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6.2.1 Product Line Management

Product Line Management involves organizing, analyzing, and strategizing around a company's total portfolio of products. This practice is particularly crucial for companies with a wide array of offerings, such as Unilever, Procter & Gamble, Coca-Cola, or FMCG companies like Dabur, Himalaya, and Patanjali. The goal is to manage the product portfolio effectively—deciding which products to retain, innovate, or phase out. Here's a structured explanation of the core concepts:

Key Concepts in Product Line Management

1. Product Item

A product item refers to an individual SKU (Stock Keeping Unit). Examples: - A table lamp. - A bar of soap. - A toothpaste tube.

Each distinct variation of a product is considered a product item.

2. Product Line

A product line is a group of related products offered by a company. These products usually share a common category or function. Examples: - Toothpaste Line: Includes 10 varieties of toothpaste. - Lamp Line: Includes 4 types: table lamps, ceiling lamps, track lamps, and desk lamps.

Note: A company may have multiple product lines, e.g., furniture, lamps, and tables for a home furnishing brand.

3. Product Mix

A product mix represents the total collection of product lines a company offers. It encompasses all product lines and their associated items.
Example: - Lamps: 4 types (table, ceiling, track, desk). - Tables: 7 types (kitchen, dining, coffee, outdoor, etc.). - Chairs: 5 types (dining room, living room, etc.).

Product Mix = Total Product Lines and Items.

Characteristics of a Product Mix

a. Length of a Product Line

  • Definition: The total number of items in a specific product line.
  • E.g., A lamp line with 4 types has a length of 4.
  • A table line with 7 types has a length of 7.

b. Width/Breadth of a Product Mix

  • Definition: The total number of product lines in the product mix.
  • E.g., A company offering 3 product lines (lamps, tables, chairs) has a width of 3.

c. Depth of a Product Line

  • Definition: The variety or number of variants available for each product item within a product line.

  • Example (Table Lamps):

    • Variants: Circular, cylindrical, with lampshade, without lampshade, etc.
    • Depth: 4 variants.

  • Example (Soap):

    • Sizes: 50g, 100g, 200g.
    • Aromas: Sandal, Lavender, Rose.
    • Depth: 3 (sizes) × 3 (aromas) = 9 variants.
    • Adding gel and solid forms: 18 variants.

d. Consistency

  • Definition: The degree of relatedness between different product lines in terms of:
  • End-use.
  • Production requirements.
  • Distribution channels.

Examples: - Soap and detergents: High consistency (similar distribution/logistics). - Soap and ice cream: Low consistency (different storage, logistics, and retail requirements).

Why Length, Breadth, Depth, and Consistency Matter

  1. Resource Management: Helps in allocating resources effectively across product lines.
  2. Market Segmentation: Greater depth allows targeting micro-segments, while similar depth across lines targets broader segments.
  3. Cost Optimization: Consistent product lines can share logistics and distribution channels.
  4. Strategic Focus: Avoids spreading too thin across too many variants, ensuring focus and efficiency.