PRODUCT MIX

Company Products & Services

PRODUCT MIX

CONTENTS

PRODUCT MIX

A key element of the industry marketing strategy is the development of a viable set of company products and brands.

By a product, one means anything (goods or services) that might be offered to a market for attention, acquisition or consumption.

The sum of the product items and lines constitutes the industry product mix. This product mix will have certain width, depth and consistency. It will express the company's positioning strategy, whether to be full line or specialize by market, product line or situation. The industry must periodically review its product mix to see if it will yield the desired profit and sales growth over time. Current products can be classified by their sales growth, market share and profitability. The analysis often reveals the need for stepped-up new-product development as well as product pruning. Management-science techniques offer an opportunity to determine the optimal product mix for a given set of management objectives.

The industry must also develop a set of brand policies concerning whether to sell their products under the company's own names, distributors' names, or both and whether to develop family or individual brands. Furthermore the possibilities to employ brand-extension and multi-brand strategies also exist.



THE CONCEPT OF THE INDUSTRY PRODUCTS

Before exploring the product-mix and brand issues in the industry it may be useful to quickly define what can be regarded as a product, being broadly:

A product is anything that can be offered to a market for attention, acquisition or consumption; it includes physical objects, services, personalities, places, organizations and ideas.

The character of the product may be seen differently by the buyer and the seller. It is useful to distinguish three concepts of a product:

   1. Formal product
   2. Core product
   3. Augmented product

 

i. The Formal product is the physical object or service that is offered to the target market. It is what is readily recognized as the offer.

If it is a physical object, it may be recognized by the market as having up to five characteristics:

   1. Quality level
   2. Features
   3. Styling
   4. Brand name
   5. Packaging

If it is a service, it may have some or all of these facets in an analogous manner.

Where,

1.	Quality level	=  Level of Competence
2.	Features	=  Types of Services, Terms, Costs, Speed
3.	Styling	=  Nature of Service, Customer perceptions, etc
4.	Brand name	=  Formal Name of Service
5.	Packaging	=  Structure, Location, Availability

ii. The Core product is the essential utility or benefit that is being offered to, or sought by the buyer.

For example, the woman purchasing lipstick is not buying a set of chemical and physical attributes for their own sake; she is buying beauty. The person buying a camera is not buying a mechanical box for its own sake; he is buying pleasure, nostalgia, and a form of immortality.

The formal product is simply the packaging of a core product or benefit. The marketer's job is to sell benefits, not features. He must find ways to attribute 'benefits' to the product.


iii. The Augmented product is the totality of benefits that the customer receives or experiences in obtaining the formal product.

For example, the augmented product of IBM was not only the computer but a whole set of accompanying services, including instruction, canned software programs, programming services, maintenance and repairs, guarantees and so on. IBM's outstanding position in the computer field was due in part to its early recognition that the customer wants all of these things when he buys a computer. This recognition led to the notion of system selling: the company is selling a system, not just a computer. It leads the seller to look at the buyer's total consumption system - 'the way a purchaser of a product performs the total task of whatever it is that he or she is trying to accomplish when using the product'. Thus (in latter years) when IBM effectively moved away from hardware towards software (or systems) this came as no surprise to industry analysts.

As a result, sellers are able to recognize many opportunities for augmenting their product offering as a competitive manoeuvre.

The industry must always remember the adage that the new competition is not between what companies produce, but between what they add to their output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing and other things that people value. The firm that develops the right augmented product will thrive in this competition.

	PRODUCT CONCEPT
	Quality
	Features
	Styling
	Branding
	Packaging

H30           Grid Definition

PRODUCT-MIX STRATEGY

In looking at the decisions the industry have made, and are likely to make in the future, in regards to their product-mix one must consider a number of elements which are analyzed in this section.

One must consider the number of individual products offered by the industry, yet to facilitate a speedy appraisal this section will limit itself to the strategically important product groups.

PRODUCT ITEMS - LINES - MIX

The large number of individual products within the industry means that product policy decisions are made at three different levels of product aggregation:


Product item:

A specific version of a product that has a separate designation in the product list.

Product line:

A group of products that are closely related either because they satisfy a class of need, are used together, are sold to the same customer groups, are marketed through the same types of outlets or fall within given price ranges.

In the case of the industry the main product groups are as follows:-  

Product mix:

Defined as ‘the composite of products offered for sale by a company’s business unit’; which in the case of the industry is as follows:-

PRODUCT-MIX CHARACTERISTICS

The product mix of the industry can be described as having certain attributes which aggregate to indicate the Quality of the Product-Mix:

   1. Width
   2. Depth
   3. Consistency

The Width of the product mix refers to how many different product lines are found within the industry. Of course, the Width of the product mix also depends on the definitions established for product-line boundaries.

