1. Employ product-mix strategies to meet customer expectations
4.04

2. Define the following terms:
Product Mix
Product Item
Product Line
Width
Depth
Consistency
Expansion
Contraction
Alteration
Trading Up
Trading Down
Positioning
You will complete the vocabulary on another document. E1 Obj 4.04 Vocabulary Sheet.
Product Mix – All the types of products a company makes or sells
Product Item – A specific model, brand, or size of a product within a product line
Product Line – A group of similar products, made or sold by one company
Width – The number of different product lines a business makes or sells
Depth – The number of items offered within each product line
Consistency - The degree of closeness or relatedness between product lines in the product mix
Expansion – Adding items to a product or an entire product line
Contraction – Eliminating an entire product line or reduce assortment within it.
Alteration – Improve an established product with a new design, package, or uses
Trading Up – Adding higher priced items to a product line
Trading Down – Adding lower priced items to a product line
Positioning – Creating a certain image of a product or brand in the customer’s mind

3. Product Mix – All the types of products a company makes or sells
Product Item – A specific model, brand, or size of a product within a product line
Product Line – A group of similar products, made or sold by one company
Width – The number of different product lines a business makes or sells
Depth – The number of items offered within each product line
Consistency - The degree of closeness or relatedness between product lines in the product mix

4. Identify ways in which product lines can be organized
When a business expands its product mix, its goal is to appeal to more market segments with a wider variety of options.

5. Describe Product Mix Dimensions
A product mix is all the items made or sold by a company. Some companies have thousands of products offered. Some companies will try to reach all possible customers by offering more products items and product lines. The more products lines and product within a company offers refers to width and depth.
A company’s product mix has four different dimensions.
Product Width
Product Mix Length
Product Mix Depth
Product Mix Consistency

6. Describe Advantages of Contraction Product-Mix Strategies
Size and target market are factors businesses use to determine its product mix

7. the Elba Corporation has decided to eliminate several of its product lines.
Elba's executives hope that by focusing on fewer product lines, they will see more profit. The Elba Corporation is planning to adjust the _ Consistency of its product mix.

8. Identify Reasons That a Business Would Offer a Broad Product Mix
Expansion or Extension = adding additional
product items or lines
An example of a company's using brand extension Coca-Cola adding Caffeine-Free Diet Coke

9. line extension
To appeal to a target market with slightly different needs, a business decides to add a group of related items to its product mix.

10. Identify Reasons That a Business Would Offer a Shallow Product Mix
One way for a business to expand its product mix is by

11. Explain the Importance of a Business’s Product Mix
One way for a business to expand its product mix is by acquiring another company.

12. Describe Advantages of Expansion Product-Mix Strategies
The product mix that a business decides to offer customers helps to project the business's Image.

13. Describe Disadvantages of Expansion Product-Mix Strategies
Adding items to a product line or introducing an entire product line can be expensive, be difficult to manage, and not always be successful.

14. Describe Disadvantages of Contraction Product-Mix Strategies
Deleting products from a product line or the entire product line is giving away market share to your competitors.
It may be wiser to improve the existing product or line to recapture market share.

15. Describe Advantages of Alteration Product-Mix Strategies
Improving an established product can capture new customers and meet customer’s unmet wants as trends change.
Ex: McDonald’s opening stores in India

16. Describe Disadvantages of Alteration Product-Mix Strategies
Improving an established product is expensive and not always a success.
Example: New Coke

17. Describe Advantages of Trading Up Product-Mix Strategies
Adding higher priced items to a product line will attract the higher income market and may help increase the image and sales of the lower priced items.

18. Describe Disadvantages of Trading Up Product-Mix Strategies
Adding higher priced items to a product line is expensive and may not attract new customers while hurting the image and sales of the lower priced items.

19. Describe Advantages of Trading Down Product-Mix Strategies
Adding lower priced items to a product line of expensive products can capture a lower income market who cannot afford the higher priced items.

20. Describe Disadvantages of Trading Down Product-Mix Strategies
Adding lower priced items to a product line of expensive products can hurt the image and sales of the higher priced items in the line.

21. Describe Advantages of Positioning Product-Mix Strategies
Creating an identity of a product helps find a place for the product in the marketplace while strongly identifying with a specific target market and possibly creating brand loyalty.

22. Describe Disadvantages of Positioning Product-Mix Strategies.
Images of a product are difficult to change once they are established and very expensive.

23. Describe Considerations in Selecting Product-Mix Strategies
Determine which products will produce the highest increase in profits and revenue for the company.
See speaker’s notes.
Questions to ask about product decisions:
What products should I manufactureor sell?
How will my products meet the needs of my target market?
What level of quality should my goods or services have?
How much inventory should I maintain?
How will my products be different from or better than my competitors?
How will I position my products?
What will my customer service policy be?

24. Identify Factors That Can Minimize Costs in Developing a Product Mix
Use of technology
An online business would minimize the expenses and up-keep of a building.
Technology allows consumers to order and/or design products online and have it shipped directly to their home, minimizing inventory and labor.
Using a website to advertise is less expensive that advertising in a newspaper, television or mailings.

25. Explain Guidelines for Planning a Product Mix
Some basic product-mix decisions include:
(1) Review existing product lines.
(2) Adding new lines and/or deleting existing lines.
(3) Compare new versus existing product lines.
(4) Compare internal development versus external acquisition in the product mix. (Do you want to make it yourself or buy it from another company for resale.)
(5) Determine the effects of adding or deleting a product line in connection to other lines in the product mix
(6) Estimate the effects of future change on the company's product mix.

26. The End
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