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 PT H EN T
D R TM )
S O IN E Power rotary Rakes Chairs
( A S IN A L
H
WIT
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
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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 Style:
Obsolescence: • A distinctive manner of
construction or
• Technological or presentation in any art,
functional product or endeavour.
obsolescence; Fashion:
other things do it • Any style that is accepted
and purchased by
better now. successive groups of people
• Style over a long period of time.
obsolescence:
Still serviceable,
but looks out of
date now.
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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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