The Depth of the product mix refers to the average number of items offered by the industry within each product line. One or more product-line Depths can be averaged to indicate the typical depth of the entire Company product mix.

The Consistency of the product mix refers to how closely inter-related the various product lines are in end use, process requirements, distribution channels or in some other way which reflects the operations of the industry.

All three dimensions of the product mix have a market rationale.

    1. Through increasing the Width of the product mix, the industry hopes to capitalize on its reputation and skills in present markets.

    2. Through increasing the Depth of its product mix, the industry hope to entice the patronage of buyers of widely differing tastes and needs.

    3. Through increasing the Consistency of its product mix, the industry hopes to acquire an unparalleled reputation in a particular area of business activity.

The concepts of Width, Depth and Consistency are related to those of product item, lines and mix of the industry as a matrix.

    a.    Product policy at the level of the product item involves the issue of whether to modify, add, or drop product items.

    b.    Product policy at the level of the product line involves the issue of whether to deepen or shorten an existing line.

    c.    Product policy at the level of a product mix involves the issue of which markets to be in.

The following diagram can be used by the reader to estimate the quality of the Company’s Product-Mix. As a further indication of the Quality of the Company’s Product-Mix readers can estimate the Quality of the Product-Mix of competitors and then compare this with the industry.

Product Trade Cell:

a group of markets that are closely related either because of their close geographic proximity, historic connections or trade agreements, are defined together, are in general sold to the same products, are marketed through the same types of outlets or fall within given price ranges.

In the case of the industry these are as follows:-  

Product Competitors:

the major competitors which have product offerings for sale; which in the case of the industry is as follows:-  

	PRODUCT-MIX QUALITY
	Items in Product Line 1
	Items in Product Line 2
	Items in Product Line 3
	Items in Product Line 4
	Total of all Items in all Product Lines

H31      Grid Definition

PRODUCT-MIX ALTERNATIVES

The industry has several options with respect to the width, depth and consistency of their product-mix. The number of possible combinations is revealed by considering the options available to the industry.

At least six product strategies are available.

1)	Full-line all-market strategy. This strategy describes the intention to be all things to all people. To implement it one must serve all market segments and offer a full choice of products within the standard range and design of the industry. This is of course an impossible target for the industry.
2)	Market specialist. This strategy calls for offering a full line of all types of products required by a particular market segment.
3)	Product-line specialist. Here one specializes in products of a single type and sells these items to all markets. This scenario would be appropriate for product technology led companies.
4)	Limited product-line specialist. Companies in this category offer a particular design of a single type of product, which usually, by virtue of its design, is intended for only one market segment. This is a scenario for smaller independent companies.
5)	Specific-product specialist. This strategy involves picking a particular product and marketing it according to the opportunity available. Usually, because of its singular character, one or only a few market segments are involved.
6)	Special-situation specialist. A company with this strategy seeks to meet special situation needs with its own special capabilities, perhaps in product design, low cost processes, techniques or product flexibility. The markets for companies in this category are usually limited in size, heterogeneous and often protected from major companies.

PRODUCT-MIX OPTIMIZATION

Given the basic product-mix strategy of the industry, they must still review from time to time whether the specific product items and lines in the mix represent a good balance in terms of future sales growth, sales stability and profitability.

Markets are continuously changing their needs and preferences; competitors keep entering and altering their marketing mixes; and the environment keeps changing. All of these changes favor certain of the Company’s products and can hurt others. Some of their products will just begin to show a profit, others will continue to produce good profits, while others will be slipping badly.

It is necessary to critically evaluate the existing Company product-mix and in order to do this one needs to analyze the relative profit contribution of the strategic Company product groups.

This is called a Product-Mix Audit and identifies future problems for the industry.

The analysis is simple. One estimates the relative profit contribution of each product group at the present time and then realistically notes the likely growth or decline of that level of profit over a period of 4 years. In this respect one can use the market data provided elsewhere in this manual to predict the impact on the product groups.

If at the end of the 4 year period the aggregate product group contribution to profit has fallen, then the sum of the fall indicates the likely profit deficit for the industry and thus indicates the level of new product introduction required from the industry.

Sound product-mix strategy calls for the industry to ensure the continuous addition of new products and the continuous elimination of old products.

The Company’s product mix reveals the potential for future sales growth through the proportions of its products in each of the six following categories.

1)	Tomorrow's breadwinners - new products or today's breadwinners modified and improved.
2)	Today's breadwinners - the innovations of yesterday.
3)	Products capable of becoming net contributors if something drastic is done.
4)	Yesterday's breadwinners - typically products with high volume, but badly fragmented into 'specials', small orders and the like.
5)	The 'also-rans' - typically the high hopes of yesterday that, while they did not work out well, nevertheless did not become outright failures.
6)	The failures.

