3.03 Content Outline
a. Definitions:
Product Mix – All the types of products a company makes or sells
Product Item – A specific model, brand, or size of a product within a product line
Product Line – A group of similar products, made or sold by one company
Width – The number of different products product lines a business makes or sells
Depth – The number of items offered within each product line
Consistency - The degree of closeness or relatedness between product lines in the product mix
Expansion – Adding items to a product or an entire product line
Contraction – Eliminating an entire product line or reduce assortment within it.
Alteration – Improve an established product with a new design, package, or uses
Trading Up – Adding higher priced items to a product line
Trading Down – Adding lower priced items to a product line
Positioning – Creating a certain image of a product or brand in the customer’s mind
b.
Identify ways in which product lines can be organized.
Product lines are groups of similar products offered by a company. A product line can have many or
few products within. P&G markets over 250products within 21 different product lines. One product line
is dish care which offers 4 products (Cascade, Dawn, Joy, and Ivory).
c.
Describe product mix dimensions.
A product mix is all the items made or sold by a company. Some companies have thousands of
products offered. Some companies will try to reach all possible customers by offering more products
items and product lines. The more products lines and product within a company offers refers to width
and depth.
d.
Identify reasons that a business would offer a narrow product mix.
A narrow product mix, limited product lines offered can increase the ease of management, cost
effectiveness, and create simplicity and consistency.
e.
Identify reasons that a business would offer a broad product mix.
A broad a product mix, offering many product lines can help attract and reach more markets and
create a competitive advantage while utilizing one stop shopping.
f.
Identify reasons that a business would offer a deep product mix.
A deep product mix, many products within a product line offers customers a variety and quantity of
items to choose from.
g.
Identify reasons that a business would offer a shallow product mix.
A shallow product mix, limiting products within a product line can be cost effective and easy to manage
while still reaching a market.
h.
Explain the importance of a business’s product mix.
Businesses must plan their product mix carefully because they cannot offer all the products that
customers want. If offering a large product mix, there should be a degree of consistency to the
products offered so that the mix is profitable for the company.
i.
Describe advantages of expansion product-mix strategies.
Adding items to a product line or introducing an entire product line can capture market share and meet
customer’s needs and wants.
j.
Describe disadvantages of expansion product-mix strategies.
Adding items to a product line or introducing an entire product line can be expensive, be difficult to
manage, and not always be successful.
k.
Describe advantages of contraction product-mix strategies.
Deleting products from a product line or the entire product line can be cost effective and easier to
manage while creating simplicity and consistency.
l.
Describe disadvantages of contraction product-mix strategies.
Deleting products from a product line or the entire product line is conceding market share to your
competitors. It may be wiser to improve the existing product or line to recapture market share.
m. Describe advantages of alteration product-mix strategies.
Improving an established product can capture new customers and meet customer’s unmet wants as
trends change. Ex: McDonald’s opening stores in India
n.
Describe disadvantages of alteration product-mix strategies.
Improving an established product is expensive and not always a success. Example: New Coke
o.
Describe advantages of trading up product-mix strategies.
Adding higher priced items to a product line will attract the higher income market and may help
increase the image and sales of the lower priced items.
p.
Describe disadvantages of trading up product-mix strategies.
Adding higher priced items to a product line is expensive and may not attract new customers while
hurting the image and sales of the lower priced items.
q.
Describe advantages of trading down product-mix strategies.
Adding lower priced items to a product line of prestige products can capture a lower income market
who cannot afford the higher priced items.
r.
Describe disadvantages of trading down product-mix strategies.
Adding lower priced items to a product line of prestige products can hurt the image and sales of the
higher priced items in the line.
s.
Describe advantages of positioning product-mix strategies.
Creating an identity of a product helps find a place for the product in the marketplace while strongly
identifying with a specific target market and possibly creating brand loyalty.
t.
Describe disadvantages of positioning product-mix strategies.
Images of a product are difficult to change once they are established and very expensive.