Product Line Decisions

Product strategy calls for building a product line. A product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer group, are marketed through the same types of outlets, or fall within given price ranges. There are a number of decisions on product line length and product line featuring that marketers must face.

Product line length is the number of items in the product line. Product line is influenced by company objectives. Product lines tend to lengthen over time. As new products are added to the line, costs begin to rise. The line can be lengthened by:

1). Product line stretching (increasing the product line by lengthening it beyond its current range).

a). A downward stretch. This occurs when the company moves from the high end of the market to the lower end because:

1]. Faster growth is occurring at the lower end.

2]. The quality image first established at the upper end can be moved downward.

3]. They need a low product to fill a hole.

4]. A retaliation against an attack on their upper end product.

b). An upward stretch is done when companies at the lower end of the market want to enter the higher end. This may occur because:

1]. They are attracted by faster growth rates or higher margins at the upper end.

2]. They may want to position themselves as a full-line company.

c). A two-way stretch occurs when companies in the middle range of the market may decide to stretch their lines in both directions.

2). Product-line filling is increasing the product line by adding more items within the present range of the line. Reasons to use this strategy include:

a). Extra profits.

b). Attempting to satisfy dealers.

c). Trying to use excess capacity.

d). Trying to be the leading full-line company.

e). Trying to plug holes to keep out competition. Caution is required, however, or cannibalization and customer confusion can occur.

Product Mix Decisions

An organization with several product lines has a product mix. A product mix (or product assortment) consists of all the product lines and items that a particular seller offers for sale.

A company’s product mix can be described in the following ways:

1). The width refers to the number of different product lines the company carries.

2). The length refers to the total number of items the company carries within its product lines.

3). The depth refers to the number of versions offered of each product in the line.

4). The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or in some other way.

Using the above information and descriptions, the company can increase its business in four ways:

1). It can add new product lines thus widening its product mix.

2). The company can lengthen its existing product lines to become a more full-line company.

3). It can add more versions of each product and thus deepen its product mix.

4). The company can pursue more product line consistency—or less— depending on whether it wants to have a strong reputation in a single field or in several fields.

Дата добавления: 2015-10-30