Managing the product range

Key terms

1. Choose the Russian equivalents on the right for the following English terms on the left.

life cycle	стадия спада
line stretching	стадия роста
line filling	стадия зрелости
introduction stage	заполнение продуктовой линейки
growth stage	стадия внедрения
maturity stage	жизненный цикл
decline stage	удлинение линейки
product deletion	новая продукция
product development	ассортимент продукции
product innovation	жизненный цикл товара
product management	удлинение товарной линии
product life cycle	линейка продуктов
product mix	управление производством товара
line stretching	разработка продукта
product line	снятие товара с продаж

Before you read

1. Have you found a new consumer product on a recent shopping trip?

2. What can be the reasons for the company to launch a new product and withdraw the old one?

Text 3.2 Scan it for detailed understanding and do the concept check.

Product life cycle and product range

The product life cycle is a useful concept to describe how products progress from introduction through to obsolescence. The theory is that products, like living things, have a natural life cycle beginning with introduction, going through a growth phase, reaching maturity, then going into decline, and finally becoming obsolete.

In the introduction phase, the product’s sales grow slowly, and the profit will be small or negative because of heavy promotion costs and production inefficiencies. If the product is very new, there will also be the need to persuade retailers and others to stock the product.

In the growth stage, there will be a rapid increase in sales as the product becomes better known. At this stage, profits begin to grow but competitors will also be entering the market, so the producer may now need to think about adapting the product to meet the competitive threat.

In the maturity phase the product is well known and well established: at this point the expenses on promotion decreases and production economies of scale become established. By this time, competitors will almost certainly have entered the market, so the firm will need to develop a new version of the product.

In the decline phase, the product is losing its market share and profitability rapidly. So the marketer must decide whether it is worthwhile supporting the product for a little longer, or whether it should be allowed to disappear. Supporting a product for which there is little natural demand is very unprofitable, but sometimes products can be revived and relaunched, perhaps in a different market. The assumption is that all products exhibit this life cycle, but the timescale will vary from one product to the next. Some products, for example, computer games, may go through the entire life cycle in a matter of months. Others, like pizza, have a life cycle measured in thousands of years, and may never become obsolete.

Companies whose objectives include large market share and market growth generally have long product lines. A product line is a group of related products produced by one manufacturer, for example products that are intended to be used for similar purposes or to be sold in similar types of shops. A product mix (also known as a product assortment) is composed of all the product lines and items that a particular seller offers for sale .Additions to product lines can be the result of either line-stretching or line-filling. Line-stretching means lengthening a product line by moving either up-market or down-market, i.e. manufacturing goods of higher or lower quality. It is done to get more customers, to enter growing or more profitable market segments, to react to competitors’ activity. But moving down the market may damage company’s image for quality. A company at the bottom of a range will not convince dealers and customers that it can produce quality product for the high end. Line-filling is a business strategy that involves increasing the number of products in an existing product line to take advantage of market place gaps and reduce competition. Many businesses use line filling to round out an already well established product line and to help increase the market success of new related products.

Text 3.3 Read the text and comment on the picture given below.