186 CHAPTER10 MANAGINGPRODUCTLINES ANDBRANDS
wheat) or natural products(e.g., lumber).Farm products are sold through
intermediaries; natural products are generally sold through long-term supply
contracts, for which price and delivery reliability are key purchase factors.
Manufactured materialsandpartsfall into two categories: component materials (iron)
and component parts (small motors); again, price and supplier reliability are
important considerations. Capital itemsare long-lasting goods that facilitate
developing or managing the finished product. They include two groups:
installations (such as factories) and equipment (such as trucks and computers),
both sold through personal selling. Suppliesandbusiness servicesare short-lasting
goods and services that facilitate developing or managing the finished product.Product Mix
Aproduct mix(also called product assortment) is the set of all products and items that
a particular marketer offers for sale. At Kodak, the product mix consists of two strong
product lines: information products and image products. At NEC (Japan), the prod-
uct mix consists of communication products and computer products.
The product mix of an individual company can be described in terms of width,
length, depth, and consistency. The widthrefers to how many different product lines
the company carries. The lengthrefers to the total number of items in the mix. The
depthof a product mix refers to how many variants of each product are offered. The
consistencyof the product mix refers to how closely related the various product lines
are in end use, production requirements, distribution channels, or some other way.
These four product-mix dimensions permit the company to expand its business
by (1) adding new product lines, thus widening its product mix; (2) lengthening each
product line; (3) deepening the product mix by adding more variants; and (4) pursu-
ing more product-line consistency.PRODUCT-LINE DECISIONS
Especially in large companies such as Kodak and NEC, the product mix consists of a
variety of product lines. In offering a product line, the company normally develops a
basic platform and modules that can then be expanded to meet different customer
requirements. As one example, many home builders show a model home to which
additional features can be added, enabling the builders to offer variety while lowering
their production costs. Regardless of the type of products being offered, successful
marketers do not make product-line decisions without rigorous analysis.Product-Line Analysis
To support decisions about which items to build, maintain, harvest, or divest, product-
line managers need to analyze the sales and profits as well as the market profile of
each item:➤ Sales and profits.The manager must calculate the percentage contribution of each item
to total sales and profits. A high concentration of sales in a few items means line
vulnerability. On the other hand, the firm may consider eliminating items that deliver
a low percentage of sales and profits—unless these exhibit strong growth potential.
➤ Market profile.The manager must review how the line is positioned against
competitors’ lines. A useful tool here is a product map showing which competitive
products compete against the company’s products on specific features or benefits.
This helps management identify different market segments and determine how well
the firm is positioned to serve the needs of each.