Product Line Decision
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PRESENTATION
Product Line Decisions Made by students Of Group # 1408 Goryatcheva Margarita Medvedeva Asya
1
Product Line Decisions
• A product line is a group of products that are closely related. They • function in a similar manner • are sold to the same customer groups • are marketed through the same types of outlets, or fall within given price ranges 2
Product Line-Length Decision: • Dropping items • Increasing items: - Stretching the line - Filling the line
3
Product Line-Stretching Decision
Every company’s product line covers a certain range of the products offered by the industry as a whole. There are 3 of basic price-ranges: 1.Low 2.Medium 3.High These ranges can also be intervening to each other. 4
Examples of Price Range BMW
Toyota
Medium-high price range
Low-to-Medium price range
Lamborghini
Auto WAZ
High price range
Low price range 5
Product Stretching
It is a product lengthening beyond the current range. This process can be held: Downwards
Two-ways
Upwards
6
Price
High
Downward Stretch
Present Products
Low
New Products
Quality Low
High7
Downward Stretch
Many companies initially locate in the Upper-end of the market and later…. Stretch their lines downwards. WHY? 1.To Respond to the ATTACK in the Upper-EndInvading the Low-End 2.To Plug an empty hole by Low-End EARLIER than competitors 3.To Expand the assortment GAINING market share 4. To Fend-Off from Low-Priced CLONES 8
Downward Stretch
Taking Risks: 1.Making competitors counteract by moving to HIGHER End 2.Company’s dealers may not be able to handle Low-End’s 3.Low-End may cannibalize the High-End…
9
The case
General Electric
GE is a Market Leader in CAT Medical Scanners for hospitals. The company learned that a Japanese competitor penetrates into the market with its compact, highly advanced, less expensive machines. Decision: Introducing the GE’s lower-prices canners on market.
After-Effects: GE’s low-priced version would hurt the high-price items of CAT scanner.
Solution:
GE’s Manager:
“Aren’t We better off to cannibalize ourselves than to 10 let Japanese do it?”
Is it a Failure or a Success? American companies:
Japanese companies:
Is a failure to plug low-ends
Is a success to plug low-ends
Resist to build smaller cars, copying machines etc.
Major opening in producing low-end electronics, chemicals. Moving in quickly. 11
Price
High
Upward Stretch
New Products
Low
Present Products
Quality Low
12 High
Upward Stretch
Many companies at the Lower-End may want to enter the High-End….. Stretch their lines upwards. WHY? 1.Attracted by faster GROWING margins in High-End. 2.Aimed to position themselves as FULL-LINE manufacturers 3.Intended to create PRESTIGE image
13
Upward Stretch
Taking Risks:
1.Competitors may have the same goals 2.Rivals strike back by entering lower end of the market. 3.Prospective customers may not believe in “Reasonable” quality of goods 4.Distribution and salespeople may lack the talent to serve the higher end of the market
14
Price
High
Two-Way Stretch
ducts o r P w Ne
nt Prese s ct u d o r P
Low
New Pro du
cts
Quality Low
15 High
Two-Way Stretch
Companies in the middle range of the market may decide to….. Stretch their lines in Two Directions. WHY? 1.To hold-off copycats of company’s bestsellers 2.To be aimed at different target-market 3.To test the blood of all markets at one time 16
Two-way Stretch
Taking Risks: 1.Trading down of some customers by discovering the advantage of cheaper items 2.Capturing the customers by competitors 3.Decline in high-End sales
17
The case
Marriott Hotels
The Marriott Hotel group performed a two-way stretch of its hotel product line. Along with regular Marriott Hotel it added the Marriott Marquise line to serve the upper end of the market, the Courtyard, Residence Inn and Fairfield to serve the low-end of market. Decision: Establishing particular services in each segment of hotels to mold the loyalty of customers
After-Effects: Conscious customers may soon discover reasonably-priced rooms of the lower chain Solution: “Marriott would rather capture it’s customers who move downward than passing keys to competitors”
18
Product Line-Filling Decision
• - adding more items within the present range of the line. Reasons: • Reaching for extra profits • Trying to satisfy dealers • Trying to use excess capacity • Trying to be the leading full-line company • Trying to plug holes to keep out competitors 19
Product Line-Modernization Decision
• The central issue: whether to overhaul the line piecemeal or all in once + allows the company to see how customers and dealers like the new styles before changing the whole line - allows competitors to see changes and start redesigning their own lines 20
Product Line-Featuring Decision - selecting one or a few items in the line to feature.
