Product Line and Product Mix
Adjustments to Products
Marketers must often make product adjustments in order to keep the product competitive and continue to provide satisfaction to the buyer.
Discuss strategies for adjusting products in response to changes in consumer taste and the marketplace
- There are risks involved with product adjustment: changing the price of the product may price some buyers out, while changing the features may dissuade some from continuing to buy the product.
- Product positioning is both a concept and a process, often requiring extensive market research and involving a conscious change in the promotional message.
- Line extensions occur when a company adds new items in the same market category. This is usually either up-market or down-market, depending on the company’s strategy and desired market growth.
- product repositioning: Changing the market’s perceptions of a product so that it may better compete in its present market or other market segments.
- product adjustment: The changing of a product in order to provide superior satisfaction and win over buyers from other brands and products.
Adjustments to Products
As more brands enter the marketplace, winning and holding buyers becomes more difficult. This is a result of:
- changes in consumer tastes; in particular, the size and characteristics of particular market segments
- changes in availability or cost of raw materials and other production or marketing components
- the proliferation of small-share brands that reduce efficiencies in production, marketing, and servicing for existing brands
Because of factors such as these, a decision is made either to identify ways of adjusting the product in order to further distinguish it from others, or to design a strategy that will eliminate the product and make way for new products. The specific strategy to accomplish these aims may be in several general categories, described below.
It is normal for products to be changed several times during their lives. If a change can provide superior satisfaction and win more initial buyers and switchers from other brands, then a change is probably warranted. Yet there are definite risks involved: a dramatic increase in product quality might price the existing target consumer out of the market. Similarly, the removal of a particular product feature might be the one characteristic of the product considered most important by a market segment.
A key question the marketer 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, function, price, service, design, packaging, and warranty may all be determinants. This evaluative process requires marketing research studies to learn of improvements buyers might want, evaluate the market reception given to the competitors ‘s improvements, and evaluate improvements that have been developed within the company.
Also required is a relationship with the product research and development (R&D) department. Ideally, R&D should be able to respond quickly to the marketing department’s requests for product upgrades and should maintain ongoing programs of product improvement and cost reduction.
Product Positioning and Repositioning
Product positioning is a strategic management decision that determines the place a product should occupy in a given market – its market niche. Given this context, the word “positioning” includes several common meanings of position:
- place (what place does the product occupy in its market? )
- rank (how does the product fare against its competitors in various evaluative dimensions? )
- mental attitude (what are consumer attitudes? )
- strategic process (what activities must be attempted in order to create the optimal product position? )
Thus, positioning is both a concept and a process. The positioning process produces a position for the product, just as the segmentation process produces alternative market segments. Positioning can be applied to any type of product at any stage of the lifecycle. Approaches to positioning range from gathering sophisticated market research information on consumers’s preferences and perceptions, to the intuition of the product manager or a member of his or her staff.
Product repositioning involves changing the market’s perceptions of a product or brand so that it can compete more effectively in its present market or in other market segments. Changing market perceptions may require changes in the tangible product or in its selling price. Often, however, the new differentiation is accomplished through a change in the promotional message. To evaluate the position and to generate information about the future positioning strategies, it is necessary to monitor the position over time. A product position may change readily; keeping track and making necessary adjustments is very important.
Product Line Extensions
A product line extension is the use of an established product’s brand name for a new item in the same product category. Line extensions occur when a company introduces additional items in the same product category under the same brand name, such as new flavors, forms, colors, added ingredients, or package sizes. The company can extend its product line down-market, up-market, or in both directions.
Down-Market Stretch: a company positioned in the middle market may want to introduce a lower-priced line for any of three reasons: (a) the company may notice strong growth opportunities as mass retailers such as Wal-Mart attract a growing number of value-seeking shoppers; (b) the company may wish to tie up lower-end competitors who might otherwise try to move up-market; or (c) the company may find that the middle market is stagnating or declining.
