Product Flashcards
What are the two fundamental decisions that all firms face?
How much to invest in modifying or developing a product and how many products should the firm offer the targeted market segment.
What are the terms in which product mix is defined?
breadth, length and depth.
What is breadth?
breadth refers to how many different product lines a firm has.
What is length?
length refers to the number of products within a product line.
What is depth?
Number of variants of each product in the product line.
What is the difference between cost-leaders and differentiators?
Cost-leaders usually have less length and depth in their product mixes than differentiators, and usually more breadth than differentiators.
What is the first determinant of a product mix decision?
Core strategy: Cost-leader or differentiator.
What is the second determinant of a product mix decision?
strategic objective: Divest, harvest, maintain or grow.
What happens if the objective is to enter?
The depth of the initial product usually increases first, followed by increases in product mix length, and then breadth.
What is the third determinant of a product mix decision?
strategic focus: A focus on increasing volume or a focus on improving productivity.
What is the fourth determinant of a product mix decision?
Need focus: he number of firm’s targeted market segments.
What are the fifth and sixth determinants of a product mix decision?
The firm’s competition and the nature of PEST variables faced by the firm.
When does downward stretching occur?
Downward stretching occurs when a firm positioned at the upper end of the market stretches its product line downwards into more inexpensive segments.
When does upward stretching occur?
Upward stretching occurs when a firm positioned at the lower end of the market stretches its product line upwards into more expensive segments.
