A product that can be offered to a market for looking at, buying and using, and consumption that can satisfy a want or need. A firm has to look into several important issues while deciding a product policy such as what products to make, where to offer these products to which segment in the market, what type of brand policy etc.
Most firms produce a product line rather than a single product. A product line is a group of products that are identical in function and can be produced on the same production line, customer purchase needs, or distribution channels. For example, Adidas produces several lines of athletic shoes; MTNL offers several lines of long distance telephone services. A firm has to decide whether to extend the product line to fill a gap that can be done by a competitor or to add more items within the existing line of products. Normally firms position at the top end of the market and later stretch their lines downward. If the firm finds the lower end of the market attractive in terms of margins or faster growth rate then they may resort to that strategy.
The product mix consists of all the different product lines that a firm offers. Firm decides with aspects like width, length, depth and consistency, in short sizes and capacity of the product. The width of a product mix is based on the number of different product lines which a firm offers. Product mix length refers to the total number of items the firm carries within its product lines. Product line depth refers to the number of types offered of each product in the line (like shaving cream, in three sizes and two formulations – paste and gel). The product mix is better based on the relationship among product lines in terms of common end use, distribution channels, consumers, and price. A larger mix helps a firm to diversify products, useful for different consumer needs and encourage one stop shopping. It also requires additional capital and expertise in different product categories. A deep mix can satisfy the needs of several consumer segments for the same product, can have more shelf space, overcome competition, can have consumer oriented prices and sustain dealer support.
It can also have higher costs for inventory product alterations and order processing. A consistent mix allows a firm to focus on marketing and production expertise, create a strong image and can have stronger distribution relations.
Once a new product is commercialized the firm tries to seek acceptance with a view to increase sales as rapidly as possible. The growth in sales for a new product depends, on the adoption process which describes how a single consumer learns about and purchases a product and the diffusion process which describes how different members of the target market learn about and buy a new product. There are several factors to consider and alternative strategies from which to choose, while planning to sustain mature products. It may not be possible to retain aging products; if consumer needs disappear new products make them obsolete (remember what happened to VCPs and VCRs).
Competitors’ exhibit too much strength (especially in passenger car, motor cycle, consumer product segments) or the market becomes too saturated (office photocopier market). Finally, when products offer limited sales and profit potential involve large amounts of management time, tie up resources that could be used for other opportunities, create dissatisfaction at the distributor level due to low turnover and poorly affect on the company. These products should be deleted from the firm’s product offerings.
Once segments have been selected and targeted the firm must position its products and services, in the minds of its customers. Positioning is the act of designing the firm’s offer and image so that the market understands and appreciates what the firm stands for in relation to its competitors. Here the firm must carefully select the ways in which it will look apart from competitors.
The difference delivers a highly valuable benefit to a sufficient number of buyers and either isn’t offered by others or is offered in a more distinctive way by the company and is superior to other ways to obtain the same benefit, is communicable and visible to buyers, and cannot be easily copied by competitors.
The buyer can afford to pay for the difference and the company will find it profitable to introduce the difference.