Product

Question 1

Developing and launching a product that encapsulates the value proposition involves a complex set of decisions. What are the two fundamental decisions that all firms face?

Answer 1

• How much to invest in modifying or developing the product?
• How many products should the firm offer the targeted market segment?

Question 2

What defines product mix?

Answer 2

• Breadth (how many different product lines a firm has)
• Length (number of products within a product line)
• Depth (number of variants of each product in the product line)

Question 3

How many determinants of product mix decisions are?

Answer 3

6

Question 4

What are the determinants of product mix decisions

Answer 4

1º firm’s core strategy ( cost leader or differentiator ) cost leader has less less length and depth but more breadth
2º firm’s strategic objectives
Divest, harvest, maintain and grow (length, depth and breadth increases)
Enter (depth increases, then length and then breadth)
3º firm’s strategic focus
increasing volume (length, depth and breadth are high) or improving productivity (length, depth are short but breadth is high)
4º firm’s need focus
number of firm’s targeted market segments (more segments, more length and depth, doesn’t have breadth)
5º firm’s competition
Downward stretching -> firm is in upper end of the market (premium or luxury) stretches its product line downwards into more inexpensive segments.
Upward stretching -> firm is in lower end of the market (deep-discount target) stretches its product line upwards into more expensive segments.
6º nature of PEST variables faced by the firm
Downwards or upwards