Company's Product Line and Product Mix
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I am thankful to Mr. KRISHNA GOPAL for providing me the task of preparing the Term Paper on COMPANY'S PRODUCT LINE AND PRODUCT MIX RELATION. We at Lovely believe in taking challenges and the term paper provided me the opportunity to tackle a practical challenge in the subject of MARKETING MANAGEMENT. This term paper tested my patience at every step of preparation but the courage provided by my teachers helped me to swim against the tide and budge against the wind.
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Group of products manufactured by a firm that are closely related in use and in production and marketing requirements. The depth of the product line refers to the number of different products offered in a product line. For example, General Foods has about a dozen different products in its coffee product line. Each of these items is promoted as distinctive, although they share the same distribution channels and similar manufacturing facilities. McDonald's has developed a food product line that includes several hamburger, fish, and chicken sandwiches. A product line may be targeted to a particular customer group, such as Skill home shop tools, or sold to various customer types through the same outlets
Product lining is the marketing strategy of offering for sale several related products. Unlike product bundling, where several products are combined into one, lining involves offering several related products individually. A line can comprise related products of various sizes, types, colours, qualities, or prices. Line depth refers to the number of product variants in a line. Line consistency refers to how closely related the products that make up the line are. Line vulnerability refers to the percentage of sales or profits that are derived from only a few products in the line.
The number of different product lines sold by a company is referred to as width of product mix. The total number of products sold in all lines is referred to as length of product mix. If a line of products is sold with the same brand name, this is referred to as family branding. When you add a new product to a line, it is referred to as a line extension. When you add a line extension that is of better quality than the other products in the line, this is referred to as trading up or brand leveraging. When you add a line extension that is of lower quality than the other products of the line, this is referred to as trading down. When you trade down, you will likely reduce your brand equity. You are gaining short-term sales at the expense of long term sales.
Image anchors are highly promoted products within a line that define the image of the whole line. Image anchors are usually from the higher end of the line's range. When you add a new product within the current range of an incomplete line, this is referred to as line filling.
Price lining is the use of a limited number of prices for all your product offerings. This is a tradition started in the old five and dime stores in which everything cost either 5 or 10 cents. Its underlying rationale is that these amounts are seen as suitable price points for a whole range of products by prospective customers. It has the advantage of ease of administering, but the disadvantage of inflexibility, particularly in times of inflation or unstable prices.
There are many important decisions about product and service development and marketing. In the process of product development and marketing we should focus on strategic decisions about product attributes, product branding, product packaging, product labeling and product support services. But product strategy also calls for building a product line.
Length, width, and depth.
Length is the number of product lines--collections and services.
Width is the number of categories within a product line such as the SF or large print collections or the number of services for adults.
Depth is the number of copies for each item or the number of times that a service is available.
Thus the product mix can be expanded by adding length or new product lines, width of a new category to an existing product line [graphic novels], or depth [adding more copies to make particular content more accessible
PEPSI PRODUCT LINE:-
The Pepsi-Cola drink contains basic ingredients found in most other similar drinks including carbonated water, high fructose corn syrup, sugar, colorings, phosphoric acid, caffeine, citric acid and natural flavors. The caffeine free Pepsi-Cola contains the same ingredients but no caffeine.
Some of the different and varied brands of Pepsi are as follows:
- All Sport
- Caffeine-Free Pepsi
- Crystal Pepsi
- Diet Pepsi
- Mountain Dew
- Mountain Dew AMP
- Mountain Dew LiveWire
- Mountain Dew MDX
- Mug Root Beer
- Pepsi Blue
- Pepsi Cappuccino
- Pepsi Max
- Pepsi ONE
- Pepsi Samba
- Pepsi Tarik
- Pepsi Twist
- Propel Fitness Water
- Sierra Mist
- Tropicana Products
- Tropicana Twister
The variety of product lines that a company produces, or that a retailer stocks. Product mix usually refers to the length (the number of products in the product line), breadth (the number of product lines that a company offers), depth (the different varieties of product in the product line), and consistency (the relationship between products in their final destination) of product lines. Product mix is sometimes called product assortment.
