HOW CAN A COMPANY BUILD AND MANAGE ITS PRODUCT MIX AND PRODUCT LINES?

SACHET JAINIIT DELHI

Product Line

• A group of product that are closely related because they perform a similar function, are sold to the same customer group and marketed through the same outlets or channel, or fall within same price ranges.

Product Mix

Set of all products and items a particular seller offers for sale. Consists of various product lines. Company’s product mix has-

Width- number of different product lines a company carriesLength- total number of items in the mixDepth- number of variants of each product in the lineConsistency- how closely related the various product lines are in end use.

Product line length - induce upsellingLINE STRETCHING- It occurs when a company lengthens its product line beyond its current range

Down market stretch – introducing a lower priced lineUp market stretch – introducing a higher priced lineTwo way stretch – stretching in both directions

LINE FILLING- lengthening a product line by adding more items within the present range.

• Incremental profits• Satisfying dealers• Trying to be leading full-line company• Plugging holes to keep out competitors

• Line Modernization, Featuring and Pruning- decisions to be taken by manager

Doing it all at once or one by one? Timing of modernization- not too late/ too earlyReviewing the line for deadwood i.e. depressing profits. Remove weak itemsOptimize Brand portfolio.

Product Mix Pricing- searching for prices that maximizes profits on total mix• Product line pricing• Optional feature pricing• Captive product pricing• Two part pricing• By product pricing• Product bundling pricing

EVERY PRODUCT INA PRODUCT LINE MUST PLAY A ROLE, AS MUST ANY BRAND IN THE BRAND PORTFOLIO

Created by Sachet Jain, IIT Delhi, during an internship by Prof. Sameer Mathur, IIM Lucknow.

www.IIMInternship.com