Product. Classification of products. Brand and branding. Product lines and product mix. Product life cycle, страница 3

3) Mixed Branding – a firm markets products under its own name and that of reseller, because the segment attracted to the reseller is different from their own market. (Sanyo, Toshiba, Polaroid)

Requirements to brand name:

1. The name should suggesttheproductsbenefits

2. The name should bememorable, distinctive, andpositive

3. The name shouldfitthecompanyorproductimage

4. The name shouldhavenolegalrestrictions.

             III. Product lines and product mix.

Product line - a group of closely related products, which usually have the same function and are sold to the same customer groups through the same outlets.

Product mix - the set of all the product lines and items offered by a company.

Two reasons for companies to re-evaluate their product mix:

1. Different products are at different stages of the life cycle;

2. Market opportunities and resources are in constant evolution.

Companies may aim at either long product lines or shorter ones. Why? It depends on their
objectives which can be of two main types:

Companies aiming at

High market share and market growth                   High profitability


Long product lines                                                  Shorter product lines (only profitable items)

But product lines have a tendency to lengthen over time in 2 ways: line-filling

and line-stretching.

             IV. Line-stretching and line-filling.

Line-stretching means lengthening a product line, either by moving up-market or down-market, i.e. makingitems of higher or lower quality in order to reach new customers, to enter growing or more profitable market segments, to react to competitors' initiatives, and so on.

Line- filling means adding further items in that part of a product range which a line already covers - might be done in order to compete in competitors' niches, or simply to utilize excess production capacity.

Dangers of line-stretching and line-filling:

Line-stretching: moving downmarket dilutes the image of a company for quality

Line-filling: cannibalization - new products can eat into the sales of existing

Both: additional costs

So companies have to make a decision to prune (shorten) their product lines. Why? It reduces (cuts) costs and generates savings.

V. Product design and development.

Product design - Process of working out of design of a product. Set of elements of the goods, such as style, the form, colour, the name, packing, safety and ease of use and service, profitability of manufacture and distribution; the good design allows the goods to be allocated in the market among the goods of competitors and is one of the most powerful tools of differentiation and positioning in the market of the most various goods.

Product development- Process of improvement of characteristics of existing kinds of production and working out of its new kinds

             VI. Product life cycle.

Product positioning is an important part of product management for new and existing products. All products have their life cycles:

·  Introduction

·  Growth

·  Maturity

·  Decline

The introduction stage generally involves slow growth. There are no profits at this stage because of the heavy advertising, distribution and sales promotions expenses.  Some producers apply a market-skimming strategy, setting a high price. Others will employ a market- penetration strategy, selling the product at as low price as possible. During the growth period sales rise quickly, producing profits, economies of scale. On the maturity stage the market is saturated. Sales will stabilize at the replacement purchase rate, brand loyalty. When a product has clearly entered its decline stage, some manufacturers will abandon it in order to invest their resources in more profitable or innovative products. Not all products have this typical life cycle. Some have an immediate rapid growth rather than a slow introductory -stage. Others never achieve the desired sales, and go straight from introduction to maturity, although of course this should have been discovered during test marketing before a full-scale launch.