PRODUCTS MIX OF PEPSICO:- PepsiCo makes products like Doritos, Lay's, Cheetos, Fritos, Ruffle potato chips, Tostitos, Quaker Chewy granola bars, Sun Chips, Rold Gold pretzels, Stacy's pita chips, Smartfood popcorn, Pepsi, Mountain Dew, Gatorade, Tropicana Pure premium, Sierra Mist, Propel, Tropicana juice drinks, Dole, SOBE Life Water, Aquafina, Cap'n Crunch, Life cereal, Starbucks ready to drink coffee, Lipton read to drink tea, Quaker oatmeal, Aunt Jemina pancake syrup, and Aunt Jemina pancake mix.
Product Mix Decisions
The term product mix was already defined. In the area of product mix, marketing decisions are width, length, depth and consistency.
Width refers to number of product lines (Refer the new product management article).
Length refers to the total number of items in a product line (different brands in a line).
Depth refers to variants of each product in a line (different pack sizes of a brand).
Consistency refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way.
Kotler says explicitly that product mix planning is largely the responsibility of the company's strategic planners. The top management has to assess with the information supplied by company's marketers, which the product mix. Hence the product mix is a shared decision by various functions of the company and not that of marketing department alone.
Elements of a Product Mix
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
Depth measures the # of products that are offered within each product line. Satisfies several consumer segments for the same product, maximizes shelf space, discourages competitors, covers a range of prices and sustains dealer support. High cost in inventory etc.
Width measures the # of product lines a company offers. Enables a firm to diversify products, appeals to different consumer needs and encourages one stop shopping.
PEPSICO example in class.
Why so many different products?
Different needs of different target markets for the same product. Channels of distribution economies etc.
Past analysis of product mix;-
Since top management is ultimately responsible for the product mix and the resulting profits or losses, they often analyze the company product mix. The first assessment involves the area of opportunity in a particular industry or market. Opportunity is generally defined in terms of current industry growth or potential attractiveness as an investment. The second criterion is the company's ability to exploit opportunity, which is based on its current or potential position in the industry. The company's position can be measured in terms of market share if it is currently in the market, or in terms of its resources if it is considering entering the market. These two factors-opportunity and the company's ability to exploit it-provide four different options for a company to follow.
- High opportunity and ability to exploit it result in the firm's introducing new products or expanding markets for existing products to ensure future growth.
- Low opportunity but a strong current market position will generally result in the company's attempting to maintain its position to ensure current profitability.
- High opportunity but a lack of ability to exploit it results in either (a) attempting to acquire the necessary resources or (b) deciding not to further pursue opportunity in these markets.
- Low opportunity and a weak market position will result in either (a) avoiding these markets or (b) divesting existing products in them.
These options provide a basis for the firm to evaluate new and existing products in an attempt to achieve balance between current and future growth. This analysis may cause the product mix to change, depending on what management decides.
The most widely used approach to product portfolio analysis is the model developed by the Boston Consulting Group (BCG). The BCG analysis emphasizes two main criteria in evaluating the firm's product mix: the market growth rate and the product's relative market share. BCG uses these two criteria because they are closely related to profitability, which is why top management often uses the BCG analysis. Proper analysis and conclusions may lead to significant changes to the company's product mix, product line, and product offerings.
The market growth rate represents the products' category position in the product life cycle. Products in the introductory and growth phases require more investment because of research and development and initial marketing costs for advertising, selling, and distribution. This category is also regarded as a high-growth area (e.g., the Internet). Relative market share represents the company's competitive strength (or estimated strength for a new entry). Market share is compared to that of the leading competitor. Once the analysis has been done using the market growth rate and relative market share, products are placed into one of four categories.
- Stars: Products with high growth and market share are know as stars. Because these products have high potential for profitability, they should be given top priority in financing, advertising, product positioning, and distribution. As a result, they need significant amounts of cash to finance rapid growth and frequently show an initial negative cash flow.
- Cash cows: Products with a high relative market share but in a low growth position are cash cows. These are profitable products that generate more cash than is required to produce and market them. Excess cash should be used to finance high-opportunity areas (stars or problem children). Strategies for cash cows should be designed to sustain current market share rather than to expand it. An expansion strategy would require additional investment, thus decreasing the existing positive cash flow.
