Page 91 - Marketing the Basics 2nd

product and placeMent 83
The customer value hierarchy theory provides a great deal of insight into how a product can be designed to build competitive advantage. In essence it claims customers seek products that satisfy their needs more conveniently, completely and cost effectively. In other words, those products that offer the most value in the long run will be the most successful in their respective categories.
THE PRODUCT MIX
Most vendors sell more than one product in different product categories. Marketers define the portfolio of products offered to the market as the product mix. For classification purposes, the product mix is divided into four dimensions: length, width, depth and consistency. Consider the product-mix matrix of a fictitious beverage manufacturer.
The product-line length is the number of products sold in one category. For this company the product-line length in soft drinks product category is four. The product-line width is the number of different categories the company operates within, which in this case is three. Product-line depth refers to the number of varying packaging sizes of each product. Suppose our company sells Generic Cola brand in the following serving sizes: ‘Take a Big Gulp’, ‘Leaves You Wanting More’ and ‘I’m on a Diet’. The product-line depth for Generic Cola would be three. Finally, product-line consistency assesses how correlated, or closely related, each product-line is to each other in terms of benefits they offer consumers. In our example, the product-line is consistency high because all of their product-lines are designed to quench one’s thirst.
The purpose of assigning numerical values to the product-line, length, depth and consistency is to create a matrix or table of a firm’s portfolio. The matrix in turn provides a platform in which to evaluate the performance of a dimension in relation to another dimension, or in relation to the entire portfolio. To conduct this analysis, managers must assess the performance of each product within each dimension. These tests indicate which products need to be built, maintained, harvested or divested in order to meet the corporate objective. Below are some tests managers use to deter- mine performance at the product level.