Discuss the Benefits Associated with Offering a Large Portfolio of Products

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The Answer is Although offering a large portfolio of products can make the coordination of marketing activities more challenging and expensive, it also creates a number of important benefits:
∙ Economies of Scale-Offering many different product lines can create economies of scale in production, bulk buying, and promotion. Many firms advertise using an umbrella theme for all products in the line. Nike's "Just Do It" and Maxwell House's "Good to the Last Drop" are examples of this. The single theme covering the entire product line saves considerably on promotional expenses.
∙ Package Uniformity-When all packages in a product line have the same look and feel, customers can locate the firm's products more quickly. It also becomes easier for the firm to coordinate and integrate promotion and distribution. For example, Duracell batteries all have the same copper look with black and copper packaging.
∙ Standardization-Product lines often use the same component parts. For example, Toyota's Camry and Highlander use many of the same chassis and engine components. This greatly reduces Toyota's manufacturing and inventory handling costs.
∙ Sales and Distribution Efficiency-When a firm offers many different product lines, sales personnel can offer a full range of choices and options to customers. For the same reason, channel intermediaries are more accepting of a product line than they are of individual products.
∙ Equivalent Quality Beliefs-Customers typically expect and believe that all products in a product line are about equal in terms of quality and performance. This is a major advantage for a firm that offers a well-known and respected line of products. For example, Crest's portfolio of oral care products all enjoys the same reputation for high quality. A firm's product portfolio must be carefully managed to reflect changes in customers' preferences and the introduction of competitive products. Product offerings may be modified to change one or more characteristics that enhance quality and/or style, or lower the product's price. Firms may introduce product line extensions that allow it to compete more broadly in an industry. Sometimes, a firm may decide that a product or product line has become obsolete or is just not competitive against other products. When this happens, the firm can decide to contract the product line.

Discuss the Benefits Associated with Offering a Large Portfolio of Products

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Discuss the Benefits Associated with Offering a Large Portfolio of Products

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Correct Answer:
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