Managing industrial product line


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Managing industrial product line

  1. 1. Managing Product Line A group of related products manufactured by a single company is called product line. The width of the product line refers to the extent of similar types of products manufactured by a firm. These products are used in the same area of application for different purposes. For instance LUCAS TVS ( An auto component manufacturer) produces starter moters, alternators ,dynamos, blower motors, fan motors and power window system. This refers to product line width.
  2. 2. The product line width depends on the number of related products in the line. Generally, firm aim to optimize the product line width with the respect to their resources and manufacturing capabilities. Product line depth refers to the number of product variants or brands a firm holds in the product category in the given time.
  3. 3. Risks In Product Line Management • The major risk involved in product line management is the expansion of width and depth of the product line. When a product line’s width and depth are expanded to an extent that is more than necessary, it becomes more difficult for the industrial marketer to manage the performance of the product line.
  4. 4. • Managing a small product line may also pose a danger as the firm may not be able to cater the customers in other market segments. Competitors can take advantage of this weakness. Hence the firm assess all the risks involved in product line management from time to time and correct the gaps as and when they arise. • Another risk is CANNIBALIZATION. This involves one brand eating into the sales of another brand of the same firm. This might kill the weaker brand.
  5. 5. Strategies for Product Line Management Industrial products in the late maturity stage of the product life cycle face a decline in sales. When the sales of a product begin to decrease , a firm is left with two options – to revitalize the product or to eliminate it. The following indicators prompt industrial marketers to decide on one of the two strategies- to revitalize or eliminate products
  6. 6. • Sales- If the sales volume is not in tune with the targets set, if there is a decrease in sales of the product as a percentage in total sales and if a decline is expected in the future sales • Declining market share – If the product shows a continuous decline in market over a period of time. • Costs and Price – If variable cost exceed revenues , if variable costs consistently increase as a percentage of sales, and if the price is being constantly reduced to maintain sales. • Advertising and sales promotion- If there is consistent increase in advertising and sales promotion
  7. 7. Revitalization Revitalization strategies include identifying the reasons for the weak performance of the products and attempting to overcome them. This can be in terms of product modification or entering new markets. In either case ,marketers have to pump in new funds into the execution of these strategies.Product modification includes changing the product attributes to suit the current trends by adding or deleting various features. Improving the product’s efficiency through innovation will also lead to improvements in market performance.Entering new markets is another strategy where marketers explore untapped market and cash in on the first mover advantage
  8. 8. Elimination Product elimination refers to the voluntary removal of the product from the market by the firm. This happens when the circumstantial and historical evidence of the sales of the product shows that the product can not be revitalized any more and that there is no alternatives for improving sales. However product elimination of a product should be given as much importance as product innovation. The marketing department in coordination with the production and finance departments , should analyze all the information pertaining to the product manufacturing and sales before recommending to the top management to eliminate the product.