A company can build and manage its product mix and lines by developing a core platform and modules to meet customer needs at lower costs. The product line manager considers factors like sales, profits, positioning against competitors, and growth potential when deciding whether to drop, stretch, fill, or modernize a product line. Companies typically develop product lines rather than single products and introduce price steps through approaches like optional feature pricing, by-product pricing, and product mix pricing to maximize total profits.

1. How can a company build and
manage its product mix and
product lines?

2. A product system is a group of diverse but related
items that function in a compatible manner.

3. Product mix (also called a
product assortment) is
the set of all products
and items a particular
seller offers for sale.

4. In offering a product line, companies normally develop a
basic platform and modules that can be added to meet
different customer requirements and lower production
costs.

5. SALES AND PROFITS
The product line manager may consider
dropping this item unless it has strong
growth potential.

6. The product line manager must
review how the line is
positioned against
competitors’ lines.

7. Line stretching occurs when a company
lengthens its product line beyond its
current range

8. THREE TYPES
• DownmarketStretch
• UpMarketstretch
• Twowaystretch

9. LINE FILLING
A firm can also lengthen its product line by adding more
items within the present range.

10. Product lines need to be Modernized.

11. Product Mix Pricing
In product mix pricing, the firm searches for a
set of prices that maximizes profits on the
total mix.

12. Companies normally develop product lines
rather than single products and introduce
price steps.

13. OPTIONAL-FEATURE PRICING
Many companies offer optional products,
features, and services with their main
product.

14. Manufacturers of razors and cameras often
price them low and set high markups on
razor blades and film.

15. Service firms engage in two-part pricing,
consisting of a fixed fee plus a variable
usage fee.

16. BY-PRODUCT PRICING
The production of certain goods—meats, petroleum
products, and other chemicals—often results in by-
products that should be priced on their value.

17. Pure bundling occurs when a firm offers its
products only as a bundle