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Chapter 10

Product-Mix Strategies
Sommers  Barnes
Ninth Canadian Edition

Presentation by
Karen A. Blotnicky
Mount Saint Vincent University, Halifax, NS

Copyright © 2001 by McGraw-Hill Ryerson Limited


Chapter Goals
To gain an understanding of:
• The difference between product mix and
product line
• Major product-mix strategies:
• Positioning, expansion, alteration,
contraction, trading up and trading down
• Managing a product throughout the Product
Life Cycle
• Planned obsolescence
• Style and fashion
• The fashion-adoption process
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Product Mix and
Product Line
• The product mix is the set of all
products offered for sale by a company.
• A product mix has two dimensions:
• Breadth - the number of product lines
carried.
• Depth - the variety of sizes, colours, and
models offered within each product line.
• A product line is a broad group of
products, intended for similar uses and
having similar characteristics.
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Product Mix - An Example
BREADTH (DIFFERENT LINES)
Lawn mowers Gardening tools Lawn furniture
E P TH ENT
D R TM )
S O IN E Power rotary Rakes Chairs
(AS IN A L
H
W IT
Power reel Hoes Chaise lounges

Hand-powered Shovels Benches


Various sizes
and prices in
redwood or
Each in various Each in various aluminium with
sizes and prices sizes and prices plastic webbing

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Product Mix Strategies
Positioning the Product
• In Relation to a Competitor
• In Relation to a Product Class or
Attribute
• In Relation to a Target Market
• By Price and Quality
Product-Mix Expansion
• Line Extension
• Mix Extension 10 - 5
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Expanding the
Product Mix
Mix-extension strategies include:
• Same brand, related product (Tim
Horton coffeemaker)
• Same brand, unrelated product (Swiss
Army watch)
• Different brand, unrelated product
(Pepsi & KFC)
• Different brand, related product (P&G
adds Luvs diapers; already makes
Pampers)
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Trading Up and
Trading Down
• Trading up: Adding a higher-priced
product to a line to attract a higher-
income market and improve the sales of
existing lower-priced products.
• Trading down: Adding a lower-priced
item to a line of prestige products to
encourage purchases from people who
cannot afford the higher-priced product,
but want the status.
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Other Product
Mix Strategies
• Alteration of Existing Products:
• Improve an established product with new
design, new package, new uses.
• Product-Mix Contraction:
• Eliminate an entire line or reduce
assortment within it.
• Pruning to reduce similar brands.
• Dump unprofitable or indistinct brands.

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The Product
Life Cycle
• the concept of the product life cycle applies to
product categories, not to brands; it is related
to the concept of diffusion of innovation
• different products will have differently-
shaped life cycle curves; will diffuse at
different rates
• a product is normally perceived to pass
through four stages over its life cycle;
introduction, growth, maturity, and decline
• each stage requires different marketing
strategies
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Product Life
Cycle Stages
• Introduction—most
Introduction risky and
expensive.
• Growth—both
Growth sales and profits rise,
often rapidly.
• Maturity—sales
Maturity increase at a decreasing
rate and profits decline.
• Decline—demand
Decline drops, often because
of another product development.

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Product Life Cycle Curve
INTRODUCTION GROWTH MATURITY DECLINE

Sales Volume
Dollars

Profit

0
Loss
Time in years

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Strategic Implications
of the Stages
• introductory stage: developing the market,
creating awareness, reaching the innovators
• growth stage: competition begins, sales
grow quickly, profits peak, market
penetration
• maturity stage: competition is intense, sales
slow down, differentiated product offerings,
customers are brand loyal, few new entrants
• decline stage: customers move to other
options, competitors leave, profits are low,
consider exit
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Characteristics of
Life Cycles
• length of the life cycle will vary across
markets; some are quite short and may be
getting shorter
• some fads have very short life cycles, while
other products stay at maturity for years
• in high-tech markets, life cycles are very
short
• some products do not make it through all
four stages; they may fail in introduction
• the life cycle must be considered in relation
to a specific market; stage may vary across
markets
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Managing the
Life Cycle
Successful life-cycle management requires
predicting the shape of the curve and then
successfully adapting strategies at each stage.
• when to consider entering the market
• how to manage to capitalize on growth
• it is possible to develop strategies that will
extend the maturity stage; modify the
product, devise new uses, or design new
appeals
• greatest challenge comes at the decline stage
which may result in product abandonment
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Different Life Cycles
Part a - Extended Part b - Fad
Aggregate

introduction stage
sales

Time in years Time in years

Part c - Indefinite
Aggregate

maturity stage
sales

Time in years
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Planned Obsolescence
Fashion and Style
Planned Obsolescence: Style:
• Technological or • A distinctive manner
functional of construction or
obsolescence; other presentation in any art,
things do it better product or endeavour.
now. Fashion:
• Style obsolescence: • Any style that is
Still serviceable, but accepted and
looks out of date purchased by
now. successive groups of
people over a long
period of time.
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Fashion-Adoption Process
• Series of buying waves as a given style is
popularly accepted by one group after
another.
• Three theories of fashion adoption:
• Trickle-down—a
Trickle-down given fashion flows down
through several socioeconomic levels.
• Trickle-across—the
Trickle-across fashion moves
horizontally and simultaneously within
several socioeconomic levels.
• Trickle-up—a
Trickle-up style first becomes popular at
lower levels and then flows upward.
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Fashion Adoption Theories in
ProductAction
Product introduced at same time
offered in all three types of stores:
first to
upper TRICKLE-ACROSS
socio- Exclusive high-priced
specialty stores
economic (boutiques)
group TRICKLE-
UP
TRICKLE-ACROSS
Medium-priced department
TRICKLE- stores and specialty stores Product
DOWN
adopted
first by
lower
TRICKLE-ACROSS
Discount stores
socio-
economic
group
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