	PRODUCT-MIX AUDIT
	Profit Contribution % in this year
	Forecast % Profit Contribution : Year + 1
	Forecast % Profit Contribution : Year + 2
	Forecast % Profit Contribution : Year + 3
	Forecast % Profit Contribution : Year + 4

H32

	PRODUCT-MIX AUDIT
	Profit Estimate % in this year
	Forecast % Profit Estimate : Year + 1
	Forecast % Profit Estimate : Year + 2
	Forecast % Profit Estimate : Year + 3
	Forecast % Profit Estimate : Year + 4

H33      Grid Definition

If the industry neglects either the new-product development function or the product-pruning function, or both, it will awaken one day to find a very unbalanced, unhealthy and unprofitable product mix.

One can appraise the soundness of their current product mix by the classification each of their product groups along three dimensions:

   1. Sales growth
   2. Market share
   3. Profitability


If each dimension is divided further into two regions, high and low, one thus has six possible product situations.

This product-mix classification technique has four benefits:

1)	It indicates whether the rate of new-product development or investment in the industry is sufficient.
2)	It indicates whether the rate of product pruning is sufficient and which products are candidates for product pruning in the industry.
3)	It indicates which product objectives the industry might set for each product group, that is, whether the product's market share, sales growth or profitability should be stressed.
4)	It indicates how product resources should be allocated by the industry to the different products.

The product strategy implications for the industry of products in the first four cells are as follows:

1)	Cell 1 products - showing high growth and high share - will be high earners for the industry and they should spend enough to maintain the high market share and not be tempted to extract extra-high profits in the short-term at the expense of market share.
2)	Cell 2 products - showing high growth but low share - require extra-heavy spending to build up market share before growth slows down. The industry cannot manage too many products like this and should consider withdrawing a product that it cannot move into a high market-share position.
3)	Cell 3 products - showing low growth but high share - are major sources of earnings. They justify enough investment to maximize cash flow consistent with maintaining market share but not more.
4)	Cell 4 products - showing low growth and low share - are candidates for product milking or pruning. They do not justify much investment or attention.

 

One can also select positive product strategy according to the following five groupings:-

1)	High-growth products deserving the highest investment support.
2)	Steady reinvestment products deserving high and steady investment.
3)	Support products deserving steady investment support.
4)	Selective pruning or rejuvenating products deserving reduced investment.
5)	Venture products deserving heavy R & D investment.

In the search for new products to add to the product mix, the industry is guided by specific criteria, such as seeking products that are compatible with their existing technological or marketing strengths or products whose sales behave counter-cyclically or counter-seasonally.

Considering the last point, the industry tries to avoid high sales variability because this means periodic excess capacity, staff under-utilization and so on. It would be a mistake to add new products whose sales correlate closely with current sales so that they aggravate the fluctuations. Even a new product whose sales are stable will not dampen sales fluctuations. The main hope of the industry is to find new products whose sales are negatively correlated with the sales time pattern of current products.

The static product-mix optimization problem is defined as follows:

given   ⁿ  product possibilities,

choose  ^m  of them (when   ^m< ⁿ   ) such that profit is maximized subject to a given level of risk and other constraints.

The problem is solvable through mathematical analysis, the most important condition being the absence of strong demand and cost interactions among the various products being considered.

The dynamic product-mix optimization problem is the problem of timing deletions and additions to the product mix in response to changing opportunities and resources so that the product mix remains optimal through time.

Although it is certain that little work has been done in the industry on this problem, computer simulations are available for the use of company managers should they address these factors.

The industry management are interested in what will happen to profits, sales stability and sales growth as the product-mix is changed. A logical approach would be to simulate possible sequences and timings of planned product deletions and additions over some future time period. Such calculations would provide the present management with the profit, stability and growth characteristics of the different possible transformations of the product-mix through time.

THE INDUSTRY OPERATIONS

	PRODUCT STRATEGY
	High Growth Products
	Steady Reinvestment Products
	Support Products
	Selective Pruning Products
	Venture Products

H34      Grid Definition

BRAND STRATEGY

Brand strategy is intimately tied up with the question of product-mix strategy. The industry face three crucial decisions on brand strategy.

The first is whether and to what extent, they should put brand names on their products (brand versus no brands).

The second is whether the brand names should be those of the company or those of the distribution channels ( suppliers' versus distributors' brands).

The third is whether the company's own brands should go under one, a few, or many individual names ( family brands versus individual brands).

