If you would like to build a greater understanding of this and similar topics, you might consider a professional accounting qualification. Productmix decision from the perspective of timedriven. A companys product mix has the certain width, length, depth and consistency. Quizlet flashcards, activities and games help you improve your grades. On the other hand, implementing the product mix decision will determine the demand for activities, indicating where the process may need additional capacity in the future. About the marketing mix the marketing mix brings together all the tools available to a company to increase its sales. Product mix decision analysis is an important part of abc information. A pdf printer is a virtual printer which you can use like any other printer. T his direct customer communication permits firms to gain a wealth of useful customer insights that should influence every area of the marketing mix including pricing, distribution channel, and promotion mix decisions. As explained, product mix is a combination of total product lines within a company. Each of these product lines, in turn, consists of several sublines.
Optimization tutorial step by step product mix example. Product mix and brand productmix decisions are concerned with the combination of product lines offered by the company. Products, services, and product mix decisions a product is anything that can be acquired by a consumer to satisfy their specific wants and needs. The product itself, defined in terms of the function or need it serves the market, defined in terms of the conditions under which the product is used, preferences of potential customers, and ability to buy the product adaptation and manufacturing costs the company will incur. All of these product lines when grouped together form the product mix of the company. According to this model, the optimal product mix is decided using abc costs except for setup costs, and then the minimal setup cost is. Product mix planning is important aspect of companys overall strategy. Finally, an application of the proposed model is illustrated from a didactic example involving a manufacturing environment. The range of products offered by a firm is a critical strategic decision that will determine how the firm and their brands compete in the.
Note the reader is being pointed to the data and not left to. In the worksheet below, we have reserved cells b4, c4, d4 and e4 to represent our decision variables x 1, x 2, x 3, and x 4 representing the number of pallets of each type of panel to produce. The first of the product mix decisions refers to the product mix width. This is related to all the product mix and line decisions we have to take in a companys.
The product mix constitutes all individual product items and product lines the company markets. The product mix is described in terms or width and depth. A company like hul has numerous product lines like shampoos, detergents, soaps etc. Marketing mix of 4ps for competitive advantage meera singh1 1 computer department h. Product and pricing strategies programs, courses aiu. All of sensits functionality, including its builtin help, is a part of the sensit. Now that you have a clear idea of what is are a product and a service then we can go on to the product mix decision. Before turning to the product mix decisions, we first have to know what the product mix actually is. All of these product lines when grouped together form the product mix of the. Product mix, also known as product assortment or product portfolio, refers to the complete set of products andor services offered by a firm.
Managing product line and product mix business market. The relationship between marketing mix and customer. Primarily purchased in order to satisfy individuals purchasing for personal or household needs business products. Product line and product mix have direct relationship. In modeling product mix linear programming lp problems, a common assumption is that fixed costs will not change for decisions made within a relevant range in which revenues and costs are linear. Product mix decisions width, length, depth and consistency. Product mix, also known as product assortment, is the total number of product lines that a company offers to its customers. It acts as a crucial element of generating revenue for an organization. Explore marketing projects for mba pdf, marketing projects, advertising project topics or ideas, sales based research projects, latest synopsis examples, samples, structure abstract, base papers, source code, thesis ideas, phd dissertation for mba students, reports in pdf, doc and ppt for final year mba, diploma, bsc, msc, btech and mtech students for the year 2015 and 2016. A company may have a single product line in which case its product mix becomes the number of products being offered in the line length.
With the introduction of the bcgmatrix in the seventies, the subject of product portfolio management ppm has enjoyed a prominent position. After getting a taste of success and with an availability of more resources, companies decide to expand their product line andor introduce newer product lines in consonance with market opportunities or in response to competitors moves. How to determine optimal product mix is examined during the aat qualification, as well as on our cima and acca courses. This study proposes a mathematical programming model to analyze the pro. Various studies routinely report that 30 35% of products introduced to the market end up failing, even when the product is simply a line extension of an existing brand, or a new brand introduced in a category where the firm already has a successful product. For example, the new system will result in more accurate product costs which will influence pricing and product mix decisions. Files of the type mix or files with the file extension. Because decision variables and constraints usually come in logical groups, youll often want to use cell ranges in your spreadsheet to represent them.
Products, services, and product mix decisions marketing. Decisions on a productmix level product decisions at the productmix level tend to determine the width of a companys productmix. The product lines may range from one to many and the company may have many products under the same product line as well. Simply, it shows the number of items in the product line. Product line decision product line managers takes product line decisions considering the sales and profit of each items in the line and comparing their product.
The width of a product mix refers to how many different product lines the company carries. An empirical study rezky purna satit faculty of management and human resource development, universiti teknologi malaysia, malaysia huam hon tat faculty of business, management and social sciences, quest international university perak, malaysia. An organisation may have just one product line in its product mix. Products arent only tangible objects, they can also be services. Although product mix problems are seldom encountered in their simple textbook form in practice, they very frequently constitute important.
Product mix overview, dimensions and practical example. Retailers carry a mixture of products to satisfy various customers. The product mix is a concept with four different dimensions. Assortment analyses might simply include evaluating different product mix strategies for different retail channels in different store types or regions, with the resulting volume and price expectations associated with any given combination. This enables an analysis of the constituency of the product mix to be made. In the old products companies create excitement through line extension, i. Product mix and brand product mix decisions are concerned with the combination of product lines offered by the company. Therefore, the pricing decisions of an organization have a direct impact on its success. Pdf a model for product line decisions researchgate. The width of the mix refers to the number of product lines the company has to offer. Cocacola deals in juices, soft drinks, and mineral water and hence the product mix of cocacola is three products. The relationship between marketing mix and customer decision. The application of the four stages of plc can assist firms to plan marketing mix decisions. Product line group of products that are closely related because.
