Presentation on theme: "1 P r o d u c t Mix. 2 Anything that is offered to the market for attention, acquisition, use or consumption that satisfies a want or a need Product is....."— Presentation transcript:
4 Product Mix and Product Line -A product mix is the set of all products offered for sale by a company -The structure of a product mix has both width and depth -Its width is measured by the number of product lines carried -Its depth by the variety of sizes, colors, and models offered within each product line -A product line is a broad group of products, intended for essentially similar uses and having similar physical characteristics
5 Product Items, Lines, and Mixes Product Item Product Line Product Mix A specific version of a product that can be designated as a distinct offering among an organization’s products. A group of closely-related product items. All products that an organization sells.
6 Product Mix and Product Line Product Mix - Breadth and Depth in a Lawn and Garden Store
8 Product-Mix Strategies -To be successful in marketing, producers and middlemen need carefully planned strategies for managing their product mixes -There are several product-mix strategies: -positioning the product -product-mix expansion -alteration of existing products -product-mix concentration -trading up and trading down
9 Product-Mix Strategies Positioning the Product -Positioning is (again!) about bringing attention to products and differentiating them from similar ones -Several major positioning strategies can be found: -Positioning in relation to a competitor -Positioning in relation to a product class or attribute -Positioning by price and quality
10 Product-Mix Strategies Product-Mix Expansion -Product-mix expansion is accomplished by increasing the depth within a particular line and/or the numbers of lines a firm offers to customers -Line extension: A company adds a similar item to an existing product line with the same brand name -Mix-expansion: A company adds a new product line to its present assortment (the new line may be related or unrelated to current products, it may also carry one of the company’s existing brand names or may be given an entirely new name) Brand equity has to be taken into consideration!
11 Product-Mix Strategies Alteration of Existing Products -Rather than developing a completely new product, management might do well to take a look at the organization’s existing offerings -Product alteration: Improving an existing product -Product alteration can be more profitable and less risky than developing a completely new one -Eg Lifebuoy +, Zen Estillo New & Improved
12 Product-Mix Strategies Product-Mix Contraction -Product-mix contraction: Carried out either by eliminating an entire line or by simplifying the assortment within a line -The intended result of product-mix concentration is higher profit from fewer products -As a result, many organizations now have fewer product lines, and the remaining lines are thinner and shorter -Eg Rexona, Maruti 1000
13 Product-Mix Strategies Trading Up and Trading Down -The strategies of trading up and trading down involve a change in product positioning and an expansion of the product line -Trading up: Adding a higher-price product to a line in order to attract a broader market, the new product’s prestige should help the sale of the existing lower-price products eg Maruti SX4, -Trading down: Adding a lower-price product to a company’s product line, the firm expects that people who cannot afford the original higher-price product will buy the lower-price one, Honda Jazz, Skoda Fabia
Leveraging Brand Equity One of the most important changes in the market is the proliferation of extensions.
Line Extension Strategy When a brand is used to brand a new product that targets a new market segment within a product category currently served by the parent brand. Examples: Coca-Cola diet Colgate for Kids
Line Extension Strategies Colours Flavours Ingredients Sunsilk Yellow Sunsilk Pink Sunsilk Black Kissan Squash Orange Kissan Squash Lemon Colgate Herbal Colgate Gel Colgate Namak
Line Extension Strategies Consumer Need Dove Shampoo- Normal Hair Coloured Damaged Hair Essential Balance
Line Extension Strategies Form Vim Bar Vim Liquid Vim Powder
Line Extensions Price Quality Downward Stretch Upward Stretch Two - way stretch MACH 3 TURBO PRESTO
Effort to use a successful brand name to introduce a new product into a different product category. Examples: Nike Shoes: Apparels, Bags, Sunglasses Park Avenue: Shirts, Shaving Creams, Shirts, Belts, Perfumes, Soaps & Razors Brand Extension Strategy
BRAND STRATEGY DECISIONS Product Category ExistingNew Brand Name Existing New Line Extension Brand Extension Multibrands New Brand Names
Licensing Involves contractual arrangements whereby firms can use names, logos, characters, and other facets of other brands to market their products. Essentially, a firm is “renting” another brand to contribute to the brand equity of their own product.
Advantage of brand extensions Help reduce cost and speed of new products/brands Provide feedback to the parent brand Can confuse or frustrate consumers
Disadvantages of brand extensions Retailers may resist Damage to parent brand image Reduce sales of parent brand Reduce identification of brand with any one category Can dilute brand meaning Company becomes less innovative
Do we extend the parent brand ? Do consumers have some positive associations about the parent brand in memory ? Will these positive associations be evoked by the brand extension ? Will negative associations be transferred from the parent brand ? Will negative associations be created by the brand extension ?
Steps in successful brand extension 1. Define consumer knowledge about the brand (brand schema) 2. Identify possible brand extensions based on parent brand associations and overall ‘fit’ of extension to parent brand 3. Evaluate the potential of possible brand extensions: Salience of parent brand associations Favourability of inferred extension associations Uniqueness of inferred extension associations
Steps in successful brand extension 4. Evaluate possible brand extension feedback: How compelling is the extension ? How relevant is the extension ? How consistent is the extension ? How strong is the extension ? 5. Consider possible competitive advantages as perceived by consumers 6. Design marketing campaign to launch brand extension 7. Evaluate brand extension success and effects on parent brand equity
Possible Extensions for the Nivea Brand Nivea Cream BRANDDEFINITIONSRELATED CATEGORIES moisturizer lotion medicinal purity body care pump bottle fragrance Soap - face cream - skin cream sunburn - after-shave - baby antiseptic - first-aid - hemorrhoid cream cotton - gauze - sterile pads emery boards - muscle toner - cotton swabs liquid hair gel – hair detangler glass cleaner perfume - room deodorizer - deodorant