behind every product is a series of supporting services, such as

warranties and money-back guarantees. In many instances, such services may be as impor-

tant as

product itseif. In fact, at times it is difficult to separate the associated services

from the product features. Consequently, companies must constantly monitor the services

offered by the company and its competitors.

Based on the results of data-gathering devices such as customer surveys, consumer

corrplaints, and suggestion boxes, the product manager can determine the types of serv-

ices to offer, the form the service will take, and the price charged. For example, consumers

are very reluctant to purchase a stereo that can be serviced only by sending it to the fac-

tory, and paying the postage and a high service fee. Maytag, however, has been very effec-

tive in selling their appliances with service contracts and local repair. Banks are still uncertain as to whether they should charge the customer for checks, ATM use, safety deposit boxes,

and overdrafts. An industrial customer might be keenly interested in related services such

as

delivery, reliable price quotations, credit, test facilities , demonstration capabili-

ties, liberal return policies, engineering expetlise, and so forth.

Although there are a wide range

supportive services, the following are most prevalent:

1. Credit andfinancing. With the increased acceptance of debt by the consumer, offer-

ing credit and/or financing has become an important part of the total product. For

certain market segments and certain products, the availability of credit may make

the difference between buying or not buying the product.

Warranty. There are several types of durable products, retail stores, and even serv-

ice products where warranties are expected. These warranties can provide a wide

array of restitution, with a very limited warranty at one end of the continuum and

extended warranties at the other. An example of the former is a VCR manufac-

turer that provides a 3D-day wananty on the motor drive and no other coverage.

The Craftsman tools division of Sears Roebuck reflects the other extreme. A bro-

shovel will be replaced, no questions asked, after a full summer of use. A good

jewelry store has a warranty backing up every diamond ring they sell.

3. Money-back guarantees. The ultimate warranty is the money-back guarantee. To

the customer, a money-back guarantee reduces risk almost totally. There are cer-

tain market segments (e.g.,

risk takers) that perceive this service as very impor-

tant. Jt .is obvious that this service is effective only if the product is superior and

PRODUCT PLANNING AND STRATEGY FORMULATION

165

the product will be returned by only a few people. Extensive research should sup-

port this decision.

4. Delivery, installation, training, and service. Products that tend to be physically cumbersome or located far from the customer might consider delivery (free or a

small charge) to be an integral part of the new product. Very few major appliance

stores, lumberyards, or furniture stores could survive without provisions for this

service. Similarly, there are products that are quite complicated and/or very tech-

and whose average consumer could neither learn how to

or use it wiLh-

out assistance from the manufacturer. Both professional and home computer

companies have been forced to provide such services. The slow development of

v;deo products or product types that have a history of breakdown and extensive

maintenance

offer this service to the customer. In addition, it must be pro-

quickly and effectively. Although product service and

been

provided to industrial customers for several years, this service is stiP new to many

product manufacturers.

Product Mix Strategies

As more brands enter the market place and lock into a par-

ticular share of the market, it becomes more difficult to win and hold buyers.

changes

that occur are:

changes in

tastes and in particular, the size and characteris-

tics of particular market segments, (2) changes in availability or cost of raw materials and

other production or

components; and (3) the proliferation of small-share brands

that reduce

in production, marketing, and servicing for existing brands. Because

of factors such

these. a decision is made either to identify ways of changing the prod-

uct to further distinguish it from otners, or to design a strategy

will eliminate the prod-

uct and make way for new products. The specific s,rategy to accomplish these

may

be in several general categor'es.

Product modification: It is normal for a product to be changed several times during

its life. Certainly, a product should be equal or superior to those of principal competitors

If a change can provide superior satisfaction and win more initial buyers and switchers from

other brands, then a change is probably warranted.

'let the decision should not be approached in a haphazard manner. There are definite

risks.

a dramatic increase in product quality might price the existing target

consumer out of the market, or it might cause him/her to perceive the product as being too

good . Similarly, the removal of a particular ?roduct feature might be the one characteris-

tic of the product considered most important by a market segment. A key question the mar-

keter must answer before modifying the product is what particular attributes of the product

and competing products are perceived as most important by the consumer. Factors such as

quality, fu'1ctions, price, services, design, packaging, and warranty may all be determ:nants.

This evaluative process requires the product manager to arrange for marketing research

studies to learn of improvements buyers might want, evaluate the market reception given

to the competitors'

and evaluate improvements that have been developed

within the company. Also required is a relationship with the product research and devel-

opment (R&D) department. Ideally, R&D should be able to respond quickly to the

keting department's request for product upgrading and should maintain ongoing programs

of product improvement and cost reduction. Even suppliers and distributors should be

aged to submit

Product positioning is a

management decision that determines the place a

product should occupy in a given market-its market niche. Given this context, the word

"positioning" includes

of the common meanings of position: a place (what place

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