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Product Mix
Original products Product improvements Product modifications New brands that the firm develops through its own research and development efforts
Overestimation of Market Size Product Design Problems Product Incorrectly Positioned, Priced or Advertised Costs of Product Development Competitive Actions To create successful new products, the company must: understand its customers, markets and competitors develop products that deliver superior value to customers.
Idea Screening
Market Testing
Idea Generation
Commercialization
Internal sources
Customers Competitors Distributors Suppliers
Idea Screening
Process to spot good ideas and drop poor ones. Criteria Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return
2. Concept Testing - Test the Product Concepts with Groups of Target Customers
SalesWave Research
Test offering trail to a sample of consumers in successive periods.
Product mix
The set of all products and items that a particular company offers for sale. All the products a given company produces comprise the product mix, or product assortment
A companys product mix has a certain width, length, depth, and consistency.
Product Mix
Width - number of different product lines Length - total number of items within the lines
Depth - number of versions of each product Product Mix all the product lines offered
Product mix
Width: the number of different product lines. Product width is the number of different products a company makes (Apple- Nano, touch, shuffle, iPhone etc...) Length: the total number of items within the line.
Depth: how many variants are offered of each product in the line or the different versions of each product that are produced (iPhone 3G/4, 8mb..) If lux has 4 variants in 2 sizes then depth is 8.
Consistency: how closely related the various product lines are in end use, production requirement, distribution channels, or some other way.
Product line
A product line refers to a number of products that are related and developed by the same manufacturer. Items within a product line generally share the same basic theme. Frequently, a product line includes different products that are offered to the public at varying price points. This way, a manufacturer or company can ensure that all products within a line will be purchased by all kinds of people. Product line extension refers to any additional products that may be added to a current product
Product-Line Length
Line Stretching- Line stretching is a strategy applied by a company to add new flavors, new colors, new varieties, new strategy used by the company minimize the costs and leverage the brand equity. Products are introduced into a product line is known as line stretching
Down-market
Up
market Two-way
Line stretching
Down-market stretch- In down stretch market, companies apply the strategy of low market for high growth opportunities. It looks for the higher margins and positions themselves as downscale . They basically focus on the mass retail such as Spencer, Wal-mart, Big Bazaar that attract millions of customers and they make a strong growth by this strategy. These are for that customer who believe in value and also gives value price for the products.
Upmarket stretch- In up stretch market, companies apply the strategy of high market for high growth.
It looks for the higher margins and positions themselves to upscale segment e.g ice cream Hagen Daaz is in up market stretch.
Line Filling
A firm can lengthen its product line by adding more items within the present range for Incremental Profits Satisfy Dealers who complain about lost sales because of missing items in the line Utilize existing capacity Try to become a full-line company Try to plug holes to keep the competitors away
One of the critical factor that a firm should consider while line filling is the Differentiation. There has to be a just-noticeable difference between the offerings other wise consumers will get confused . In the case of Maruti brands, there is a clear differentiation either in terms of design or performance between these brands. Line Filling is the strategy adopted by Maruti Suzuki to retain its grip in the Indian market