11.4 how can a company build and manage its product mix and product lines by vishnupriya aryabhumi

Setting

Product Strategy

How can a company build and manage its product mix and

product lines?

What is a product lineand

a product mix?

The product hierarchy

Security

Item

Product type

Product line

Product classProduct

family

Need

family

Prudential renewable term

life insurance

Term life insurance

Insurance

Financial instruments

Savings, Income

More terms…

• A product system is a group of diverse but related items that function in a compatible manner.

• A product mix (also called a product assortment) is the set of all products and items a particular seller offers for sale.

Characteristics of Product Mix

Characteristics of product mix

• Width = number of different product lines

• Length=total number of items in the mix

• Depth =number of variants of each product in a line

• Consistency = relation of product lines w.r.t. end use, production requirements, distribution channels or some other way

Illustration of the characteristics

Consistency (Personal Care)

Total length = 8+2+5+2+3 = 20No. of line = 5Avg line line = 20/5 = 4Depth of product mix = sum of variants in each product = 8 if Tide came in two scents (Mountain Spring and Regular),two formulations (liquid and powder),and two additives (with or without bleach

How do you decide which product to develop?

Product line analysis

3 Steps to

develop a product line

Develop basic modules/platforms that can be added to the current variant

with lower production costs and

still meeting the customer expectations

Step 1

Step 2

• know the sales/profit of each product in the product line

Might be discontinu

ed

Product 1 and 2 are to

be retained

or improve

d

Step 3

• know the market profile

B and D are

competing

products for X

Ideal range for product X

Use of Product line analysis

• Product line analysis provides information for two key decision areas-– product line length and – product mix pricing

Now on, the focus is on the product line length

Product line length

• Companies objectives affect the product line length

– Companies seeking high market share and market growth will gene rally carry longer product lines.

– Companies that emphasize high profitability will carry shorter ones consist of carefully chosen items.

3 ways to

increase product line length

1. Line stretching

Why/When

WhatDivisions Way

Line stretching

down market stretch

middle market

company introducing a lower-priced

linestrong growth opportunities

tie-up with low-market competitors

middle market

stagnated or declining

Up market stretch

two way stretch Eg:

titan

1. Line stretching (contd.,)

Why/When

WhatDivisions Way

Line stretching

down market stretch

Up market stretch

middle market

company introducing a higher-

priced line

strong growth

opportunitiesmiddle

market stagnated

or declining

Increasing market share

two way stretch Eg:

titan

How to name the new product??

Example

Way to name

naming

parent brand name

Titan

sub-brand name

Titan raga

different name Sonata

2. Line filling

Why/WhenWhatWay

Line filling

adding more items within

present range

items missing from

the line

utilizing excess

capacity,plugging

holes to keep out

competitors

Thankyou!

ByVishnupriya AryabhumiIITMadras

CreditsBackground

www.flickr.com

Extracted / Based on Chapter 12 of Marketing Management by Kotler Keller Koshy Jha 14th edition

Disclaimer"Created by Vishnupriya Aryabhumi, IITMadras, during an internship by

Prof. Sameer Mathur, IIMLucknow.www.IIMInternship.com"