Up-Market Stretch: companies may wish to enter the high end of the market for more growth, higher margins, or simply to position themselves as full-line manufacturers. Many markets have spawned surprising upscale segments: Starbucks in coffee, Haagen-Dazs in ice cream, and Evian in bottled water. Leading Japanese auto companies have each introduced an upscale automobile: Toyota’s Lexus, Nissan’s Infiniti, and Honda’s Acura.
Product Line Breadth
The breadth of the product mix consists of all the product lines that the company has to offer to its customers.
Describe the relationship between product line breadth and the product marketing mix
- Product marketers must decide what products will be offered (i.e., the breadth and depth of the product line ).
- The product line breadth is one of the four dimensions associated with a company’s product mix.
- The product line breadth is also referred to as the: product width, product assortment width and merchandise breadth.
- product line breadth: The breadth of the product mix consists of all the product lines that the company has to offer to its customers.
- depth of the product line: Line depth refers to the number of subcategories a category has.
- product mix: The complete set of all products a business offers to a market. The product mix is made up of both product lines and individual products.
Introduction: Product Marketing Questions
Product marketing in a business addresses five important strategic questions:
- What products will be offered (i.e., the breadth and depth of the product line)?
- Who will be the target customers (i.e., the boundaries of the market segments to be served)?
- How will the products reach those (i.e., the distribution channel and are there viable possibilities that create a solid business model)?
- At what price should the products be offered?
- How will customers be introduced to the products (i.e., advertising)?
In this unit, you’re going to learn about the relationship between the breadth of the product line and the product mix.
Product Line Breadth
The breadth of the product mix consists of all the product lines that the company has to offer to its customers. If we take P&G, for example, the breadth of the major product lines would consists of hair products, oral care, soaps and detergents, baby care, and personal care.
You may also hear the product line breadth referred to as the product width, product assortment width, and merchandize breadth.
Product Line Breadth and the Product Mix
The product mix of a company is generally defined as the complete set of all products a business offers to a market. The product mix (sometimes called “product assortment”) is made up of both product lines and individual products.
A product line is a group of products within the product mix that are closely related, either because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets or fall within given price ranges.
An individual product is a particular product within a product line. It is a distinct unit within the product line that is distinguishable by size, price, appearance, or some other attribute. For example, all the courses a university offers constitute its product mix, courses in the marketing department constitute a product line, and the principles of marketing course is a product item.
Now, there are four dimensions associated with a company’s product mix and the product line breadth is one of them. The other three are the length, the depth, and the consistency.
Going back in our P&G example we saw five different product lines: hair products, oral care, soaps and detergents, baby care, and personal care. This means that the product mix breadth is five.
Product Line Depth
Companies employ different strategies to expand their product line depth, which refers to the number of products in a specific product line.
Describe the different tactics for implementing full-line and limited-line product strategies
- Companies with full-line strategies attempt to enhance product line depth through carrying a high number of variations on a similar product in order to satisfy a wide range of different customer desires.
- Companies with limited-line strategies will carry a select few product variations with the highest impact, rather than carrying every conceivable variation of the product.
- Line-filling and line-pruning strategies can take place, depending on whether there is a perceived void in the product line, or whether an existing product in the line becomes obsolete or unprofitable.
- product line depth: Product line depth refers to the number of products in a company’s specific product line.
A product line can contain one product or hundreds. The number of products in a product line refer to its product line depth, while the number of separate product lines owned by a company is the product line width (or breadth).
There are two basic strategies that deal with whether the company will attempt to carry every conceivable product needed and wanted by the consumer or whether they will carry selected items. The former is a full-line strategy while the latter is called a limited-line strategy.
Line-filling strategies occur when a void in the existing product line has not been filled or a new void has developed due to the activities of competitors or the request of consumers. Before considering such a strategy, several key questions should be answered: Can the new product support itself? Will it cannibalize existing products? Will existing outlets be willing to stock it? Will competitors fill the gap if we do not? What will happen if we do not act?
