Plan: Introduction: Product Planning and Development Product Line Product Mix

Advantages:

1 More products mean choice for customers and thereby more consumer satisfaction.
2. Costs of maintaining the sales force are reduced if more products are distributed through the same outlets.
3. Advertising of a wide range of products is likely to yield better results.
4. It may be possible to overcome inefficient middlemen and set up direct distribution to con­sumers and end users.
5. Production of items with a few minor changes in the model results in lowering cost per unit of production.

Factors Influencing Change in Product Mix:

Product mix is affected by several factors and particularly changes in the product may be due to the following factors:
(a) Goodwill of the company
(b) Competitors’ attitude
(c) Financial position of the company
(d) Change in company’s plan
(e) The purchasing power of consumers
(f) The change in demand of a product
(g) The introduction of by-products
(h) Possibility of adding new product with least cost
(i) The existing marketing capacity
(j) Advertising and distribution factors

Strategies of Product Mix:

The following strategies are generally employed by the producer of the product:
(a) Expansion of Product Mix:
Under expansion of product mix, a company may expand its present product mix by increasing the number of product lines or increasing the number of product items. It is also known as product diversification. The diversification may be concentric diversification, horizontal diversification or con­glomerate diversification.
(b) Contraction of Product Mix:
Under certain circumstances, the management has to drop the production of non-profitable prod­ucts. The company’s product line managers periodically review items for product line contraction. Sometimes the company may either eliminate an entire line or simply the assortment within a line. After that, the manager should concentrate on producing the higher margin items.