Product Mix Strategies Product Planning Product Mix Strategies

Product Mix Strategies Plan for how the business determines which product it will make or stock. Develop New Products Develop Existing Products Delete Product or Product Line

Developing New Products Why develop new products? Can add to sales. (Markup and profits) Can boost market share. Can help company’s image. Often become part of product line.

Developing New Products Six Step Process (pg 450) Generate Ideas Screen Ideas Develop Product Test Product Introduce Product Evaluate Customer Acceptance

1. Generate Ideas Ideas can come from: Customers Competitors Channel Members Company Employees

2. Screen Ideas Determine: Size of market Profit Potential Level of Risk Effect on Existing Products Effect on Company Image Production Requirements (Cost)

3. Develop the Product Can take a very long time. Develop Prototype: Model (first piece) Government Requirements / Approvals? Develop plans for: Production / Packaging / Labeling / Branding / Promotion / Distribution

4. Test the Product Test in lab Does Product Function Properly Safe Test with consumers (market testing) Geographic Testing Forgo? Expense and Time Delay

5. Introduce the Product If it is market tested…Get out to Public Advertise High Initial Costs Train Staff? Distribute New Channels?

6. Evaluate Acceptance Track Performance Study Sales: Who Are Best Customers for Product? What New Products are Customers Buying? How Often Do they Buy? When Did They Last Buy?

Product Mix Strategies Plan for how the business determines which product it will make or stock. Develop New Products Develop Existing Products Delete Product or Product Line

Developing Existing Products Line Extension

Line Extension Example: -Crunch ‘N Yogurt- Add New Products: WIDTH or DEPTH Example: -Crunch ‘N Yogurt- Build on Product or Company Image Take Advantage of Customer Loyalty Increase Sales and Profits Appeal to New Markets Get New Customers…Market Share

Line Extension Disadvantages? If bad…Existing Products May Suffer. Increased Costs Inventory Promotion Distribution May Take Sales Away from Existing Products

Developing Existing Products Product Modification

Product Modification Alteration in Company’s Existing Product. New Varieties New Colors New Styles New Features New Sizes

Product Modification Why Modify? Quick and Easy Low Risk Low Cost New Technology

Product Mix Strategies Plan for how the business determines which product it will make or stock. Develop New Products Develop Existing Products Delete Product or Product Line

Delete Product or Line Why? Product Obsolete Changing Technology Product Lost Appeal Product Does Not Match Current Objectives Make Room for Other Products Limited Shelf Space Product No Longer Profitable Product Conflicts with Others in Product Line