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Product decisions &


Madhusmita Das.

Product Line Decisions

Product line is
A product line is a broad group of products,
intended for similar uses and having similar
A group of products that are closely related
because they may
Function in a similar manner
Are sold to the same customer groups
Market through the same types of outlets
Fall with in given price ranges

Product line length


The product line length involves the number

of items in the product line.
Greatly influenced by the company objectives
and the resources.
Product line growth needs to be planned
carefully and is extended in two ways :
stretching "and filling.
Two decisions generally being taken here,
such as:
Line stretching: adding products that are
higher or lower priced than the existing line.
Line filling: adding more items with in the
present price range.

Product line stretching

Downward stretch
Company initially located at the top end of the
market and then stretches downwards to preempt a competitor or respond to an attack. Launch
of A-Class by Mercedes-Benz.
Upward stretch
Companies stretching upwards to add prestige to
their existing range of products. Mercedes with
Can be risky due to customer perception and
inability of sales people to trade up and negotiate to
the new level.
Two-way stretch
Extending product lines upwards and downwards
to address different segments of the market.

Product line filling

Increasing the product line by adding
more items with in the present range of
the line.
Reasons for product filling:
Extra profits
Satisfying dealers
Using excess capacity
Being the leading full-line company
Plugging holes to keep out the
Care needs to be taken that the line
filling does not lead to cannibalization
and customer confusion

Product Mix Decisions

Product mix or product assortment

consists of all the product lines and
items that a particular seller offers
for sale to buyers.

Dimensions of the product


Breadth or width
Wide product mix containing many different
product lines.
Unilever producing cooking oil, toilet soap,
cosmetics etc.
Total number of products in the product lines.
Different versions, such as size of packaging and
different formulations.
How closely related the various product lines are in
end use, production requirements, distribution
channels etc.

Product mix strategies

Company can add new product lines,

thus widening the product mix.
Company can lengthen the existing
product lines to become a more full line
It can add more product versions of each
product and deepen its product mix.
The company can pursue more product
line consistency, or less, depending upon
whether it wants to have a strong
reputation in a single field or in several

Trading Up and Trading Down

Trading up: Adding a higher-priced
product to a line to attract a higherincome 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.

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

What is a Brand?
A brand is a promise.
It exists only in the minds of the
It is both functional and emotional.
It must stand for something.
It is the art and science of creating
mind space and shelf space.

Branding Equity

Brand equity is defined as the value of the brand, based

on the extent to which it has high brand loyalty, name
awareness, perceived quality, strong brand associations
and other assets such as patents, trademarks and
channel relationships.

Brand equity is the positive differential effect that

knowing the brand name has on customer response to
the product or service.

One measure of equity is he extent to which customers

are willing to pay more for the brand.

Brand valuation is the process of estimating the total

financial value of a brand .

Brands with strong equity have many
competitive advantages:
High consumer awareness,
Strong brand loyalty,
Helps when introducing new products,
Less susceptible to price competition.

Brand valuation
Placing values on brands is difficult.
Not always incorporated into the balance
sheet asset valuations.
Inter brand, the branding consultancy
utilize the estimated economic earnings;
which is equal to the brand future
operating profits (minus a capital and tax
charge),as the valuation method for
However, this does not measure future
growth and thus the following marketing
insight illustrates other methods

Branding Strategies.

Brand positioning
Provides a basic position for the brand based upon its
Customers buy benefits not features. These features
must be translated into functional and emotional
The brand reflects the values of the buyer.
The brand represents the culture of the organization
and product.
Each brand has a personality and the brand will attract
people whose actual or desired self-images match the
brands image.

Brand name selection

A good name contribute significantly to
the success of a brand.
Given the global market, great care
needs to be taken regarding the
translation of the brand name as

Desirable qualities for a brand

Should suggest something about the

products features and benefits.

Easy to pronounce, recognize and
Brand name must be distinctive.
Must translate easily and accurately into
other major languages.
Must be capable of registration and legal
Once selected, the brand name needs to
be legally protected and registered with
the appropriate Trade Marks Register.

Brand sponsorship
Manufacturers brand (national brand)
Brand created and owned by the producer of the
product or service.
Private brand (middleman, distributor or store brand)
A brand created and owned by are seller of a product or
Licensed brand
A product or service using a brand name offered by the
brand owner to the licensee for an agreed fee or royalty.
The practice of using t he established brand names of
two different companies on the same product.

Manufacturers brand versus

private brand

The brand battles rage between

manufacturers brands and private brands.
Winners of the battle focus on one simple
rule: achieve success through delivering
superior value to target customers.
Retailers have many advantages:
They control the stock on the shelf
Which products to feature in promotions
They price store brands lower than the
manufacturers brands
Appeal to budget conscious consumers
Higher profit margins generated

Brand licensing

Branding is costly and time consuming

and in an effort to short circuit the
process, some organizations seek
licensing agreements for big brands
especially in emergent markets.

The fastest growing licensing category is

corporate brand licensing, a form of
licensing where by a firm rents a
corporate trade mark or logo made
famous in one product or service
category, and uses it in a related


Co branding occurs when two established

brand names of different companies are used
on the same product or service.
It offers many advantages:
creates broader consumer appeal.
greater brand equity.
allows companies to enter new markets with
minimal risk or investment.
It also has limitations:
Partnerships should be carefully evaluated
and often involve complex legal contracts.
A great deal of trust is necessary for success.

Brand development

1. Line Extensions
Using a successful brand name to
introduce additional items in a given
product category under the same
brand name, such as new flavors,
forms, colours, added ingredients or
package size.
Danger of over extending the brand
and losing meaning.
Danger of cannibalization of own

2. Brand Extensions

Using a successful brand name to

launch a new or modified product in a
new category.
Gives new product greater recognition
and faster acceptance.
Save high advertising costs due to
familiar brand name.
Must ensure the appropriateness of the
new product to the brand and market to
customers that value the brand.
Guard against confusing the consumer .

3. Multi-brands

Firm develops two or more brands in the same

product category.
Establishes different features and appeals to
different market segments and buying motives.
Some companies develop multiple brands for
different families of products. This is called range
branding and is illustrated by the Matsushita
Group with its ranges of Technics , National
, Panasonic and Quasar.
Incorporate branding the firm makes its company
name the dominant brand identity across all
products, e.g. Johnson & Johnson.
Other companies use the company and
individual branding approach, e.g. Nestl

4.New brands

Some companies create a new brand

for a new product if their existing
brands do not fit or seem appropriate.

Managing Brands
Brands are known through advertising,
personal experience, word of mouth,
the Internet.
Every one in the company represents
the brand.
Companies need to periodically run a
brand audit.


Packaging is the science, art and technology of

enclosing or protecting products for distribution,
storage, sale, and use. Packaging also refers to the
process of design, evaluation, and production of
Packaging can be described as a coordinated system of
preparing goods for transport, warehousing, logistics,
sale, and end use. Packaging contains, protects,
preserves, transports, informs, and sells.
Designing and producing the container or wrapper for a
Developing a good package:
Market the brand
Protect the elements
Ensure product safety
Address environmental concerns

Packaging types