The product mix, also called product portfolio, is the set of all product lines and items that a company offers for sale. Product line depth refers to the number of versions offered of each product in the line. In general, a product goes through introduction, growth, maturity and decline. The length of a product mix refers to the total number of items in a particular product line. The current traditional abc product mix decision models do not explicitly consider capacity expansions. Product cost analysis our analysis begins by computing the costs of the two products, x and y, using the current cost system. Product mix decisions in marketing management tutorial. A product line often evolves, as manufacturers want to take advantage of a brands value and the success of other products in the mix. Ch8 managing products, product lines, brands, packaging. Managing product line and product mix free download as powerpoint presentation. A product is a combination of physical attributes say, size and shape. Total number of items in the product mix of the company. Pricing as an element of the marketing mix a nytime anything is sold, there must be a price involved. Relevant costs in product mix decision making seonmin kim.
E2515 making product mix decisions 1 constraint is the machine hours for lifemaster. Exhibit 1 shows the manufacturing cost of the two products under the existing cost system. Product definition a product service is the most important component of the marketing mix being the centre of focus as the offer to the market. We then have 375kg left, so we will use that to make as many of product 2 as possible. Many companies start as a single product item or product line business. The breadth of a product mix shows the different kinds of product lines that firm carries. Jul 23, 20 contraction of the product line dropping a product from the line. Product decisions or policy and strategy are concerned with the management of the products product portfolio and brand management. A product line is a group of products within the product mix that are closely related either because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets. Product life cycle plc shows the stages of a new product going through in the market place.
Identify the products that are the chosen cost objects. According to alexander 12, when travel agents sell a travel product to a customer, they will charge a percentage of the sales price as an agency commission. Product mix decision making pmdm a product mix is defined as the number of product lines that a company sells. Sunfeast biscuits special snacky glucose dreamcream marie golden bakery fitkit butter chilli orange choco orange coconut vitamin cashew flakes milky magic vanilla butter nut multigrain crunchy classic nice orange butter scotch coconut salted milk cream pasta. The width is all about the number of different product lines the company carries. A product mix is the set of all products and items that a particular seller offers for sale. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Its distinctive 4 ps allow users to make informed decisions about product policy, pricing policy, distribution policy and communication policy in order to attract consumers in the target market. This research suggests the integration of the two models as a proper model of the product mix decision.
Basic concept a product can be defined as a collection of physical, service and symbolic attributes which yield satisfaction or benefits to a user or buyer. A new product analysis and decision model b491 preliminary sales results may be used as prediction guides. In contrast, the successful company will find out what customers need or want and then develop the right product. Product mix and product line understanding product length. The astrocosmo problem considered earlier is an example. Mar 04, 2016 marketing management notes product mix decisions product mix consists of various product lines that an organisation offers. The focus of this book is to present concepts, principles, and techniques that provide guidance to help a seller set the. Product mix decision making pmdm definition operations. Consequently, lp is commonly used to solve for an optimal mix of products that maximizes contribution margin i. Product decisions at the productmix level tend to determine the width of a companys productmix. A product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlet, or fall within given price ranges. If the new product is analogous to products offered by the firm or its competitors, the growth rate of these products may aid in estimating the life cycle for the new product. To receive additional updates regarding our library please subscribe to our mailing list using the following link. The product mix typically con sists of various product lines, which are groups of associated items that consumers tend to use together or think of as part of a group of similar products or services.
The consistency of a product mix refers to how closely related are the companys product lines in terms of characteristics, production process, distribution channels to name just a few. Ch 7 operations study guide by kyrstnecole includes 32 questions covering vocabulary, terms and more. Therefore, while satisfying the needs of consumers, the company makes decisions related to the product, its price, distribution place and promotion, and the four of the group is considered to be the key marketing mix elements also called 4p marketing mix see. The product mix is the variety of products a company produces or sells to the marketplace. Number of different product lines carries by the company. Hence, normally done by persons with experience with understanding of market oriented strategic planning. Multiple regression analysis utilizing easily acquired data is used to estimate dynamic crosselasticity coefficients and the carryover effect of short duration price. An abbreviated version of bmws prod uct mix appears in exhibit 11.
This dimension of the product mix represents the extent to which the activities of the firm are diversified. The marketing mix comprises of four decisions which should be considered before launching a product. Pepsico product line delopment is closely relates to product mix because when product line is big then company product mix also developed. The relationship between marketing mix and customer decision making over travel agents. The following product mix example will illustrate not only product mix lp formulations, but also. Product there is no point in developing a product or service that no one wants to buy, yet many businesses decide what to offer first, and then hope to find a market for it afterwards.
The purpose of this paper is to incorporate the capacity expansion features into an abc product mix decision model by using a mathematical programming approach. Product mix and product line decisions the complete set of all products and services offered by a firm is called its product mix. Timedriven activitybased costing as pointed by tsai et al. Four important dimensions of a product mix can be identified. Product decision of marketing mix is concerned with both the existing products and the new products. What you need to convert a mix file to a pdf file or how you can create a pdf version from your mix file. The combination of all these product lines is the product mix. An activitybased costing system 53 abcs 7 steps step 1. Product mix decisions with capacity constraints recap 6.
Pricing can be defined as a process of determining the value that is received by an organization in exchange of its products or services. Because of factors such as these, a decision is made either to identify ways of adjusting the product in order to further distinguish it from others, or to design a. For example, when you go to a restaurant, the food is a product but what the waiter does is a service. Combination of all the product lines constitute the product mix.