Assuming that the company decides to fill out the product line further, there are several ways of implementing this decision. Three are most common:
- Product proliferation: the introduction of new varieties of the initial product or products that are similar (e.g. a ketchup manufacturer introduces a hickory-flavored sauce, a pizza-flavored barbecue sauce, and a special hot dog sauce)
- Brand extension: strong brand preference allows the company to introduce the related product under the brand umbrella (e.g. Jell-O introduces pie filling and diet desserts under the Jell-O brand name)
- Private branding: producing and distributing a related product under the brand of a distributor or other producers (e.g. Firestone producing a less expensive tire for Kmart)
In addition to the demand of consumers or pressures from competitors, there are other legitimate reasons to engage in these tactics. First, the additional products may have a greater appeal and serve a greater customer base than did the original product. Second, the additional product or brand can create excitement both for the manufacturer and distributor. Third, shelf space taken by the new product means it cannot be used by competitors. Finally, the danger of the original product becoming outmoded is hedged. Yet there is stil serious risk to consider: unless there are markets for proliferation that will expand the brand’s share, the newer forms will cannibalize the original product and depress profits.
Line-pruning strategies involve the process of getting rid of products that no longer contribute to company profits. A simple fact of marketing is that sooner or later a product will decline in demand and require pruning. Timex has stopped selling home computers. Hallmark has stopped selling talking cards. A great many of the components used in the latest automobile have replaced far more expensive parts, due to the increased costs in other areas of the process, such as labor.
Using modern robotics technology has halved the manufacturing costs of several products. Through such implementation, Keebler Cookies moved from packaging their cookies totally by hand to 70% automation. Other possible ways a company might become more efficient are by replacing antiquated machinery, moving production closer to the point of sale, subcontracting out part of the manufacturing process, or hiring more productive employees.
Product Lines in Services
By productizing a service it can be managed more like a product and various product lines can be created.
State the criteria required to productize a service
- The service product manager identifies profitable service space, packages services in a productized form, and delivers the same to the market.
- Productizing a service involves the creation of necessary product documentation like executive materials, service product document, technical services document, and service scope.
- Like regular products, service products can be ramped down.
- productize: To modify something to become suitable as a commercial product.
Consider this scenario: you provide a service, let’s say image consulting. You’ve been in business for quite some time and have been charging an hourly rate. Business has been okay, but you constantly have to defend your rate to clients who benefit from your service but still complain that your rate “seems to be a bit high.” Or maybe they are reluctant to even use your service because they don’t know what they will be getting for that price.
Service providers often have to deal with this problem. There is a solution, however, to productize the service.
How to Productize a Service
Productizing a service means making the service look more like a product so that it is easier for customers to conceive, and thus buy. This involves:
- Giving it a defined scope;
- Putting it into a limited time period;
- Attaching a definite price tag; and
- Giving it a distinctive name.
Going back to the image consulting business, instead of charging an hourly rate, you could productize your service by offering a “One-Day Makeover. ” The product would consist of a:
- Wardrobe assessment;
- Shopping trip;
- Beauty salon visit; and
- Make-up application tips.
All of this would be offered for a fixed price. And there’s no need to stop there. An entire product line (or lines) could be produced using the same technique.
If you worked for a large corporation and developed a solution such as this, you would be called a Service Product manager.
The Service Product Management
Service Product Management deals with managing a service product throughout its complete life cycle. This organizational function is equally common in business-to-business as well as business-to-consumer organizations.
A service product, unlike a hardware or software product, is intangible, and manifests itself as pure professional services or as a combination of services with necessary software and/or hardware.
The service product management practice ensures management of a profitable service in the marketplace.
The service product manager identifies a profitable service space, packages services in a productized form and delivers the same to the market. The function is a core service business management function and is a mix of sales and marketing functions. The function interfaces with various organizational groups like strategy, planning, financial controls /management accounting, sales, marketing and communications.