MARKETING MANAGEMENT - Product Mix Decisions
Product line length - Product Mix Decisions
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Now you should ask a question what is the optimum size of a product line?
Product line length
Now you should ask a question what is the optimum size of a product line?
A line is too long if after eliminating a product is results into increased profits. A line is too short when any addition to it results into increased profits.
One thing should be clear to you that the Company’s overall objectives do affect the length of its product line. For instance, a company may have the objective of expanding its market share. It will then have a longer product line. Contribution of individual products to profits may be ignored. However, a company whose objective is to have larger profits will have a shorter product line consisting of those items, which contribute to profits substantially Product lines have a tendency, to lengthen over a period of time. Many a time, a firm may, have extra capacity, which is used for developing new items. . Sales people and trade put pressure on management to keep on adding items to a product line so as, to satisfy their customers.
Lengthening of the line shoot up costs. At some point, this must come to halt. Loss making items are then eliminated. The contribution of items to profits is studied. Thus in the life of an organization, there is a cycle of longer product line followed by a pruned product line. This cycle is repeated again arid again.
Now you should ask a question what is the optimum size of a product line?
A line is too long if after eliminating a product is results into increased profits. A line is too short when any addition to it results into increased profits.
One thing should be clear to you that the Company’s overall objectives do affect the length of its product line. For instance, a company may have the objective of expanding its market share. It will then have a longer product line. Contribution of individual products to profits may be ignored. However, a company whose objective is to have larger profits will have a shorter product line consisting of those items, which contribute to profits substantially Product lines have a tendency, to lengthen over a period of time. Many a time, a firm may, have extra capacity, which is used for developing new items. . Sales people and trade put pressure on management to keep on adding items to a product line so as, to satisfy their customers.
Lengthening of the line shoot up costs. At some point, this must come to halt. Loss making items are then eliminated. The contribution of items to profits is studied. Thus in the life of an organization, there is a cycle of longer product line followed by a pruned product line. This cycle is repeated again arid again.
Tags : MARKETING MANAGEMENT - Product Mix Decisions
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