To illustrate the range of decisions which this key area encompasses, we consider product strategy as a hierarchy of related decisions ranging from product item to product mix elements.
Product item decisions
The first level of product decisions concern individual products/services that a company manufactures and markets. Some companies produce only one product, but most are multi-product. A product item is, by definition, any item that can be considered as a separate product entity and that may be distinguished from other products the company produces irrespective of its relationship to those other products. Provided that any product differs in some way from another, either through modification or market application, it is regarded as a product item. At the product item level, product decisions include: design, quality, features, packaging and branding.
Product line decisions
Individual product items that are closely related are classed as product lines. The relationship could be different variations of the same basic product, e.g. the range of different fillings as product items in a range of Sainsbury’s sandwiches – the product line, or a range of industrial and domestic air conditioning filters as two product lines containing product items for different end use applications.
Product line decisions involve the marketing planner in considering the number of product items in a selected product line e.g. Ford Motor Company must determine how many models in the ‘Ford Focus’ line they should offer, and what the nature of these variations should be (engine, trim and accessory variations).
Product line decisions are not easy. A careful, detailed evaluation of demand and cost interrelationships between individual products in the line is vital. A sense of balance is needed; if too many variations in a line are offered, costs increase, but if a product line contains too few variations customer satisfaction may be unfulfilled through lack of variety. In competitive multiproduct markets, it is essential to maintain balance within each product line to achieve and maintain market share. Product lines should focus on target markets to achieve market concentration and maintain competitive advantage.
Management of the product line means frequent appraisal of the range of product items in each product line, determining whether they are too extensive or too constrained. Policy must be set to add and delete items from product lines to meet financial targets while maintaining customer service levels. This can be a difficult dilemma as frequently opportunities arise to extend the product line either by moving up-market by adding higher quality products to the line or meeting ‘budget market’ requirements by adding economy lines. A clear rationale is needed for such decisions. Over time there is a tendency for product lines to extend in size as new products are added, while older outmoded ones, for many reasons, are not deleted. This calls for clear policy guidelines on the addition or deletion of product items from established product lines.
Over 30 years ago one of the UK Polytechnic institutions introduced the first undergraduate marketing degree in the United Kingdom. This was a straightforward marketing degree with no specialist options aimed at producing graduates who wanted to work in some area of marketing activity. During the first few years after the programme was launched there was little or no competition. Demand for the course built slowly but steadily, and there were good employment prospects with graduates proceeding to work in brand management, advertising, marketing research, retail marketing, and so on.
Over the years success of the product encouraged more competitors to enter the market, and potential students began to pick and choose. Some competitors, encouraged by increasing specialization in the marketing jobs market itself, began to introduce more specialized marketing undergraduate courses. Slowly at first, but then with increasing urgency, in response to increasing competition and changing demand, the original Polytechnic (now a University) provider began introducing new marketing degree course products to its range. Examples included:
‘Marketing with a Foreign Language’, ‘Global Marketing’, ‘Sports Marketing’ and Retail Marketing’. This University has over 20 different marketing degree specialisms in its product range, including the original programme introduced over 30 years ago. Only a small number of students apply for the original marketing degree. Most choose one of the more specialized degrees. Despite this, there is some residual nostalgia for the original course, coupled with a degree of inertia. This has meant that the original has never been dropped despite its now poor sales.
This situation can be found in many companies. Old, established products, which in the past were often the basis of the organization’s initial success, are kept in the product range which simply continues to expand until it becomes unmanageable.
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Development Of A Strategic Approach To Marketing: Its Culture; Internal Macro- And External Micro-environmental Issues
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Analysing The Environment: (opportunities And Threats) And Appraising Resources (strengths And Weaknesses)
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