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Formation of product range. Assortment (Range) - this is a wide range of all necessary

One of the most important merchandising characteristics of goods is the assortment characteristic, which determines the fundamental differences between goods of different types and names.

Product range- a set of goods combined according to one or a set of characteristics (GOST R 51303-99).

The term comes from the French word “assortiment”, which means a selection of different types and varieties of goods. However, in commodity science, it is customary to limit the set of goods by their names, and varieties as gradations of the quality of goods of the same type and name are referred to as an assortment.

In accordance with the mentioned GOST R, the unacceptable concepts are “product range” and “product range”. However, it is difficult to agree with the inadmissibility of the latter, since this term is used in international and Russian practice, as evidenced by the name of the regulatory document “Commodity nomenclature of foreign economic activity.” In this regard, we consider it necessary to define this term.

Product nomenclature- a list of homogeneous and dissimilar goods of general or similar purpose.

Thus, the commodity nomenclature of foreign economic activity (TN FEA) is a list of goods intended for export-import operations. The range of products subject to confirmation of compliance with safety indicators is intended for the purposes of mandatory certification.

Thus, the above concepts are close to each other. What they have in common is that they are both lists of products. The differences lie in the purpose: the range of goods is intended to meet the needs of consumers, the product range may have a different purpose - to regulate a certain professional activity or another field of application.

The professional activities of commodity experts are mainly related to the range of goods, so in the future we will consider issues related specifically to this concept.

The range of consumer goods is divided into groups - according to location, into subgroups - according to the breadth and depth of coverage of goods, into types - according to the degree of satisfaction of needs, into varieties - according to the nature of needs.

By location of goods a distinction is made between industrial and commercial assortments.

Industrial range(unacceptable (hereinafter - NDP): production assortment) - an assortment of goods produced by a separate industry or a separate industrial enterprise (GOST R 51303-99).

The industrial range of goods from various manufacturing organizations, including public catering enterprises, regardless of the form of ownership, must be agreed upon with the sanitary authorities of the Ministry of Health and Social Development of the Russian Federation.

An example is the industrial assortment of the Babaevsky confectionery concern, which includes about 100 types of caramel, candy and chocolate products.

Trade assortment- assortment of goods presented in the retail chain (GOST R 51303-99).

Unlike the industrial one, the trade assortment usually includes products from different manufacturers. The exception is the branded stores of manufacturing organizations, whose strategy is based on the sale of goods only from this company. Thus, the product range of any confectionery store includes goods produced by many confectionery factories, and sometimes by catering establishments, bakeries that produce flour confectionery products. If pastry shops do not have refrigeration equipment, cream cakes and pastries should be excluded from their assortment.

The breadth of coverage of goods included in the assortment is determined by the number of groups, subgroups, types, varieties, brands, types and names.

Depending on breadth of product coverage The following types of assortment are distinguished: simple, complex, expanded, enlarged, accompanying, mixed.

Simple product range(NDP: simple assortment goods) - an assortment of goods represented by types that are classified according to no more than three criteria (GOST R 51303-99).

This assortment is represented by a small number of groups, types and names of goods that satisfy a limited number of needs.

A simple assortment is typical for stores selling everyday goods in areas where customers live with little financial resources. For example, bakery and dairy stores in working-class areas and rural areas.

Complex range of products(NDP: complex assortment goods) - an assortment of goods represented by types that are classified according to more than three criteria (GOST R 51303-99).

This assortment is characterized by a significant number of groups, types, varieties and names of goods that satisfy various needs for goods.

A complex assortment is inherent in wholesale centers and retail trade organizations such as supermarkets or department stores, targeting customers with different demands.

Wide range of products(NDP: intragroup assortment) - an assortment of goods represented by their varieties (GOST R 51303-99).

