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Now let's talk about product classifications and

we need to understand this as we move forward.

There are different types of products,

they can be put into different groupings, different classifications.

Convenience goods are goods that you buy frequently,

they are low priced, they're advertised to a large mass market.

So convenience products are products such as candy and newspapers, soda, etc.

Shopping goods are goods that you buy less frequently.

They're higher priced and they're sold in fewer locations, so you do some

comparison shopping, so appliances like microwaves, smartphones, etc.

[INAUDIBLE] shopping goods.

Specialty goods are products that require special purchase effort,

so you have to work to locate them and buy them they're higher priced.

They have unique attributes and they tend to be as I said,

really expensive, such as this Patek Philippe watch.

These can retail anywhere from $10,000 for used one, low end up to $120,000.

Then the final category are unsought products and

those could be new innovations, very new or

they're products consumers don't know that they might need.

Or do not believe they need to purchase at the moment they do

usually require a lot of advertising, and please, no selling.

So think of an example, it could be burial plots.

Burial plots can be considered unsought products.

Now, these different types of products could form a part of a company's

product mix.

What is a product mix?

That's a total variety of products that themselves.

Some will sell just one product

others will sell a large number of different products.

Let's think of Samsung for example.

Samsung's product mix includes mobile phones.

Well, it should include mobile phones still,

even though some time ago, they did have this issue with the exploding phones,

but it has traditionally included Samsung mobile phones.

Netbooks, tablets, televisions, fridges, microwaves, printers, memory cards.

That's a whole wide range of products in their product mix.

Firms really have to be very careful about selecting a product mix,

as you need to generate profit from each of the products in the mix.

Now, the products in a company's mix can usually be grouped into basic categories.

A baker, for example, might have four categories,

say, breads, rolls, pastries, and cookies.

The width of a company's mix describes how many categories it has.

Think of Campbell's Soup Company as an example, it's mix is five categories wide,

canned soups, microwave soups, gravies, meal kits, and tomato juices.

That's their product product mix five categories wide,

that's the width of the product mix.

The length of the product mix shows the number of different

products in a product line.

Number of different, so

if the line is canned soups then you might have certain types of soups.

Under that, vegetable soups, soups with meat, etc.,

etc., so that's a length of the product line.

And another decision companies have to make with regard to the product mix

is about the depth, the depth.

So you have width, you have length and

for each area within that length, you have depth.

The depth is the amount of sub products offered by a business within

a particular line of products.

Increasing a company's product depth can involve adding new and

related products to an existing product line, or

increasing the number of varieties of a particular product offered.

Now, with product line decisions,

there are really two major decisions to be made as well.

One involves how far are you going to stretch

the product line and the other involves whether or

not you plan to lengthen the line by filling It filling.

Let's talk about both of these, stretching the line, and filling the line.

Product line filling involves increasing the number of products in an existing

product line, to take advantage of gaps in the market.

Which can sometimes be a barrier to competition many business use line

filling to round out already established product lines and

to help increase the market success of new unrelated products.

Now BMW, their 3 Series

usually retails about $33,000, that's the low end but

they have the higher end BMW i8 which reduce about 140,000.

Now BMW does not go way below sale cost to 20,000 and 15, etc.

The three series that's one.

One of the entry level models.

In between however, there were major gaps that BMW could fill with different models

at different prices, so they sold the M3 convertible.

Then you had the Touring BMW and other series such as a BMW 7 series.

So this is just some of the series, some of the models that they had that actually

filled their product line to capture different market segments and

fill gaps, all right?

Now, the next set of decisions that you make about a product is

with regard to line stretching.

Product line stretching includes when a business adds new

products to a product line and the new product types are of a higher or

lower quality than existing products.

Filling, remember, is when you have bookends on your product line, bookends,

and you fill between those bookends with different types of products.

Now, with stretching, you have the ends, but

you go past them, either up or down.

Either higher or lower quality on the existing products and the market.

If the new product types are cheaper all the low quality,

that's known as downward stretch.

If the product types are more expensive, or high quality, that's an upward stretch.

Supermarkets often stretch product lines themselves,

by offering value standard and premium versions.

Values, standard and premium of their own brands of products.

When you next you go to a supermarket, go through the isles and

look to see if they're valid,

their offerings that way, then you know they have done some stretching.

Product stretching is similar to line filling and

that it allows firms to fill any gaps that they have identified in the market place.

So in addition to filling gaps and

growing the product line, line stretching can have other benefits.

Think of the Hyundai Genesis G90 Hyundai, they do have a luxury car.

The 2017 model of this luxury automobile has a base price of, I believe $68,000.

Does Hyundai really expect to compete with BMW or Mercedes automobiles?

No, this entry into the market serves another purpose.

What do you think it could be?

Well, I'll tell you, this new entry,

the genesis, helps to shift opinion regarding other

down market models like the Hyundai Elantra and the Hyundai Sonata.

It moves them Upward to this newly created

up market level established by the Genesis Luxury automobile.

So perception begins to change.

Consumer start thinking more positively about the down market model,

down market stretches come with some risk.

So if you think, if the brand is known as luxury brand,

right, and you might think you might be able to do a dull market stretch.

You can't, stop, they could be brand illusion.

Think of when Jaguar tried to extend,

they tried to stretch with an extension called the Jaguar X-Type.

We discussed that earlier this was designed and manufactured by Ford,

and it led to erosion of the luxury image of Jaguar.

And the car was called one of the worst of all time, by time magazine, worst car.

We've talked about the up market stretch, and the down market stretch.

But there's also a two way stretch, Marriott Hotels,

they used a two-way stretch when they were extending their line.

They moved both upmarket and downmarket during this time.

This really helped to fill gaps, and with smart branding and

positioning, Marriott the company limited brand illusion.

Now products selection is a very important decision

as the product is the item you're selling.

You would need to strike a balance between giving customers choice and

also trying to keep of everybody by stocking too many products.

You don't want to do that.

Dividing products into product lines and then the product lines into

further subgroups helps groups to develop product strategies.

It will also help them identify which product ranges sell well and

which do not, as each product line will be monitored.

Now Let's talk about the product life cycle, does this make sense?

Is it still used?

Product Mix Decisions

Marketing Management I

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