A few definitions are in appropriate:

	A brand is a name, term, sign, symbol or design, or a combination of all of them which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from their competitors.
	A brand name is that part of a brand which can be vocalized - the utterable.
	A brand mark is that part of a brand which can be recognized , but is not utterable, such as a symbol, design or distinctive colouring or lettering.
	Finally, a trademark is a brand or part of a brand that is given legal protection because it is capable of exclusive appropriation. Thus a trademark is essentially a legal term protecting the seller's exclusive rights to use the brand name and/or brand mark.

 

Branding will be used as a general term describing the establishing of brand names, marks, or trade names for a product.

BRAND -v- NO BRANDS DECISIONS

Why should the industry consider a branding programme when it clearly involves cost, packaging, stamping, legal protection - and a risk, should the product should prove unsatisfying to the user?

At least four purposes may attract the industry:

1)	A brand mark for identification purposes to simplify handling or tracing.
2)	A legal trademark and patent to protect unique features of their product from imitation.
3)	The industry may want to connote a certain quality that they are offering so that satisfied buyers might easily obtain that product again through brand recognition.
4)	The industry may see the brand name as an opportunity for endowing the product with a unique story and character that may create the basis for price differentiation.

Sometimes the pressure for branding comes not from company management but from the distributor or ultimate buyer. Distributors may want names as a means of making the product easier to handle, identifying suppliers, holding protection to certain quality standards and increasing buyer preference. Ultimate buyers may want brand names to help them identify the products they want without close inspection. The brand name has informational value to the buyer.

In branding their products, companies may use their name(s) (suppliers' brands), the names of their distributors (distributors' brands), or follow a mixed brand policy, producing some output under their own name(s) and some output under distributors' names.

Historically, suppliers' brands have dominated most markets, however in recent times, larger stores and wholesalers have seen an advantage in developing and offering their own brands. The distributor may be able to obtain and sell the products at lower prices than the suppliers' brand (because private brands do not bear the suppliers' promotional expenses and because of volume of purchasing), passing on some of these cost savings and still realizing a higher profit margin. Having Own Branding gives a distributor more control over pricing and also some measure of control over the producing company because the distributor can threaten to change the source of supply. Because of these and other advantages, distributors' brands have become an important factor in brand competition.

The competition between suppliers' and distributors' brands has been labeled the 'battle of the brands'. In this confrontation, the distributor has many advantages on his side. Retail merchandising outlets are scarce, and many suppliers, especially newer and smaller ones, cannot introduce products into distribution under their own name. The distributors take special care to maintain the quality of their brands, building consumers' confidence. Many buyers know that the private label is often manufactured by one of the big suppliers anyway. The distributors' brands are often priced lower than comparable suppliers' brands, thus appealing to budget-conscious shoppers, especially in times of inflation. The distributors give more prominent display to their own brands and make sure they are better supplied. For these and other reasons, the former dominance of the suppliers' brands is ending. Indeed, some marketing commentators predict that distributors' brands will eventually knock out most suppliers' brands.

Suppliers of national brands are in a very trying situation. Their instinct is to spend a lot of money on consumer-directed advertising and promotion to maintain strong brand preference. Their price has to be somewhat higher to cover this promotion. At the same time, the mass distributors put strong pressures on them to put more of their promotional money towards trade allowances and deals if they want adequate shelf space. Once suppliers start giving in, they have less to spend on consumer promotion and their brand demand starts deteriorating. This is the national brand suppliers' dilemma.

FAMILY -v- INDIVIDUAL BRAND DECISIONS

If the industry choose to produce most of their output under their own name they still face several choices.

At least four brand name strategies can be distinguished:

1)	Individual brand names. This policy is followed by companies with consumer, highly advertised, products.
2)	A blanket family name for all products. This policy is followed by companies with related products sold in limited markets.
3)	Separate family names for all products. This policy is followed by certain large scale distributors.
4)	Company trade name combined with individual product names.

Competitors within the same industry may adopt quite different brand strategies.

    What are the advantages of an individual-brand-names strategy?

A major advantage is that the industry does not tie its reputation to the product's acceptance. If the product fails, it is not a bad mark for the company. Or if the new product is of lower quality, the industry does not dilute its reputation.

The supplier of a line of expensive or high-quality food products can introduce lower-quality lines without using its own name.

On the positive side the individual-brand-names strategy will permit the industry to search for the best name for each new product. Another advantage is that a new name permits the building of new excitement and conviction.

The opposite policy, that of using a blanket family name for all products, also has some advantages if the industry is willing to maintain quality for all items in the line. The cost of introducing the product will be less, because there is no need for 'name' research, or for expensive advertising to create brand name recognition and preference. Furthermore, sales will be strong if the company's name is good.

