Product decisions 7.2

Product decisions As you may recall, a product is a good or service for sale in a market. For example, we buy products when we get our haircut or buy food.

Product decisions Product decisions vary by company. Companies face different product decisions depending on the number of products involved.

Product decisions If an organization is marketing more than one product it has a product mix. Product item--a single product Product line--all items of the same type Product mix--total group of products that an organization markets

Product Items, Lines, and Mixes Product Concepts Product Items, Lines, and Mixes Product Item Product Line Product Mix A specific version of a product A group of closely-related product items that are sold together The combination off all products that a company sells Chapter 9 Version 6e

The number of product lines an organization offers. Product Concepts Product Mix Width The number of product lines an organization offers. Diversifies risk Capitalizes on established reputations Chapter 9 Version 6e

The number of product items in a product line. Product Concepts Product Line Depth The number of product items in a product line. Attracts buyers with different preferences Increases sales/profits by further market segmentation Capitalizes on economies of scale Evens out seasonal sales patterns Chapter 9 Version 6e

Campbell’s Product Lines and Mix Chapter 10 Product Concepts Campbell’s Product Lines and Mix { } Notes: All of Campbell’s products constitute its product mix. Each product in the product mix may require a separate marketing strategy. In some cases, product lines and mixes share some marketing strategy components. Consider Nike’s theme, “Just Do It.” An example of Campbell’s product lines and product mix is shown in Exhibit 9.1. Discussion/Team Activity: Identify a few companies with extensive product lines and product mixes. Pick one and create a matrix similar to Exhibit 9.1. Evaluate the marketing strategies in use.

Product decisions Companies often make adjustments to product items, lines, and mixes. Modification Repositioning Extensions Contraction

Product decisions Product modification means changing one or more of the product's features to enhance its customer appeal. For example, a new formula or new package design.

Product decisions Repositioning involves changing the identity of a product, relative to the identity of competing products in the target market. Repositioning is most often changed with a price change. For example, Cadillac introduced cars at a lower prices and was said to “cheapen the brand”.

Product decisions A product extension is the use of an established product’s brand name for a new item in the same product category. 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, package sizes.

Line Extension The development of a product closely related to existing products in the line, but designed specifically to meet different customer needs Many “new products” are really line extensions Are less expensive, lower-risk, and more common than totally new products Downside is that unpopular line extensions may result in negative evaluation of the core product © 2013 Cengage Learning. All rights reserved.

Product decisions For example, Charmin toilet paper has been known as high price, high value. Charmin has introduced Basic Charmin to meet the needs of consumers looking for high value and lower cost.

Think About It Reese’s has introduced many line extensions to its core product, the Peanut Butter Cup Pieces Miniatures Big Cup NutRageous Cereal Can you think of any line extensions? © 2013 Cengage Learning. All rights reserved.

Product decisions Contraction: A reduction in the products offered by a company in order to reduce costs or to focus on core products. General Motors discontinued it Oldsmobile and Pontiac lines.