Page 575 - Business Principles and Management

Unit 6

Product Selection

After designing the product, companies must make another set of decisions to
plan the product mix element. The first decision is whether to offer a product
line. A product line is a group of similar products with obvious variations in the
design and quality to meet the needs of distinct cus-
tomer groups. New and small companies may be-
gin by offering only one category of product to its
customers. That product may have choices of fea-
tures, options, and enhancements, but the basic
product is the same for all customers. With more
It is often difficult to identify the total number
experience and resources, the company may decide
of product lines a store carries by walking through
to expand its product line.
the store. But product lines are often used to
One of the obvious ways to expand a product
organize a customer’s online shopping experi-
line is to offer different sizes of the product. That
ence. Point your browser to www.thomsonedu.
can be done with the serving sizes of food items, as
comschoolbpmxtra. Look at the tabs in the Web
well as with the sizes of automobiles. As an
site. How do these indicate product lines? Click
example, when sports utility vehicles (SUVs) were
on the “See All” tab. Describe how this shows
first introduced, most manufacturers produced
Wal-Mart’s online product assortment. Based on
one midsize model, such as the Chevy Blazer or
your research, how does the online site differ
Ford Explorer. As the popularity of SUVs grew,
from Wal-Marts you have visited?
manufacturers began to appeal to other market
segments with smaller models, such as the Toyota
www.thomsonedu.com/school/bpmxtra
RAV4, and then very large models, including the
Mercury Mountaineer and Cadillac Escalade. Rising
gas prices opened a market for fuel-efficient SUVs,
such as Honda’s CR-V. Some companies offer only one model size, but others
have a model in each size category for a full product line.
Another way to develop a product line is to offer variations in quality and
price. If you visit an appliance store, you will usually find low-, mid-, and high-
priced choices for each type of appliance, such as refrigerators, dishwashers, and
microwaves. The price differences are based on the construction, quality of ma-
terials, and available features and options. A person buying a microwave for a
college dorm room probably does not want the most expensive, full-featured
choice, and so will be drawn to the lower-priced end of the product line. On the
other hand, a gourmet chef making a purchase for a new kitchen may want only
the highest quality and latest features.
Once a company has made decisions about a product line, it continues plan-
ning by determining the product assortment. A product assortment is the com-
plete set of all products a business offers to a market. A product assortment can
have depth, breadth, or both. A company offering a deep product assortment
carries a large number of choices of features for each product category it handles.
Walk into a Bath and Body Works store and look at the variety of fragrances,
colors, bottle sizes, and packages for any of the major products sold there. That
is an example of a deep assortment. Compare that to the choices of bath lotions
that you might find in a small drugstore, where the assortment would be limited.
With a broad product assortment, a business offers a large number of differ-
ent but often related products to its customers. If you visit a garden center, you
may find many different types of products for lawns and gardens, ranging from
plants, shrubs, and trees to lawn mowers, hoses, and patio furniture. There may
not be a wide range of choices within every product category, but customers
should be able to satisfy most of their outdoor home needs at one location.
As shown in Figure 21-1, businesses can choose any combination of depth and
breadth for their product assortment. Some will be very small and specialized,

562