PRODUCT

MANAGEMENT
Product policy decisions

Agenda

Product policy decisions

Lines & mix decisions

Sub-optimality
Product-company fit

Adjustments to mix

Product policy decisions

Need for changes
in product line?
Dynamic nature of
marketplace?
Changes in nature
& resources of firm
itself?

Objectives
Eliminate / modify
products
Satisfy

needs?
Contribute
significantly to wellbeing?

Add NPs / features

Better

meet needs
Enhance current line
Improve resource
utilisation

Product mix

Consistency

Width
Width -- #
#
different
different product
product
lines
lines
Length
Length -- total
total #
#
items
items
within
within
Depth
Depth -- #
#
versions
versions of
of items
items
[size,
[size, weights,
weights,
colour]
colour]

Degree of similarity between

lines

End use

Technology

Production technics

Distribution channels

Product
Product Mix
Mix -all
all the
the product
product
lines
lines offered
offered

Mix and lines

Width

D
E
P
T
H

Bathing
Soaps

Detergen
ts

Lux

Surf

Dalda

Nihar

Closeup

Liril

Rin

And others

Clinic

Lifebuoy

Wheel

And
others

Rexona

Sunlight

Pears

And others

Dove
And
others

Cooking
Medium

Hair
Care

Oral
Hygiene

And others

Lines and mix

Mix

Lines

Composite of offerings
Wide variety of lines
Group of different products but related
Satisfy particular class of need
Used together
Common physical / technical characteristics
Sold to same customer groups
Through same channels
Fall within specific price ranges

Item / line may not be profitable

Retain?

Mix decisions in perspective

Reflect
Nature of market
Firms resources
Management philosophy

Influences

Long-run objectives
Profit levels
Sales stability
Growth
Personal values
Risk attitude
Market opportunities for
mix
Upper limits for potential
profitability?
Marketing program quality
Potential achieved?

Sub-optimal mix

Vary firm to firm

Hard to define
Situations that suggest
sub-optimality
Chronic / seasonally
recurring excess capacity
Production
Storage
Transportation

20-80
Inefficient use of
salesforce contacts &
skills
Steadily declining
profits / sales

Narrower than
optimum
Loss in EOS
Broader than
optimum
Excessive costs
Production
changeovers
Order processing
Inventory
management

Product company fit

Good opportunities exist in

marketplace for NP

Should we proceed?

If no fit,

Net result of GO harmful or at

best sub-optimal

Technological skills
Labour & management
Financial resources
Production resources & capacity
Logistics facilities
Feasibility of using current
salesforce & channels
Needs & behaviour of current
customers
Impact on market position of
other products
Consistency with current image
Demand seasonality

Good fit that lack growth

potential or vice versa
Sacrifice fit for need to
diversify?

Poorer the fit

Drop the idea?

Maturing markets, under

pressure to diversify

10 conditions for evaluating fit

NP not consistent with 1 of

10

Larger financial resources

needed to purchase or
develop internally
Requisite skills, production
facilities, market
relationships

Will NP exaggerate or
counter balance current
fluctuations?

Adjustments to product mix

Why changes in policy?

Correct any sub-optimality
Enhance ability to meet objectives
Efficiency
Quality
Innovation
Responsiveness to customers

3 forms
Abandonment
Modification
Introduction

Adjustments to mix:
Abandonment

Individual items / entire line

Likely candidates

Low demand
Uneconomically
Short

production runs
Frequent price & inventory adjustments

Excessive management time & resources

Relative

to profit contribution

Out of date
Detract

from image

Adjustments to mix:
Modification & Introduction

Modification

Product attributes
Tangible
Intangible
Options
Reformulation
Redesign
Change in unit size
Add / remove
features

Introduction

New product line(s)

Develop
Test market
Commercialise
Current line
Add / extend
Me-too imitation
Brand name?
Trade-off

Advertising EOS
Higher costs of
cannibalisation