Page 137 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes review their product lines by examining sales and costs to spot items that are negatively
impacting the profits. Procter and Gamble (P&G) was known to have very lengthy product lines
but decided to rationalise and pruned its product lines.

Example: The Head & Shoulders shampoo line had 31 items; P & G subsequently pruned
this product line to only 15 variants. The company now believes that it is better to maintain
simpler product lines and do away with unnecessary complexity. If the company can use any
existing product formula or package to enter a new market, it can save precious resources and
move faster.

Product Mix Decisions

Most business entities have many products in their portfolio. By dealing in many products, companies
aim to serve a much larger and varied group of customers who look for solutions to different types
of needs. This also helps to minimise the risks for a company across different products.

Example: ITC diversified from tobacco-based products to hospitality products, financial
services, and consumer non-durables such as edible oil and atta. Keeping in view the growing
opposition from consumer advocates and restrictions being imposed by governments on certain
types of promotional activities concerning cigarettes, ITC with only a single product line of
different brands of cigarettes would have experienced high business risk.
Companies make decisions concerning product mix based on competitive situations, existing or
emerging market opportunities, and changes in consumer lifestyles and preferences.

Example: As pointed out earlier, HUL faced competitive pressures from low-priced
washing powders and introduced low-end brands at various price-points. In response to
opportunities in medium-price segment of passenger cars, Maruti introduced suitable models.
ITC introduced sportswear keeping in view the lifestyles of younger generation, seeing it as a
logical extension of its positioning itself as a lifestyle products company. Bajaj Auto introduced its
Pulsar motorcycle, and Apple computers introduced its iPods offering a high-quality portable
digital music gadget.
For quite some time, iPod was available as a high-end product. The market opportunities
emerged and the company introduced medium-priced variants. These companies are operating
in highly competitive markets and have two or more product lines. Moreover, there is a degree
of convergence of various needs that are being met by products that combine the features of a
mobile phone, camera, PDA, online communicator and music system.

Self Assessment

State whether the following statements are true or false:
1. A product is a tangible offering by a company.

2. The design and quality of the cloth of a shirt are part of the generic product level.
3. The term product mix length refers to the number of product lines a company has.
4. Skoda Motors introduced Skoda Fabia in the mid-price (Hatchback) car segment. It is an
example of line pruning.
5. Nokia introduces various cell phone models are regular intervals. It is a part of its line
filling strategy.
6. Diversifying the product mix helps to minimise the risks for a company across different
products.

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