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Optimum Length for a Product Line

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How does a product-line manager arrive at the optimum length for a product line? Briefly describe the strategies that can be used to create a product line with the optimum length.

Kotler, P. (2003). Marketing Management, 11/E. Prentice Hall. Chapters 14, 15, and 16, Pages 406-502. MBA

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Please see response attached for active links, and two supporting articles. I hope this helps and take care.

RESPONSE:

1. How does a product-line manager arrive at the optimum length for a product line? Briefly describe the strategies that can be used to create a product line with the optimum length.

The increasing number of consumer goods and services over the years suggests that product line extensions have become a favorite strategy for product managers. A larger assortment, it is argued, keeps customers loyal and allows firms to charge higher prices. There is disagreement, however, to what extent a longer product line translates into higher profits (Draganska, n.d.).

Vertical line extension

Firms may compete their products in two ways. First, by extending the product line to add surplus customers (vertical line extension). For example, by offering a wide range of products, From BMW series 3 to BMW series 7, BMW is able to target many different segments of customers. BMWs vertical line extension strategy involves price discrimination according to consumer's willingness to pay for quality (Draganska, n.d.). Thus, this is the optimal ...

Solution Summary

This solution examines how a product-line manager arrives at the optimum length for a product line. It briefly describes the strategies that can be used to create a product line with the optimum length. Supplemented with two highly informative articles on optimum product line length.

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Similar Posting

Import Beer product line: Method for optimal ordering quantities

See attached data file.

Subject: Re: Quarterly Ordering Decisions

Here is what we would like you to do. We want you to use the Import Beer product line as a test case for developing an optimization program. Use the Excel file that we have developed with the forecast information for the import beer product line. Other information that you will need has been provided by Accounting: inventory holding costs, product costs and price markups.

The information has been provided in the Excel file. [EBBD-ImportsData]

We want you to develop a method that will determine the optimal ordering quantities so that we maximize the gross profits and also take into account inventory holding costs.

After developing this method, write a short report to management explaining what you did and how this method can be used going forward on a quarter by quarter basis and for the other product lines. Also attach any calculations or analysis that you did in an Excel file.

Setup the decision cells, the inventory cells and inventory constraints. Then add the calculations for income and costs. Make sure you get the timing right for which inventory is sold in which quarter. You could develop intermediate cells that calculate the costs, just to help you keep track of this. Be sure to use the quarterly inventory holding cost rate. Then calculate the gross profit cell.

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