- Problem children: These products have low relative market share but are in a high-growth situation. They are called "problem children" because their eventual direction is not yet clear. The firm should invest heavily in those that sales forecasts indicate might have a reasonable chance to become stars. Otherwise divestment is the best course, since problem children may become dogs and thereby candidates for deletion.
- Dogs: Products in the category are clearly candidates for deletion. Such products have low market shares and unlike problem children, have no real prospect for growth. Eliminating a dog is not always necessary, since there are strategies for dogs that could make them profitable in the short term. These strategies involve "harvesting" these products by eliminating marketing support and selling the product only to intensely loyal consumers who will buy in the absence of advertising. However, over the long term companies will seek to eliminate dogs.
As can be seen from the description of the four BCG alternatives, products are evaluated as producers or users of cash. Products with a positive cash flow will finance high-opportunity products that need cash. The emphasis on cash flow stems from management's belief that it is better to finance new entries and to support existing products with internally produced funds than to increase debt or equity in the company.
Based on this belief, companies will normally take money from cash cows and divert it to stars and to some problem children. The hope is that the stars will turn into cash cows and the problem children will turn into stars. The dogs will continue to receive lower funding and eventually be dropped.
PEPSICO PRODUCT MIX RELATE TO DEVELOPMENT OF PRODUCT LINE:
PepsiCo product line directs relate to has product mix. When company's product line is developed then product mix also developed. Because A product mix consists of all the product lines and items that a particular seller offers for sale. Avon's product mix consists of four major product lines: cosmetics, jewelry, fashions, and household items. Each product line consists of several sublines.
A company's. pepsico a fairly wide product mix consisting of many product lines, product mix has four important dimensions: width, length, depth, and consistency. Product mix width refers to the number of different product lines the company carries including paper, food, household cleaning, medicinal, cosmetics, and personal care products. Product mix length refers to the total number of items the company carries within its product lines. Procter & Gamble typically carries many brands within each line. For example, it sells eleven laundry detergents, eight hand soaps, six shampoos, and four dishwashing detergents.
Product line depth refers to the number of versions offered of each product in the line. Thus, pepsico's pepsi come into different different color and taste. Finally, the consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. Pepsico product lines are consistent insofar as they are consumer products that go through the same distribution channels. The lines are less consistent insofar as they perform different functions for buyers.
PEPSICO product line delopment is closely relates to product mix because when product line is big then company product mix also developed.
Product line and product mix have direct relationship.
Depth of the product line:- Product line depth refers to the number of versions offered of each product in the line. Thus, pepsico's pepsi come into different different color and taste.
Pepsico added depth to its product line more then width of product mix because company's product mix width is narrow and product line depth is good. (LIKE- PEPSI PRODUCT IS MORE THEN OTHER PRODUCT)
Product mix WIDTH:- product mix has four important dimensions: width, length, depth, and consistency. Product mix width refers to the number of different product lines the company carries including paper, food, household cleaning, medicinal, cosmetics, and personal care products. Product mix length refers to the total number of items the company carries within its product lines. Pepsico typically carries many brands within each line. For example, it sells pepsi, Aquafina Starbucks (Partnership) Lipton (Partnership)
WIDE WIDTH, AVERAGE DEPTH
The product lines are defined in terms of academic departments. The depth of each line is shown by the number of different product items-course offerings-offered within each product line. (The examples represent only a partial listing of what a real university would offer.) The state university has made the strategic decision to offer a diverse market mix. Because the university has numerous academic departments, it can appeal to a large cross-section of potential students. This university has decided to offer a wide product line (academic departments), but the depth of each department (course offerings) is only average.
In order to see the difference in product mix, product line, and products, consider a smaller college that focuses on the sciences represented in Table 2. This college has decided to concentrate its resources in a few departments.
- PEPSICO'S PRODUCT LINE IS MORE DEVELOPED THEN PRODUCT MIX. PEPSICO PRODUCT DEVELOPMENT ALSO DEVELOPED ITS PRODUCT MIX.
- PEPSICO ADDED PRODUCT LINE DEPTH IS MORE THEN PRODUCT MIX WIDTH BECAUSE PEPSICO USE LIMITES OF DIFFERENT PRODUCT ITS INCREASE HAS PRODUCT LINE DEPTH. FOR INCREASING PRODUCT MIX.
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