It includes a significant number of subgroups, types, varieties, names, including branded trade articles, belonging to a group of homogeneous goods, but differing in individual characteristics. Such an assortment is usually found in specialized stores, and the number of groups of homogeneous goods can be relatively small. For example, the product range of stores specializing in the sale of audio and video equipment includes three or four groups of homogeneous goods (TVs, tape recorders, video recorders), but they are represented by a large number of goods of different classes of complexity and brands.

Enlarged range of products(NDP: group assortment) - an assortment of goods combined according to common characteristics in a certain set of goods (GOST R 51303-99).

The totality is a class, subgroup, type of goods. In trade, an enlarged assortment usually refers to a genus (for example, food or non-food products), as well as a group or subgroup of homogeneous goods (for example, clothing, footwear or dairy products). A set of the same type, but different names or brands will determine the brand assortment.

Products of an enlarged assortment satisfy the same needs as products of a comprehensive assortment. Most often, a functional or social purpose acts as a common feature. For example, bakery, fruits and vegetables, dairy, footwear, clothing and other groups of goods are combined on the basis of functional purpose, and goods for children, youth, and recreation - on the basis of social purpose.

An enlarged assortment forms the basis of the organizational structure of many trading enterprises. Thus, at non-food wholesale warehouses, warehouses differ in their enlarged assortment. For the same reason, department stores create different sections (clothing, shoe, haberdashery, etc.).

Species assortment- a set of goods of various types, varieties and names that satisfy similar needs. It is an integral part of the assortment. For example, the assortment of milk - pasteurized, sterilized, etc. - is part of the assortment of dairy products.

Branded assortment- a set of goods of the same type, but of different brands. Such products, along with satisfying physiological needs, are largely aimed at satisfying social and mental needs. These needs are satisfied by prestigious brands of cars, clothing, shoes, perfumes, fine wines, etc.

An example of a branded assortment could be the assortment of pasteurized milk of the following brands: “Tsaritsyno”, “Lianozovo”, “Domik v Derevne”, “33 Cows” and others, or an assortment of perfumes: Krasnaya Moskva, Chanel No. 5, Nina Ricci, etc. A branded assortment can include assortment units as product articles that differ in packaging, size and other characteristics

Related products- a set of goods that perform auxiliary functions and are not core to a given organization. Related products, for example, in a shoe store are shoe care items, and in a grocery store - soap, matches, and some other household goods.

Mixed assortment- a set of goods of different groups, types, names, characterized by a wide variety of functional purposes. This assortment is typical for stores that sell both non-food and food products, for example, hypermarkets.

By degree of satisfaction needs, a distinction is made between rational and optimal assortment.

Rational assortment- a set of goods that provides a sufficient degree of customer satisfaction and achievement of the organization's goals.

Forming a rational assortment requires taking into account a large number of factors and indicators, many of which are quite variable. Such factors, first of all, include real needs, which depend on the standard of living of the population, achievements of scientific and technological progress and other features of the external environment. In turn, many of these factors directly influence changes in the rational assortment. For example, achievements of scientific and technological progress stimulate the development of new products and create new needs. This is clearly manifested in the formation of a rational assortment of household appliances.

The criteria for assessing a rational assortment among consumers, sellers and manufacturers are not the same. For consumers, such criteria are the degree of satisfaction with the set of necessary goods, the ability to purchase the necessary goods in one place, and the adequacy of the breadth and depth of the assortment. For manufacturers and sellers, criteria such as profitability, the possibility of timely and uninterrupted delivery of goods, sales volumes in certain periods, and compliance of the set of goods with the existing material and technical base for production, storage and sales are more important. The degree of consumer satisfaction with the rational range of goods sold is regarded by the manufacturer and seller as one of the results of ensuring the competitiveness of their organization.

Optimal assortment- a set of goods that satisfies real needs with the maximum beneficial effect for the consumer or organization at rational costs for their acquisition and consumption (sales). Products with an optimal range are characterized by increased competitiveness.

The optimal assortment can be considered from the perspective of consumers - purchasers of goods and organizations that form them.

