Chapter 8
Product-Management Strategies
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–1
Product mix and product line
• Product mix—the full set of products by type,
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brand, size, style, and colour sold
by a firm.
A product mix has dimensions both of breath
and depth.
Breadth—the number of product lines.
Depth—variety of sizes, colours and models
(see Figure 8.1, p. 286).
Product line—a group of products sold together
or intended for the same general use.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–2
Product mix strategies
Product mix strategies involve:
• expansion of the product mix
• alterations of existing products
• product mix contraction
• trading up, trading down.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–3
Expansion of the product mix
• Line extension—an extension can be related or
unrelated.
• Aims to appeal to more market segments with the
same basic product, and to increase usage rates.
• Related—an increase in depth of the product.
• Unrelated—an increase in the breadth or product
range.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–4
Alterations of existing products
• Types of alterations:
– redesign
– modification
– packaging.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–5
Product mix contraction
• Eliminating an entire product line
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deleting non-profitable product lines.
• Simplifying the product assortment
– specialising in a smaller range of products.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–6
Trading up, trading down
• Marketers add:
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Higher priced item

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To increase perception of product prestige and attract
the higher income market.
Lower priced item

To increase perception of product prestige and attract
the lower income market.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–7
Risks in trading up, trading down
• negligible net gain, buyer confusion
• sales generated at expense of older
products—cannibalisation
• hurt or affect firm’s reputation
• change firm’s image.
• confuse new and current target market owing
to change in product positioning.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–8
Branding
• A brand name is a term, sign and/or special design
which is intended to identify the goods or services
of one seller and distinguish them from all others,
e.g. Uncle Tobys.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–9
Reasons for branding
• Easy identification of product.
• Assures consumer of comparable quality.
• Stops confusion and helps seller control their
market.
• Helps sellers to control their market.
• Adds to product differentiation as a measure of
distinction.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–10
Reasons for not branding
• Cost of maintaining market presence,
including:
– promotions
– brand quality
– product cannot be differentiated
– physical nature of product, e.g. fruit and
vegies.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–11
A good brand name
• suggests characteristics, benefits, use or
action (See Table 8.1, p. 274)
• easy to recognise and pronounce
• is distinctive
• adaptable to new products that might be
added to the product line.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–12
Protecting a brand name
• Product counterfeiting—refers to placing a brand
name on a product even though the rights to the
product or name are not owned by that firm.
• Generic usage—when a brand name is so
common it describes the category, e.g. Aspirin is a
brand that also signifies a ‘headache tablet’.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–13
Branding strategies
• Marketing under producer’s own brand—includes
entire output, e.g. IBM.
• Branding or fabricating parts and materials—used
to develop market preference, e.g. Intel.
• Marketing under intermediaries’ brands—
generates additional sales volume and profit, e.g.
Farmland or No-Frills.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–14
Types of brands
• Separate name (individual brand)—a brand name
given to individual products, leaving out the
manufacturer’s name, e.g. Rinso, OMO, and Lux
all made by Unilever.
• Family branding (blanket)—brands that take on
the manufacturer’s name, e.g. Mars Bar.
• Combined-brand strategy—the combination of
the manufacturer’s name with a product, e.g.
Kellogg’s Special K.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–15
Multi-brand strategy
• Multi-branding—firm using more than one brand
name for similar products in its range in an attempt
to reach different market segments, e.g. Dynamo
and Fab washing products.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–16
Brand equity
• Brand equity is the value a brand adds to a
product. Having brand equity benefits a product by:
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becoming a differential advantage
creating barriers for companies entering the market
helping products survive changes in the operating
environment
creating strong potential for trademark or brand licensing
maintaining product quality
supporting positioning (through promotional message)
maintaining open two-way communication with
customers.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–17
Packaging
• Packaging can be defined as all the activities of
designing and producing the container or wrapping
for a product.
• Packaging performs several marketing functions:
protects the product and the people handling and
using it; provides information; and helps promote
the product.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–18
Uses for packaging
• Protecting the product and the purchaser to
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protect against damage.
• Gaining acceptance of the product by
intermediaries, i.e.
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wholesalers and retailers.
• Helping persuade consumers to purchase the
product by providing
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clear identification of the product.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–19
Packaging strategies
• Family packaging
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family resemblance.
• Changing the packaging
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redesign of package.
• Re-use packaging
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glass jars re-used as a glass
refill containers
re-usable envelopes.
• Multiple packaging:
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the practice of placing several units in one container
used to increase consumer’s consumption of products
(e.g. toilet roll six pack).
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–20
Criticisms of packaging
• Packaging is deceptive.
• Packaging depletes our natural resources.
• Packaging is excessively expensive.
• Packaging poses environmental hazards.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–21
Labelling
• A label is the part of a product that
carries information about the product
itself, or about the seller. It is used to
communicate useful information to
customers.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–22
Design
• Design benefits:
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improves marketability
significantly differentiates a product
adds promotional appeal
can be protected under the Designs Act, e.g.
furniture or prestige pen.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–23
Warranty and product liability
• Warranties give consumers assurance that they
will be compensated if a product does not
perform according to reasonable expectations.
• Product liability—responsibility producers have
to safeguard the interests of the consumers of
their products.
• Implied warranty—the idea that warranty was
intended by the seller even though it was not
stated.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–24
Service provision
• A common consumer complaint is that
manufacturers and retailers do not provide
adequate repair services for the product they sell.
• Providing effective post-sales service such as
advice, training, maintenance and repairs has
become more essential as products become more
complex.
Copyright  2007 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: A Practical Approach 6/e by Peter Rix
Slides prepared by Angela Tasevski
8–25