Where a company produces or sells quite different types of products, it may not be appropriate to use one blanket family name. Companies often invent different family brand names for different quality lines within the same product class.

Finally, sometimes managers may want to associate their company name along with an individual brand for each product. In these cases, the company name legitimize, and the individual name individualizes, the new product.

In the present discussion two particular strategies deserve mention:

  1. Brand Extension strategies
  2. Multi-brand strategies

 

1. Brand extension strategy

A brand-extension strategy is any effort to use a successful brand name to launch product modifications or additional products. In the case of product modifications, it is commonplace to compare one brand with a new and improved replacement. Brand extension also covers the introduction of new package sizes, features, models and so on. More interesting is the use of a successful brand name to launch new products. Brand extension has also been used by companies to cover a variety of new products that could not easily find distribution without the strength of the original name.

Another kind of brand extension occurs when suppliers of consumer and producer durables add stripped-down models to the lower end of their line to permit advertising their brand as starting at a low price. Thus companies may advertise their products as 'starting at $99'. In these cases, these 'fighter' or 'promotional' products are used to draw in customers on a price basis who, upon seeing the better models, usually decides to trade up. This is a common strategy but must be used carefully. The 'promotional' brand, although stripped, must be up to the line's quality standards. The seller must be sure to have the promotional product in stock when it is advertised. Consumers must not get the feeling they were 'taken', or else they may terminate their future business with the seller.


2. Multi-brand strategy

A multi-brand strategy is the development by a particular seller of two or more brands that compete with each other. Suppliers of high volume consumables have pioneered this strategy.

There are several reasons why suppliers turn to multi-brand strategy. First, there is the severe battle for point of sale coverage. Each brand that the distributor accepts get some allocation of merchandising and coverage. By introducing several brands, a supplier ties up more of the available distributor resources, leaving less for competitors.

Second, few consumers are really so loyal to a brand that they would not, under the right circumstances, try another. They respond to price-cutting deals, gifts and new-product entries that claim superior performance. Thus the supplier who never introduces another brand entry will almost inevitably face a declining market share. The only way to capture the 'brand switchers' is to be on the offering end of a new brand.

Third, creating new brands develops excitement and efficiency within the supplier's organization. Certain companies see their individual brands and managers in internal competition that keeps products dynamic and in a state of flux.

Fourth, a multi-brand strategy enables the industry to take advantage of different market segments. Consumers respond to various appeals, and even marginal differences between brands can win a large following.

In deciding whether to introduce another brand, companies should consider such questions as:-

	Can a unique story be built for the new brand?
	Will the unique story be believable?
	How much will the new brand cannibalize the sales of the company's other brand versus the sales of the competitors' brands?
	Will the cost of product development and promotion be justified by the estimated Return on Investment?

A major pitfall to avoid is introducing a number of multi-brand entries, each of which obtains only a small share of the market and none of which is particularly profitable. In this case, the company has dissipated its resources over several partially successful brands instead of concentrating on a few brands and building each one up to highly profitable levels. Such companies should weed out the weaker products and establish tighter screening procedures for choosing new brands to introduce.

	BRAND STRATEGY
	Individual Brand names
	Blanket Family Brand names
	Separate Family Brand names
	Company Trade name
	No Brand names

H35      Grid Definition

NEW PRODUCT EXPENDITURE EFFECT FORECASTS

The following pages analyze the effects of New Product or Product Revision expenditure in terms of the industry's Financial and Operational results.

New Products refer to entirely new products or services offered to customers and Product Revisions refer to the improvement or enhancement of existing products or services.

The data assumes that the industry will increase its New Product investment by a rate of 5% above that of the industry averages.

The Financial and Operational Data forecasts given for the New Product Expenditure Scenario makes the following assumptions:-

1. Forecasts are based on all external factors:

  a. Market Growth (Medium + Long Term)
  b. Competitive Market Factors
  c. Competitor + Industry Environment Factors

2. Forecasts assume ceteris paribus in terms of internal factors with the exception of an acceleration of New Product or Product Revision expenditure which is assumed to increase by a rate equivalent to 5% greater than the competitor average.

3. Forecasts assume change (as appropriate) in Market Competitors. The forecast assumptions use Competitor databases to forecast changes in competitive situations which will affect the Company and includes the Competitor response (in New Product Terms) to the scenario shown.

New Product Development

F02 |     NEW PRODUCT DEVELOPMENT : Financials

G02 |     NEW PRODUCT DEVELOPMENT : Margins & Ratios

 

MARKET SEGMENTATION EXPENDITURE EFFECT FORECASTS

This section analyses the effects of a Market Segmentation programme and its concomitant expenditure in terms of the industry's Financial and Operational results.