The criterion for classifying products as an optimal assortment can be the optimality coefficient (CoP), which is calculated for a specific product using the formula:

where E p is the beneficial effect of the acquisition and consumption of a product when used by the consumer for its intended purpose, rub.;

3 - costs of design, development, production, delivery to consumers, rub.

The beneficial effect (E p) is the benefit that a consumer can receive if the product is used correctly.

The above calculation formula takes into account mainly the functional purpose of goods and the economic effect of consumption, but does not take into account the social effect. This calculation is applicable mainly for non-food products and is not suitable for food products, since it is impossible to calculate in monetary terms the health benefits received by the consumer.

For the consumer, the optimal assortment is characterized by a significant number of products with a high optimality coefficient. At the same time, this assortment for different consumer segments will contain a different set of goods. Thus, for wealthy consumers, high-quality goods of prestigious demand are of the greatest importance, which largely determines the beneficial effect of consuming these goods for them. For socially disadvantaged consumers, acquisition costs in the form of sales prices of goods are more important. Therefore, the optimal assortment of economy-class (discount) stores will be formed due to the predominance of goods with reasonable prices and adequate quality. There are no expensive products from prestigious brands in such stores.

For organizations, the optimal assortment is determined by the predominance of highly profitable products that ensure the planned profit. At the same time, such an assortment should contain the required quantities of low-profit, but socially significant goods that are in steady demand. This will allow the organization to attract and retain its consumer segment, as well as fulfill its mission of meeting the needs of this segment and thereby obtain the planned profit.

The optimal range of trading organizations is determined by their type and type. Thus, the optimal assortment of hypermarkets and supermarkets is characterized by a large breadth and completeness of goods of heterogeneous groups with prices acceptable for certain segments of consumers. The optimal assortment of “walking distance” stores is formed mainly by goods of a simple range of everyday and sustainable demand.

The criterion for assessing the optimal assortment for consumers is the beneficial effect of purchasing goods, which can be conditionally calculated as the average cost of one purchase made by the average consumer. The conditionality of this assessment is due to the fact that the expected beneficial effect is caused by satisfaction with the appearance and price of the product. As a result of evaluating these indicators, the consumer makes a purchasing decision. In small grocery stores, the average purchase price ranges from 50-200 rubles, and in hypermarkets - 1500-3000 rubles. However, the costs of consumers in the first case will be insignificant and are expressed mainly in the time it takes to get to the store and make a purchase. The costs of purchasing goods in hypermarkets are higher and are caused by transportation costs, significant travel time to the store, selection of necessary goods and payment for them.

The costs of trade organizations are assessed based on distribution costs caused by the purchase, delivery, storage and sale of goods of the optimal range, and the beneficial effect is assessed based on net profit.

Depending on nature of needs the assortment can be real and predictable.

Real assortment- a valid set of goods available in a specific organization of the manufacturer or seller.

Projected assortment- a set of goods that will satisfy expected needs.

What is category management and how to implement it? What are the categories? How to balance the assortment and increase the financial return from managing it? The answers to these and other equally important questions for a retail store are provided by the new edition of the best-selling book on assortment management, the only practical guide in Russia on building a category product management system.

The book is intended for category managers, merchandise experts, buyers, commercial directors, managers and directors of retail enterprises - everyone who is responsible for working with assortment in a retail company.

As a bonus, an electronic application has been added to the book, which includes the most popular formulas, tables and documents necessary in the daily work of category managers, as well as detailed information about such popular types of analysis as ABC and XYZ analysis, turnover, demand forecasting . The application is available here

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Assortment width - This is the total number of different product categories included in the assortment. For example, a grocery supermarket may have products in categories such as " milk», « meat", « cheese», « fish», « baby food», « dietary food», « salads», « household chemicals», « household goods», « animal feed», « magazines and postcards», « souvenirs and gifts" The wider the range, the more likely it is that the buyer’s needs will be satisfied, and the wider range of buyers we can attract.

