Product Mix Strategy

• Manufactures and middlemen use several strategies to manage their product mix effectively. Some of the these strategies as follows :

• Expansion of product mix• Contraction of product mix• Altering existing products• Positioning the product : (a) Positioning the product in

relation to the competitor’s product (b) Positioning the product in relation to the target market (c ) Positioning in relation to product class (d) Positioning by price and quality

• Trading up• Trading down

Continue…• Expansion of product mix : An Orgn may opt to expand

its existing product mix by increasing its product lines and or the depth within the line. New product lines may be either related or unrelated to the existing product lines

• Contraction of product mix : Cos contract their product mix during economic slumps, and when the competition is intense. The product mix is contracted to eliminate low profit yielding products and to get a better profit margin from fewer products

• Altering existing products : Cos should consider altering the existing products instead of adding new products to their product mix. It is less risky and more lucrative . E.g. tetra pack milk/juices. Colgate toothpaste plastic packaging makes it easy to use and dispense the product

Continue…• Positioning the product : product positioning is the image

projected by the product against the competitor’s products and other products of the same firm Various strategies :

(a) Positioning the product in relation to the competitor’s product : This strategy is useful for some products like Coke and Pepsi which position directly against each other

(b) Positioning the product in relation to the target market : When J & J realized that the market for its baby shampoo was shrinking, it repositioned the product to target wider range of adults who J & J stated would benefit from using a mild shampoo if they washed their hair frequently, IIIly Coke targeted its diet coke at calorie conscious consumers

Continue…(c ) Positioning in relation to product class : Marketers try to

position a product by associating or disassociating it from a common class of products e.g. Tropicana fruit juices, available in 7 flavors, positions all of its products as containing no preservatives, and no added sugars or coloring

(d) Positioning by price and quality : • Trading up : Cos offer higher priced, prestige products to

their existing product line in an effort to increase the sales• Trading down : Marketers who adopt the trading down

strategy add low priced items to their existing line of specialty products. Trading down is used in order to provide a new product to customers who cannot afford the original product e.g. Marriott Corporation introduced a new chain of hotels called “ Holiday Inn” to cater to the needs of not so affluent customers

Product Life Cycle• A model that describes the stages that a product or a product category

passes through, from introductory to its removal from the market• Introduction Stage : In the introduction stage the product is introduced to

the customer. Advertising and promotional expenses are higher(Strategy : Rapid Skimming, Slow Skimming, Rapid penetration , Slow penetration)

• Growth Stage: The growth stage is crucial for the product’s survival in the market because the reactions of the competitors to the product’s success will affect the products life expectancy. There is increase in sales, demand for the product and peaking of profits. New firms enter the market in the growth stage (aggressive pricing, emphasis on product’s benefits, improve product quality add new features to product, may introduce new distribution channel, enter new market)

• Maturity Stage : Is marked by a steady decline in profits. The sales tend to grow, stabilize and then start to decline (Abandon weaker products and concentrate on profitable products, increase adv and promotion)

• Decline Stage : Eventually, the sales and profits of almost all products and brands tend to decline. The reason of decline in sales could be (a) Technological advances (b) Increase in competition (c ) Shift in consumer’s taste and preferences

Product Differentiation• The scope for differentiating products varies significantly. There are some

products such as meat, steel etc, which provide little scope for differentiation, while others such as home appliances, electronics equipment etc, provide lots of scope for differentiation.

• Even if a product is highly standardized variety can be introduced by exercising some creativity. E.g. Birla Cement Works differentiates its product by highlighting the fact that red oxide is mixed in cement to protect iron rods used in RCC (Reinforced Cement & Concrete) from rust. Marketers face a lot of difficulty in differentiating products for many options are available. E.g. there are various options available for marketers of refrigerators to differentiate their products such as on the basis of their capacity (165, 190, 200, 250, 260, 300. 310 liters etc) number of doors ( single and double doors), color, design etc. A product can be differentiated on the basis of form, features, quality, durability, reliability, reparability, style and design

New Product Development• Organizations take new product development

initiatives to meet different objectives. According to Booz, Allen and Hamilton, a new product can be categorized as :

• New to the world product• New product line• Additions to the existing product lines• Improvement and revision of existing products • Repositioning• Cost reduction