1 P r o d u c t Mix. 2 Anything that is offered to the market for attention, acquisition, use or consumption that satisfies a want or a need Product is.....

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P r o d u c tP r o d u c tMixMix

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Anything that is offered to the market for

attention, acquisition, use or consumption that

satisfies a want or a need

Product is . . . . .

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Types of Products

ConsumerProducts

IndustrialProducts

PRODUCTS

Services

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Product Mix and Product LineProduct Mix and Product Line

- A product mix is the set of all products offered for sale by a company

- The structure of a product mix has both width and depth

- Its width is measured by the number of product lines carried

- Its depth by the variety of sizes, colors, and models offered within each product line

- A product line is a broad group of products, intended for essentially similar uses and having similar physical characteristics

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Product Items, Lines, and Mixes

Product ItemProduct Item

Product LineProduct Line

Product MixProduct Mix

A specific version of a product that can be designated as a distinct offering among an organization’s products.

A specific version of a product that can be designated as a distinct offering among an organization’s products.

A group of closely-related product items.

A group of closely-related product items.

All products that an organization sells.

All products that an organization sells.

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Product Mix and Product LineProduct Mix and Product Line

Product Mix - Breadth and Depth in a Lawn and Garden Store

Gillette’s Product Lines & Mix

Gillette’s Product Lines and Mix http://www.gillette.com/

Width of the product mix

Blades and Writingrazors Toiletries instruments Lighters

Mach 3 Series Paper Mate CricketSensor Adorn Flair S.T. Dupont Trac II ToniAtra Right GuardSwivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry LookTwin Injector Dry Idea Techmatic Brush Plus

Dep

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f th

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lin

es

Product Line and Product Mix

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Product-Mix StrategiesProduct-Mix Strategies

- To be successful in marketing, producers and middlemen need carefully planned strategies for managing their product mixes

- There are several product-mix strategies:

- positioning the product

- product-mix expansion

- alteration of existing products

- product-mix concentration

- trading up and trading down

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Product-Mix StrategiesProduct-Mix Strategies

Positioning the Product

- Positioning is (again!) about bringing attention to products and differentiating them from similar ones

- Several major positioning strategies can be found:

- Positioning in relation to a competitor

- Positioning in relation to a product class or attribute

- Positioning by price and quality

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Product-Mix StrategiesProduct-Mix Strategies

Product-Mix Expansion

- Product-mix expansion is accomplished by increasing the depth within a particular line and/or the numbers of lines a firm offers to customers

- Line extension: A company adds a similar item to an existing product line with the same brand name

- Mix-expansion: A company adds a new product line to its present assortment (the new line may be related or unrelated to current products, it may also carry one of the company’s existing brand names or may be given an entirely new name)

Brand equity has to be taken into consideration!

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Product-Mix StrategiesProduct-Mix Strategies

Alteration of Existing Products

- Rather than developing a completely new product, management might do well to take a look at the organization’s existing offerings

- Product alteration: Improving an existing product

- Product alteration can be more profitable and less risky than developing a completely new one

- Eg Lifebuoy +, Zen Estillo New & Improved

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Product-Mix StrategiesProduct-Mix Strategies

Product-Mix Contraction

- Product-mix contraction: Carried out either by eliminating an entire line or by simplifying the assortment within a line

- The intended result of product-mix concentration is higher profit from fewer products

- As a result, many organizations now have fewer product lines, and the remaining lines are thinner and shorter

- Eg Rexona , Maruti 1000

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Product-Mix StrategiesProduct-Mix Strategies

Trading Up and Trading Down

- The strategies of trading up and trading down involve a change in product positioning and an expansion of the product line

- Trading up: Adding a higher-price product to a line in order to attract a broader market, the new product’s prestige should help the sale of the existing lower-price products eg Maruti SX4,

- Trading down: Adding a lower-price product to a company’s product line, the firm expects that people who cannot afford the original higher-price product will buy the lower-price one, Honda Jazz, Skoda Fabia

Leveraging Brand Equity

One of the most important changes in the market is the proliferation of extensions.

Line Extension Strategy

When a brand is used to brand a new product that targets a new market segment within a product category currently served by the parent brand.

