Product Mix Flashcards

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Questions and Answers

What is a product mix?

The particular assortment of products a business offers to meet its market's needs and its company's goals.

What is a product item?

Each individual good, service, or idea that a business offers for sale is a product.

What is a product line?

A group of related product items is the product.

How do companies classify product lines? (Select all that apply)

Customer group Signup and view all the answers

Describe the four product-mix dimensions.

Width, Length, Depth, Consistency. Signup and view all the answers

Why are product-mix decisions so important?

They determine the variety of products in terms of width, length, depth, and consistency. Signup and view all the answers

Why would a company use an expansion product-mix strategy?

To satisfy customers' desire for variety and options. Signup and view all the answers

What are the disadvantages of an expansion strategy?

Increases costs of inventory, marketing, transportation, and storage. Signup and view all the answers

Why would a company use a contraction product-mix strategy?

It has lost its appeal to customers. Signup and view all the answers

What are the disadvantages of a contraction strategy?

Greater financial risk if one of the remaining products fails. Signup and view all the answers

Why would a company use an alteration product-mix strategy?

To limit costs by altering existing products rather than developing new ones. Signup and view all the answers

What are the disadvantages of an alteration strategy?

Can be quite expensive and may allow competitors to observe and adapt. Signup and view all the answers

Why would a company use a trading-up product-mix strategy?

To enhance the company's image. Signup and view all the answers

What are the disadvantages of a trading-up strategy?

Risk of losing existing customers while trying to gain new ones. Signup and view all the answers

Why would a company use a trading-down product-mix strategy?

To attract a new target market with less expensive offerings. Signup and view all the answers

What are the disadvantages of a trading-down strategy?

The firm's reputation for high quality may be damaged. Signup and view all the answers

Study Notes

Product Mix Overview

A product mix encompasses the assortment of products a business offers to fulfill market needs and company objectives.
Each product offered by a business is referred to as a product item.

Product Lines

A product line consists of a collection of related product items.
Classification of product lines may include factors such as product class, customer group, distribution method, and price/quality.

Product-Mix Dimensions

Product mix is defined by four dimensions:
- Width (number of product lines)
- Length (total number of products in the mix)
- Depth (variety of sizes, colors, flavors, models within lines)
- Consistency (relationship of lines in terms of end use, distribution methods, target market, and price range)

Expansion and Contraction Strategies

Companies pursue expansion product-mix strategies to provide variety and meet customer demands for options.
Disadvantages of expansion include increased costs in inventory, marketing, and the need for staff training on new products.
Contraction strategies are used when a company loses customer appeal or aims to streamline offerings, with risks including financial vulnerability and competitor encroachment.

Alteration Strategies

Alteration of existing products is favored to manage costs, as it is generally cheaper than developing new products and offers a higher success rate.
Risks include high costs if an entire line is altered at once and potential competitive response if changes are made gradually.

Trading Strategies

Trading-up is employed to elevate the company's image by introducing higher-end products, though it risks alienating existing customers and potentially decreasing sales of established products.
Trading-down targets new market segments by adding lower-priced products, which may compromise the firm’s reputation for quality.

These strategies highlight the importance of careful decision-making in product mix management to balance customer satisfaction with business sustainability.

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Description

Test your knowledge about the nature of product mix with these flashcards. Each card covers key concepts such as product mix, product items, and product lines. Perfect for anyone studying marketing concepts!