Marketing Segmentation involves the repositioning, repackaging and remarketing of existing products to meet and serve other market segments. In general terms the expenditure incurred is limited product development costs plus additional marketing costs.

This tactic is regarded as a short or medium-term operation where the benefits are seen in a fairly short time.

The Financial and Operational Data for the Market Segmentation Expenditure Scenario forecasts given make the following assumptions:-

1. Forecasts are based on all external factors:

  a. Market Growth (Medium + Long Term)
  b. Competitive Market Factors
  c. Competitor + Industry Environment Factors

2. Forecasts assume ceteris paribus in terms of internal factors with the exception of a Market Segmentation programme and its concomitant expenditure which is assumed to increase by a rate equivalent to 5% greater than the competitor average

3. Forecasts assume changes in Market Competitors. The forecast assumptions use Competitor databases to forecast changes in competitive situations which will affect the Company and includes the Competitor response (in Market Segmentation Terms) to the scenario shown.

Market Segmentation

F03 |     MARKET SEGMENTATION : Financials

G03 |     MARKET SEGMENTATION : Margins & Ratios

HISTORIC FINANCIAL DATA
THE INDUSTRY

F_H - FIN_HIST.HTM   HISTORIC FINANCIAL DATA

 Financial Definitions

PRODUCT MIX FINANCIAL SCENARIOS
THE INDUSTRY
FINANCIAL DATA FORECAST

PRODUCT MIX BASED BALANCE SHEET FORECASTS

The PRODUCT MIX FINANCIAL SCENARIO BALANCE SHEET FORECASTS section gives a series of Balance Sheet Forecasts for the industry using a number of assumptions relating to the product decisions available to the management of the industry.

The Balance sheet forecast given shows the effects of product improvements which Product Management is likely to recommend:


PRODUCT MIX FINANCIAL SCENARIOS

- Base Forecast : Median Market Scenario

- Research & Product Cost Objectives
- Product Positioning
- Product Branding + Multi-branding Investment
- New Product & New Technology Cost Scenarios
- Product Cost Improvements
- Product Quality Improvement

Managers in the industry will, in both the short-term and the long-term, have vital decisions to make regarding the product improvements, margins and profitability and these decisions will need to be evaluated in light of the customers, markets, competitors, products, industry and internal factors. The scenarios given isolate a number of the most important factors and provide balance sheet forecasts for each of the scenarios.

The data provides a short and medium term forecast covering the next 6 years for each of the Forecast Financial and Operational items. The Financial and Operational Data sections show each of the items listed below in terms of forecast data and covers a period of the next 6 years.

Base Forecast : Median Market Scenario

F0M|     MEDIAN  FORECAST : Financials

G0M|     MEDIAN  FORECAST : Margins & Ratios

Research & Product Cost Objectives

F33 |     RESEARCH & PRODUCT COST OBJECTIVES : Financials

G33 |     RESEARCH & PRODUCT COST OBJECTIVES : Margins & Ratios

Product Positioning

F43 |     PRODUCT POSITIONING : Financials

G43 |     PRODUCT POSITIONING : Margins & Ratios

Product Branding + Multi-branding Investment

F44 |     PRODUCT BRANDING + MULTI-BRANDING INVESTMENT : Financials

G44 |     PRODUCT BRANDING + MULTI-BRANDING INVESTMENT : Margins & Ratios

New Product & New Technology Cost Scenarios

F55 |     NEW PRODUCT & NEW TECHNOLOGY COST SCENARIOS : Financials

G55 |     NEW PRODUCT & NEW TECHNOLOGY COST SCENARIOS : Margins & Ratios

Product Cost Improvements

F70 |     PRODUCT COST IMPROVEMENTS : Financials

G70 |     PRODUCT COST IMPROVEMENTS : Margins & Ratios

Product Quality Improvement

F71 |     PRODUCT QUALITY IMPROVEMENT : Financials

G71 |     PRODUCT QUALITY IMPROVEMENT : Margins & Ratios

FIN_DEFI.HTM Financial Definitions

INDEX

Augmented product, 1

Balance Sheet Base Forecast : Median Market Scenarios, 56
Balance Sheet Historic, 50
Balance Sheet Market Segmentation, 44
Balance Sheet New Product Development, 40
Balance Sheet New Product & New Technology Cost Scenario, 72
Balance Sheet Product Branding + Multi-branding Investment, 68
Balance Sheet Product Cost Improvements, 76
Balance Sheet Product Positioning, 64
Balance Sheet Product Quality Improvement, 80
Balance Sheet Research & Product Cost Objectives, 60
Blanket Family Brand names, 35
Brand, 31
Brand extension strategy, 34
Brand mark, 31
Brand name, 2, 31
BRAND STRATEGY, 31, 35
BRAND -v- NO BRANDS DECISIONS, 32
Branding, 3

