Product Mix Strategies
Project #3 :: She Sells Cell Phones at the Cell Store
Product Mix and Product Line
§ The product mix is the set of all products offered for sale by a company.
§ A product mix has two dimensions:
§ Width
Width - the number of product lines carried.
§ Depth
- the variety of sizes, colors, and models offered within each product line..
§
§ A product line is a broad group of products, intended for similar uses and having similar
characteristics.
Expanding the Product Mix
MixMix-extension strategies include:
§ Same brand, related product (Tim Horton coffeemaker)
§ Same brand, unrelated product (Swiss Army watch)
§ Different brand, unrelated product (Pepsi & KFC)
§ Different brand, related product (P&G adds Luvs diapers; already makes Pampers)
Trading Up and Trading Down
§ Trading up: Adding a higher-priced product to a line to attract a higher-income market and
improve the sales of existing lower-priced products.
§ Trading down: Adding a lower-priced item to a line of prestige products to encourage
purchases from people who cannot afford the higher-priced product, but want the status.
Other Product Mix Strategies
§ Alteration of Existing Products:
§ Improve an established product with new design, new package, new uses.
§ ProductProduct-Mix Contraction:
Contraction:
o Eliminate an entire line or reduce assortment within it.
o Pruning to reduce similar brands.
o Dump unprofitable or indistinct brands.
The Product Life Cycle
§ the concept of the product life cycle applies to product categories, not to brands; it is related
to the concept of diffusion of innovation
§ different products will have differently-shaped life cycle curves; will diffuse at different rates
§ a product is normally perceived to pass through four stages over its life cycle; introduction,
growth, maturity, and decline
§ each stage requires different marketing strategies
Product Life Cycle Stages
§ Introduction—most
risky and expensive.
Introduction
§ Growth—both
sales and profits rise, often rapidly.
Growth
§ Maturity—sales
increase at a decreasing rate and profits decline.
Maturity
§ Decline
Decline—demand drops, often because of another product development.
Strategic Implications of the Stages
§ introductory stage: developing the market, creating awareness, reaching the innovators
§ growth stage: competition begins, sales grow quickly, profits peak, market penetration
§ maturity stage: competition is intense, sales slow down, differentiated product offerings,
customers are brand loyal, few new entrants
§ decline stage: customers move to other options, competitors leave, profits are low, consider
exit
Characteristics of Life Cycles
§ § § § § length of the life cycle will vary across markets; some are quite short and may be getting
shorter
some fads have very short life cycles, while other products stay at maturity for years
in high-tech markets, life cycles are very short
some products do not make it through all four stages; they may fail in introduction
the life cycle must be considered in relation to a specific market; stage may vary across
markets
Managing the Life Cycle
Successful life-cycle management requires
predicting the shape of the curve and then
successfully adapting strategies at each stage.
§ when to consider entering the market
§ how to manage to capitalize on growth
§ it is possible to develop strategies that will extend the maturity stage; modify the product,
devise new uses, or design new appeals
§ greatest challenge comes at the decline stage which may result in product abandonment
Planned Obsolescence Fashion and Style
Planned Obsolescence:
§ Technological or functional obsolescence; other things do it better now.
§ Style obsolescence: Still serviceable, but looks out of date now.
Style:
§ A distinctive manner of construction or presentation in any art, product or endeavor.
Fashion:
§ Any style that is accepted and purchased by successive groups of people over a long period
of time.
Fashion-Adoption Process
§ Series of buying waves as a given style is popularly accepted by one group after another.
§ Three theories of fashion adoption:
§ Tricklegiven fashion flows down through several socioeconomic levels.
Trickle-down—a
down
§ Trickle
-across—the
fashion moves horizontally and simultaneously within several
Trickleacross
socioeconomic levels.
§ Tricklestyle first becomes popular at lower levels and then flows upward.
Trickle-up—a
up