Examples:Coca-Cola dietColgate for Kids

Line Extension Strategies

Product Sizes

Bisleri 1.1 Ltr

Bisleri .5Ltr

Bisleri 1.2Ltr

Bisleri 1.5 Ltr

Bisleri 5Ltr

Line Extension Strategies

Colours

Flavours

Ingredients

Sunsilk Yellow

Sunsilk Pink

Sunsilk Black

Kissan Squash Orange

Kissan Squash Lemon

Colgate Herbal

Colgate Gel

Colgate Namak

Line Extension Strategies

Consumer Need

Dove Shampoo-

Normal Hair

Coloured

Damaged Hair

Essential

Balance

Line Extension Strategies

FormVim Bar

Vim Liquid

Vim Powder

Line Extensions

Price

Quality

Downwar

d

Stretch

Upward

Stretch

Two - w

ay st

retch

MACH 3 TURBO

PRESTO

Effort to use a successful brand name to introduce a new product into a different product category.

Examples: Nike Shoes: Apparels, Bags, Sunglasses

Park Avenue: Shirts, Shaving Creams, Shirts, Belts, Perfumes, Soaps & Razors

Brand Extension Strategy

BRAND STRATEGY DECISIONS

Product Category

Existing New

BrandName

Existing

New

Line

ExtensionBrand

Extension

Multibrands New Brand

Names

Types Of Extensions

• Companion product

• Colgate Dental cream ---------- Colgate Tooth Brush

• Gillette Razors -------- Gillette Blades ..........Gillette Shaving Creams--------- Gillette After Shave

Types Of Extensions

• Customer Need

Johnson's baby Talc

Johnson's baby Oil

Johnson's baby

cream

Johnson's baby

Shampoo

Johnson's Nappy Pads

Types Of Extensions

• Company Expertise

Honda Cars

Honda Scooters

Honda Lawn

mowers

Types Of Extensions

• Brand Distinction

Parashute

Hair Oil ShampooCooking

oilCream

Baby Soap Baby oil

Types Of Extensions

Brand Image or Prestige

Steel, Automobile, Heavy Vehicles, Watches, S/ W Development, Training,

Sub-Branding Strategy

Using a new brand name in conjunction with a family brand name to introduce new products.

Examples:

• Sony Vaio• Colgate Total• Levi’s Dockers

Co-Branding/Brand Alliance Strategies

When two or more different brand names are attached to a product.

Examples:

• Compaq - Intel (“Intel inside”)• Citibank Jet Privilage card

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Licensing

• Involves contractual arrangements whereby firms can use names, logos, characters, and other facets of other brands to market their products.

• Essentially, a firm is “renting” another brand to contribute to the brand equity of their own product.

Advantage of brand extensions

• Help reduce cost and speed of new products/brands

• Provide feedback to the parent brand

• Can confuse or frustrate consumers

Disadvantages of brand extensions

• Retailers may resist• Damage to parent brand image• Reduce sales of parent brand• Reduce identification of brand with

any one category• Can dilute brand meaning• Company becomes less innovative

Do we extend the parent brand ?

• Do consumers have some positive associations about the parent brand in memory ?

• Will these positive associations be evoked by the brand extension ?

• Will negative associations be transferred from the parent brand ?

• Will negative associations be created by the brand extension ?

When to Extend ?

Steps in successful brand extension

• 1. Define consumer knowledge about the brand (brand schema)

• 2. Identify possible brand extensions based on parent brand associations and overall ‘fit’ of extension to parent brand

• 3. Evaluate the potential of possible brand extensions: Salience of parent brand associations Favourability of inferred extension associations Uniqueness of inferred extension associations

Steps in successful brand extension

• 4. Evaluate possible brand extension feedback: How compelling is the extension ? How relevant is the extension ? How consistent is the extension ? How strong is the extension ?

• 5. Consider possible competitive advantages as perceived by consumers

• 6. Design marketing campaign to launch brand extension

• 7. Evaluate brand extension success and effects on parent brand equity

Possible Extensions for the Nivea Brand

NiveaCream

BRAND DEFINITIONS RELATED CATEGORIESmoisturizer

lotion

medicinal

purity

body care

pump bottle

fragrance

Soap - face cream - skin cream

sunburn - after-shave - baby

antiseptic - first-aid - hemorrhoid cream

cotton - gauze - sterile pads

emery boards - muscle toner - cotton swabs

liquid hair gel – hair detangler glass cleaner

perfume - room deodorizer - deodorant

Extensions gone wrong

• New Coke

• Frito-Lay Lemonade

• Harley Davidson Perfume

Top Brand Extensions

• Diet Coke

• Dove Shampoo

• Sony Digital Cameras