Company Trade name, 35
CONCEPT OF PRODUCTS, 1
Core product, 1
Costs & Margins Historic, 51

Dynamic product-mix optimization, 26

Family brands versus individual brands, 31
FAMILY -v- INDIVIDUAL BRAND DECISIONS, 33
Features, 2, 3
Financial data definitions, 85
Financial forecast notes, 54
Financial Ratios Base Forecast : Median Market Scenario, 58
Financial Ratios Market Segmentation, 46
Financial Ratios New Product Development, 42
Financial Ratios New Product & New Technology Cost, 74
Financial Ratios Product Branding + Multi-branding, 70
Financial Ratios Product Cost Improvements, 78
Financial Ratios Product Positioning, 66
Financial Ratios Product Quality Improvement, 82
Financial Ratios Research & Product Cost Objective, 62
Financial Ratios & Margins Historic, 52
Forecast % Profit Contribution : Year + 1, 17
Forecast % Profit Contribution : Year + 2, 17
Forecast % Profit Contribution : Year + 3, 17
Forecast % Profit Contribution : Year + 4, 17
Forecast % Profit Estimate : Year + 1, 21
Forecast % Profit Estimate : Year + 2, 21
Forecast % Profit Estimate : Year + 3, 21
Forecast % Profit Estimate : Year + 4, 21
Formal product, 1
Full-line all-market strategy, 15

High Growth Products, 27
High-growth products, 26
HISTORIC FINANCIAL DATA, 49

Individual Brand names, 35
Items in Product Line 1, 11
Items in Product Line 2, 11
Items in Product Line 3, 11
Items in Product Line 4, 11

Limited product-line specialist, 15

MARKET SEGMENTATION EXPENDITURE EFFECT FORECASTS, 39
Market specialist, 15
Multi-brand strategy, 34

NEW PRODUCT EXPENDITURE EFFECT FORECASTS, 39
No Brand names, 35

Operational Costs Base Forecast : Median Market, 57
Operational Costs Market Segmentation, 45
Operational Costs New Product Development, 41
Operational Costs New Product & New Technology Cost, 73
Operational Costs Product Branding + Multi-branding, 69
Operational Costs Product Cost Improvements, 77
Operational Costs Product Positioning, 65
Operational Costs Product Quality Improvement, 81
Operational Costs Research & Product Cost Objective, 61
Operational Margins Base Forecast : Median Market, 59
Operational Margins Market Segmentation, 47
Operational Margins New Product Development, 43
Operational Margins New Product & New Technology Cost, 75
Operational Margins Product Branding + Multi-branding, 71
Operational Margins Product Cost Improvements, 79
Operational Margins Product Positioning, 67
Operational Margins Product Quality Improvement, 83
Operational Margins Research & Product Cost Objective, 63
Operational Ratios & Margins Historic, 53

Packaging, 2, 3
Product Competitors, 10
PRODUCT CONCEPT, 3
Product item, 7
PRODUCT ITEMS - LINES - MIX, 7
Product line, 8
PRODUCT MIX, 1, 8
PRODUCT MIX FORECASTS, 55
Product objectives, 25
Product resources, 25
PRODUCT STRATEGY, 27
Product Trade Cell, 10
Product-line specialist, 15
PRODUCT-MIX ALTERNATIVES, 15
Product-Mix Audit, 16, 17, 21
PRODUCT-MIX CHARACTERISTICS, 9
Product-mix classification technique, 25
PRODUCT-MIX OPTIMIZATION, 16
PRODUCT-MIX QUALITY, 11
PRODUCT-MIX STRATEGY, 7
Profit Contribution % in this year, 17
Profit Estimate % in this year, 21

Quality, 3, 9
Quality level, 2

Rate of new-product development, 25
Rate of product pruning, 25

Selective pruning or rejuvenating products, 26
Selective Pruning Products, 27
Separate Family Brand names, 35
Special-situation specialist, 15
Specific-product specialist, 15
Static product-mix optimization, 26
Steady reinvestment products, 26, 27
Styling, 2, 3
Suppliers' versus distributors' brands, 31
Support products, 26, 27

