This document discusses how companies can build and manage their product mix and product lines. It defines product mix as the set of all products a company offers for sale, and product lines as sets of related products made by the same company. It discusses factors like the width, depth, and consistency of product lines. It also covers analyzing product line contributions, market profiles, competition, and deciding on product line length and mix through tools like product maps. Finally, it discusses optimizing brand portfolios through modernization, selective featuring, and rational pruning.

1. Setting Product Strategy
How can a company build and manage its
product mix and product line?
Presentation by
Divyasree P K
IIT Madras

2. Product
mixmix
N. Set of all products that a company offers for sale

4. Product mix comprises of multiple
PRODUCTLINES
N. Set of all related products manufactured by same
company

5. Cigarettes Agarbattis
Lifestyle retailing Hotels
Deodorants
Stationery & Education
FoodPersonal wash Food
Product lines

6. WIDTH
No. of different product lines
in a company
-----------------------------------------------------------
DepthDepth
No. of variants of each
product

7. CONSISTENCy
Extent of similarity within the product lines in terms of
end use, production , distribution, etc

8. ProductLineAnalysis
Crucial to manage the product lines
1.
Sales &
Profits
2.
Market
Profile

9. contribution
1.
Sales & Profits
Higher
Products with
contributionHigher Sales
Profits
Requires careful monitoring
and protection

10. 1.
Sales & Profits
Products with low sales and profits
and lower growth potentialand lower growth potential
SHOULD be dropped

11. 2.
Market
Profile
How the product lines fare in the
market scenario

12. …Competition.
Expansion avenues
&
Employ Product Maps to identify…
&
Market Segments…
…And decide about Product Line Length & Product
Mix Pricing

13. Product Line Length
New linesNew lines
Stretching old lines
Filling old lines
Optimization

14. New Product Line

15. New lines to induce UP SELLING

16. New lines to induce CROSS SELLING

17. Diversifying across multiple economic segments
to reduce risk from a volatile economy

18. Product Line Stretching
Increase the range

19. Down-market stretching
Movement from
middle to low marketmiddle to low market

20. WHY1. Growth potential
2. Attack low-end competitors
3. Stagnating middle market

21. Caution
Adopt appropriate strategy & pricing to
prevent cannibalization

22. Up-market stretching
Movement to upper market

23. WHY1. Growth potential
2. Higher margins
3. Positioning as full-line manufacturers

24. Two-way stretching
Titan Sonata Titan Exacta Titan Royale

25. Product Line Filling
New products within the current range

26. WHY1. Incremental profits
2. Keep out the competition

27. Caution 1
Do not overdo
Else risk cannibalization & customer
confusion

28. Caution 2
Differentiation with NOTICEABLE RELATIVE
difference

29. Caution 3
ACT ON MARKET NEED, not internal need

30. Brand Portfolio
OptimizationOptimization
Continuous modernization
Selective featuring
Rational pruning

31. Microsoft and Intel continuously
introduce advanced versions ofintroduce
their products

32. Caution
Time the product releases appropriately
NEITHER LAG, Nor BE QUICK

33. Feature
Low-priced product to attract customers
High end product to add prestigeHigh end product to add prestige
Good brand to offset loss from a weak one

34. 90% profit from 25% of the brands.
Hence..
75%Brand pruning
by UNILEVER in 2003

35. Product Mix Pricing
Product line pricing
Optional feature pricing
Captive product pricingCaptive product pricing
Two part pricing
By product pricing
Product bundling pricing

36. Product Line Pricing
Progressively different prices for
different brands of the same product
line

37. Optional Feature Pricing
Core product available relatively lower
rate
Additional features available on extra
payment

38. Captive Product Pricing
Captive product
crucial to the functioning of
main product
available at a premiumavailable at a premium
Main product
at low rates

39. Two part Pricing
Fixed PLUSVariable costs

40. By-Product Pricing
Value of by-product derived from the
main product to facilitate lower prices
for main product
Tar prices linked to that of oil

41. Product Bundling Pricing
Pure Bundling
Only BlueDart
cartons are allowed
Mixed Bundling
Combo packet of a
shampoo andcartons are allowed
for packaging if one
chooses to use their
courier service
shampoo and
conditioner costs
less than the sum of
individual
components