Study Notes for Chapter 11

7 Pages

Management (MGM)
Course Code
Ingrid L.Stefanovic

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Chapter 11: Product Strategy INTRODUCTION Product Mix - the assortment of product lines and individual offerings available from a company Product Line - a series of related products Individual Offering - a single product within a product line THE EXISTING PRODUCT MIX - the marketer looks for gaps in the assortment that can be filled by new products or by modified versions of existing products - firms usually decide to expand or redevelop existing product lines since market requirements for these lines are well known Cannibalization - a situation where one product takes sales from another offering in a product line Line Extension - the development of individual offerings that appeal to different market segments but are closely related to the existing product line - a cheap way of increasing sales revenue at minimal risk THE IMPORTANCE OF PRODUCT LINES Desire to Grow - firms place limitations on their growth potential if they focus only on a single product - firms often introduce new products to offset seasonal variations in the sales of their current products Making Optimal Use of Company Resources - by spreading costs of operation over a series of products, average costs of all products is reduced! - advertising costs overall from an intermediary if the quantity of products is larger - same with production facilities - expertise of all the firms personnel can be applied more widely to a line or products instead of just one Increasing Company Importance in the Market - companies are expected to offer other related products to its initial one under the same brand name Exploiting the Product Life Cycle - as output reaches maturity and decline, the firm must add new products THE PRODUCT LIFE CYCLE - a products progress through introduction, growth, maturity and decline stages
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