Marketing === “Product Planning : Product Line and Mix Strategies”
We end the series of product planning by talking about the concept of product lines and the product mix strategies. A product lines consists of related products with similar features, markets, and/or end use applications. For example, the product line of Weavers consists of machine-made rug collections that targets different markets and segments. However, a company like Weavers produces other product lines, like towels, chenille carpets, hand tuft carpets, and yarn. Combining these different product lines creates what is known as the product mix. So, the product mix is the combination of different product lines manufactured by a company.
There are various product line decisions that face any company.
These decisions include:
-Product line length decisions.
This means the number of products included in the line. In general, products are added as long as they contribute to profits and don’t cannibalize sales and profits from existing products.
-Product line stretching decisions.
This is denoting the products added to an existing line to either attract less profitable markets (downward stretch), more profitable markets (upward stretch), or both (two-way stretch).
-Product line filling decisions.
This decision involves filling gaps in an existing line, usually to gain additional sales or profits, utilize excess capacity, or respond to competitive initiatives or dealer needs.
-Product line featuring decisions.
Such a decision discusses which products to be featured in promotional campaigns.
There are also other decisions concerning the product mix of any company, like:
-Mix width decisions.
This decision discusses how many different lines a company would market and it also depends on the profitability of those product lines, consistency with company mission and danger of cannibalizing sales from other lines).
-Mix consistency.
This pertains to how closely the firm’s products are in terms of common end uses, distribution outlets, price ranges, and markets served. A consistent mix of product lines is specifically important in international markets, where such factors as high entry costs and limited communication and distribution channels often limit profit opportunities. Mix consistency can offset these limitations by helping firms concentrate production and marketing efforts, achieve sales economies, and create strong brand images and relations with distributors. The product life cycle of a product is important for the decisions taken about the product lines and mixes. For example, if products in the firm’s mix were situated primarily in the highly competitive growth stage, line stretching and filling decisions might be indicated to meet these threats. Mix width and consistency decisions might also be made in response to competitive product life cycle environments, with products added or modified during growth periods, and narrowed during periods of decline. Generally, there are three important strategies for a product line during later product life cycle stages, when competition becomes more intense and markets and profits began to decline:- Repositioning strategies. These strategies involve using advertising and promotion campaigns to create changed consumer perceptions of the product. The danger of such a strategy is the possibility of losing, or confusing, the firm’s main market.
-Product life extension strategies.
Such strategies pertain to one or more of the following tactical options: new uses for the product; new product features or benefits; new classes of customers for present product; increased product usage; and/or a changed marketing strategy.
-Product deletion strategies.
As the name suggests, such strategies involve removing products from the line when they are no longer profitable. Product deletion strategies include: a continuation strategy, where the company continue to market the product until it must be dropped; a milking strategy, where a company cuts back marketing expenses to maintain profits during the decline product life cycle stage; and a concentrated strategy where a company aims all marketing efforts at the strongest existing segment, and phasing out all others. A danger in milking and concentration deletion strategies is that they will be applied prematurely, without regard to the impact on the rest of the line and/or mix and without fully considering possibilities in repositioning and product life extension strategies. We finally reached the end of the product planning series. WE examine different issues related to product planning and stressed how important is product planning to the profitability and performance of any company. Product planning is not an option, it is a vital necessity.
Headline News
· A promising year.
The Weavers crew has returned from the Domotex fair in Hannover Germany with a lot of optimism and hope for the year 2007. The results and feedback of the fair were magnificent and exceeded all expectations. This year’s collection attracted many new customers and helped to increase the volume of business with the existing customers. ·
His Highness: Royal Shag.
Oriental Weavers reached an unprecedented level of creativity and innovation this year through presenting the collection Royal Shag in Domotex 2007. This is a quality of 50 mm polyester shag very similar to the hand tuft shag, but it is a machine-made rug. Such an invention deserves to be the invention of the year. Customers should look out throughout the year for further developments of this quality.
·New markets again.
This year in Domotex witnessed the penetration of new export markets. The new markets came from different geographical locations. In Asia, there are clients from Iran, Uzbekistan, and Philippines. In Europe, there are new clients from Czech Republic, Austria, Holland, Kosovo, and Macedonia. There were also other new markets from different continents, like in African and South America.
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