Total of all Items in all Product Lines, 11
Trademark, 31

Venture products, 26, 27

CONTENTS

PRODUCT ITEMS - LINES - MIX
PRODUCT-MIX CHARACTERISTICS
THE INDUSTRY OPERATIONS
Augmented product
Base Forecast : Median Market Scenario
Blanket Family Brand names
BRAND -v- NO BRANDS DECISIONS
Brand extension strategy
brand mark
Brand name
brand name
BRAND STRATEGY
BRAND STRATEGY
brand
Branding
Company Trade name
CONCEPT OF PRODUCTS
Core product
dynamic product-mix optimization
FAMILY -v- INDIVIDUAL BRAND DECISIONS
family brands versus individual brands
Features
Features
Forecast % Profit Contribution : Year + 1
Forecast % Profit Contribution : Year + 2
Forecast % Profit Contribution : Year + 3
Forecast % Profit Contribution : Year + 4
Forecast % Profit Estimate : Year + 1
Forecast % Profit Estimate : Year + 2
Forecast % Profit Estimate : Year + 3
Forecast % Profit Estimate : Year + 4
Formal product
Full-line all-market strategy
High Growth Products
High-growth products
HISTORIC FINANCIAL DATA
Individual Brand names
Items in Product Line 1
Items in Product Line 2
Items in Product Line 3
Items in Product Line 4
Limited product-line specialist
MARKET SEGMENTATION EXPENDITURE EFFECT FORECASTS
Market Segmentation
Market specialist
Multi-brand strategy
New Product & New Technology Cost Scenarios
New Product Development
NEW PRODUCT EXPENDITURE EFFECT FORECASTS
No Brand names
Packaging
Packaging
Product Branding + Multi-branding Investment
Product Competitors
PRODUCT CONCEPT
Product Cost Improvements
Product item
Product line
PRODUCT MIX FORECASTS
PRODUCT MIX
Product mix
product objectives
Product Positioning
Product Quality Improvement
product resources
PRODUCT STRATEGY
Product Trade Cell
Product-line specialist
PRODUCT-MIX ALTERNATIVES
PRODUCT-MIX AUDIT
PRODUCT-MIX AUDIT
Product-Mix Audit
product-mix classification technique
PRODUCT-MIX OPTIMIZATION
PRODUCT-MIX QUALITY
PRODUCT-MIX STRATEGY
Profit Contribution % in this year
Profit Estimate % in this year
Quality level
Quality
Quality
rate of new-product development
rate of product pruning
Research & Product Cost Objectives
Selective pruning or rejuvenating products
Selective Pruning Products
Separate Family Brand names
Special-situation specialist
Specific-product specialist
static product-mix optimization
Steady Reinvestment Products
Steady reinvestment products
Styling
Styling
suppliers' versus distributors' brands
Support Products
Support products
Total of all Items in all Product Lines
trademark Venture products
Venture Products

PRODUCT MIX
CONCEPT OF PRODUCTS
PRODUCT-MIX STRATEGY
PRODUCT ITEMS - LINES - MIX
PRODUCT-MIX CHARACTERISTICS
PRODUCT-MIX ALTERNATIVES
PRODUCT-MIX OPTIMIZATION
BRAND STRATEGY
BRAND -v- NO BRANDS DECISIONS
FAMILY -v- INDIVIDUAL BRAND DECISIONS
Brand extension strategy
Multi-brand strategy
NEW PRODUCT EXPENDITURE EFFECT FORECASTS
MARKET SEGMENTATION EXPENDITURE EFFECT FORECASTS
HISTORIC FINANCIAL DATA
PRODUCT MIX FORECASTS
PRODUCT CONCEPT
Quality
Features
Styling
Branding
Packaging
PRODUCT-MIX QUALITY
Items in Product Line 1
Items in Product Line 2
Items in Product Line 3
Items in Product Line 4
Total of all Items in all Product Lines
PRODUCT-MIX AUDIT
Profit Contribution % in this year
Forecast % Profit Contribution : Year + 1
Forecast % Profit Contribution : Year + 2
Forecast % Profit Contribution : Year + 3
Forecast % Profit Contribution : Year + 4
PRODUCT-MIX AUDIT
Profit Estimate % in this year
Forecast % Profit Estimate : Year + 1
Forecast % Profit Estimate : Year + 2
Forecast % Profit Estimate : Year + 3
Forecast % Profit Estimate : Year + 4
PRODUCT STRATEGY
High Growth Products
Steady Reinvestment Products
Support Products
Selective Pruning Products
Venture Products
THE INDUSTRY OPERATIONS
BRAND STRATEGY
Individual Brand names
Blanket Family Brand names
Separate Family Brand names
Company Trade name
No Brand names
New Product Development
Market Segmentation
Base Forecast : Median Market Scenario
Research & Product Cost Objectives
Product Positioning
Product Branding + Multi-branding Investment
New Product & New Technology Cost Scenarios
Product Cost Improvements
Product Quality Improvement