21
Product Line Decisions Made by students Of Group # 1408 Goryatcheva Margarita Medvedeva Asya
1
Product Line Decisions
• A product line is a group of products that are closely related. They • function in a similar manner • are sold to the same customer groups • are marketed through the same types of outlets, or fall within given price ranges 2
Product Line-Length Decision: • Dropping items • Increasing items: - Stretching the line - Filling the line
3
Product Line-Stretching Decision
Every company’s product line covers a certain range of the products offered by the industry as a whole. There are 3 of basic price-ranges: 1.Low 2.Medium 3.High These ranges can also be intervening to each other. 4
Examples of Price Range BMW
Toyota
Medium-high price range
Low-to-Medium price range
Lamborghini
Auto WAZ
High price range
Low price range 5
Product Stretching
It is a product lengthening beyond the current range. This process can be held: Downwards
Two-ways
Upwards
6
Price
High
Downward Stretch
Present Products
Low
New Products
Quality Low
High7
Downward Stretch
Many companies initially locate in the Upper-end of the market and later…. Stretch their lines downwards. WHY? 1.To Respond to the ATTACK in the Upper-EndInvading the Low-End 2.To Plug an empty hole by Low-End EARLIER than competitors 3.To Expand the assortment GAINING market share 4. To Fend-Off from Low-Priced CLONES 8
Downward Stretch
Taking Risks: 1.Making competitors counteract by moving to HIGHER End 2.Company’s dealers may not be able to handle Low-End’s 3.Low-End may cannibalize the High-End…
9
The case
General Electric
GE is a Market Leader in CAT Medical Scanners for hospitals. The company learned that a Japanese competitor penetrates into the market with its compact, highly advanced, less expensive machines. Decision: Introducing the GE’s lower-prices canners on market.
After-Effects: GE’s low-priced version would hurt the high-price items of CAT scanner.
Solution:
GE’s Manager:
“Aren’t We better off to cannibalize ourselves than to 10 let Japanese do it?”
Is it a Failure or a Success? American companies:
Japanese companies:
Is a failure to plug low-ends
Is a success to plug low-ends
Resist to build smaller cars, copying machines etc.
Major opening in producing low-end electronics, chemicals. Moving in quickly. 11
Price
High
Upward Stretch
New Products
Low
Present Products
Quality Low
12 High
Upward Stretch
Many companies at the Lower-End may want to enter the High-End….. Stretch their lines upwards. WHY? 1.Attracted by faster GROWING margins in High-End. 2.Aimed to position themselves as FULL-LINE manufacturers 3.Intended to create PRESTIGE image
13
Upward Stretch
Taking Risks:
1.Competitors may have the same goals 2.Rivals strike back by entering lower end of the market. 3.Prospective customers may not believe in “Reasonable” quality of goods 4.Distribution and salespeople may lack the talent to serve the higher end of the market
14
Price
High
Two-Way Stretch
ducts o r P w Ne
nt Prese s ct u d o r P
Low
New Pro du
cts
Quality Low
15 High
Two-Way Stretch
Companies in the middle range of the market may decide to….. Stretch their lines in Two Directions. WHY? 1.To hold-off copycats of company’s bestsellers 2.To be aimed at different target-market 3.To test the blood of all markets at one time 16
Two-way Stretch
Taking Risks: 1.Trading down of some customers by discovering the advantage of cheaper items 2.Capturing the customers by competitors 3.Decline in high-End sales
17
The case
Marriott Hotels
The Marriott Hotel group performed a two-way stretch of its hotel product line. Along with regular Marriott Hotel it added the Marriott Marquise line to serve the upper end of the market, the Courtyard, Residence Inn and Fairfield to serve the low-end of market. Decision: Establishing particular services in each segment of hotels to mold the loyalty of customers
After-Effects: Conscious customers may soon discover reasonably-priced rooms of the lower chain Solution: “Marriott would rather capture it’s customers who move downward than passing keys to competitors”
18
Product Line-Filling Decision
• - adding more items within the present range of the line. Reasons: • Reaching for extra profits • Trying to satisfy dealers • Trying to use excess capacity • Trying to be the leading full-line company • Trying to plug holes to keep out competitors 19
Product Line-Modernization Decision
• The central issue: whether to overhaul the line piecemeal or all in once + allows the company to see how customers and dealers like the new styles before changing the whole line - allows competitors to see changes and start redesigning their own lines 20
Product Line-Featuring Decision - selecting one or a few items in the line to feature.
21
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