What major product decisions are taken in product management? What is line filling?
What major product decisions are taken in product management? What is line filling?
Or
What is meant by product simplification and product diversification? Explain the difference between two.
Ans.
Product Simplification
Simplification is the method by which an unduly long and complicated product line is contracted. Over the years brands and variants keep on accumulating in a product line. In the changed market conditions they might have lost their profitability. The over-crowed product line may be eating away. the resources and the efforts of the firm. Such problems force the manufacturer to withdraw certain items from the product line.
According to Philip Kotler, “many sick and marginal products never die; they are allowed to continue in the company’s product mix until they fade away”, Simplification is a major decision where conscious decision is taken to reduce the number of such unprofitable products.
Product Diversification
This method is also called product line expansion or line stretching. method. According to Philip Kotler, “a product line is too short if profits can be increased by adding items the line is too long if profits can be increased by dropping items.” The aim of diversification is to enter a new product to the existing product line. It does not mean introducing a new quality of the same product. According to Philip Kotler “Line stretching occurs when a company lengthens its product line beyond its current range. The company can stretch its line down market, up market or both ways.”
A firm which has already established its position in the high price slot offers products in the same line for the lower end markets. This is known as stretching down. On the other hand if a firm which has positioned its product for the lower end market decides to make higher priced offer for the top slots is called stretching up. Diversification is profitable in case of multi-market and multi-product companies.
Difference between Product Simplification and Product Diversification
| Sl. No. | Product Simplification | Product Diversification |
| 1. | It aims maximising efficiency in production, distribution and promotion and saving cost. | It aims at maximising varieties by extending the product line and satisfying more and more numbers of consumers. |
| 2. | It aims at producing the similar type of products/product line. |
It aims different types of goods/product line. |
| 3. |
Product line is contracted. |
Product line extends when new range enters the market. |
| 4. | It is useful to those firms which try to save cost and maximise efficiencies in production distribution and sales promotion. | Diversification is profitable for multi-market and multi-product firms. |
Line Filling
When a firm introduces more items to the line to plug in its present range of offers it is called line filling. The line is lengthened by adding more items within the present range. The intention is that customers do not go to competitors for models in particular price slots. For example in the beginning of their entry in T.V. market Videocon introduced high priced model for the elite market but later they introduced more ranges of colour TV’s even the model and budget line for lower middle income group.
This line filling method is usually adopted when dealers about lost sales because of the missing items.