On the one hand, the wider the range, the more diverse needs can be satisfied. A wide range allows you to set different trade markups (from minimum to maximum), while maintaining the overall profit of the store. The number of impulse purchases is increasing, and the number of different customer segments is increasing. On the other hand, with an extremely wide range of products, it is difficult for the consumer to navigate such a variety; this makes it difficult to choose the right product. Managing too wide an assortment is also not easy - this leads to huge logistics costs and, in most cases, to an excess of working capital frozen in inventory. With a very wide assortment, turnover is lower, and accounting policies are complicated by the need for frequent inventories.

An example from personal practice. I thought about assortment optimization many years ago, when I was managing a separate division of a large trading holding. While taking stock of inventory, I realized that too much warehouse space was involved, we were holding a lot of excess goods... But it was necessary to increase sales, and expanding the assortment seemed like the shortest way, because many people follow the path of expanding the assortment. But this does not always lead to a direct increase in income and increased competitiveness.

For example, there was a time when our assortment included collections of ceramic wall tiles in seven different colors and sizes 20 x 20, 35? 23, 25? 40, 20 ? 15, 20 ? 30, 30 ? 40, 15 ? 15 and 10? 10 centimeters (plus more mosaic). We wanted to attract more customers in this way. Imagine our surprise when it turned out that with such a variety of products, people are simply not able to make a choice and end up postponing the purchase or taking the most popular sizes and colors. We have reduced the range and left four colors and three popular sizes in each collection. And this range turned out to be more competitive and profitable. Then we did this not only with the ceramic tile group, but with all positions.

Too much choice acts as a lack of choice. Therefore, breadth cannot serve as the only indicator of a correctly selected assortment and the main competitive advantage.

Depth of assortment– the total number of product items within each product category in the assortment. The deeper the category is presented, the more accurately we can guess the needs of our buyer, the more choice we will provide him. If we are dealing with a specialized store, for example, “Computers,” then the buyer rightly believes that the assortment in such a store will not be very wide, but quite deep, that is, there will only be computers, but of a wide variety of brands, models and options. The deeper the assortment, the higher the specialization of the store.

As a rule, a deep assortment is easier to manage, but it attracts a fairly limited number of buyers. But these customers are willing to pay a higher price in anticipation of a special choice; they are more loyal to the store where their most subtle needs are satisfied.

How do you know whether a store should have a wide or deep assortment?

Let's take such a popular category as “cheese”. Imagine that you entered a store where the assortment seems wide to you - there are many products from both grocery and food groups. But among the cheeses you see only two types - “Russian” cheese and processed “Viola” cheese. Can such an assortment be called deep? No, most likely, such a store’s assortment as a whole will seem insufficient to you, despite its breadth. The depth is precisely determined by the presence within the category of such a proposal of types, varieties of goods, by which one can judge the balance of the assortment.

Example 1. If we look into a grocery store and see categories such as meat, milk, wine, cheese, etc., can we conclude that the store has a wide range of products? Most likely not. But if we see other categories of goods in the store - diet food, animal food, magazines, postcards, etc., then such an assortment will be perceived by us as wide.

Exploring the assortment further, we come to the “Cheese” department. And if we see one variety each of hard, soft and melted, can we perceive such an assortment as deep? No, most likely we will conclude that the store does not have a deep enough or poor range of cheeses. But if different types of cheese are presented, including blue cheese, lactose-free, sausage, low-fat, green, etc., then such an assortment will seem deep or complete (Fig. 3.9).

Rice. 3.9

Example 2. When examining the assortment of a cosmetics and perfumery store, we will conclude that the assortment is insufficient if we see only creams, shampoos and body care products. But if the assortment also includes gift sets, jewelry, professional care products, etc., then the assortment will seem wide to us. In this example, the “Hand Creams” category is presented in depth - there are many varieties of cream. If we limited ourselves to only three or four varieties (with aloe, moisturizing and with glycerin), then such a range of creams would not be deep (Fig. 3.10).

The ratio of these two parameters – the width and depth of the assortment – determines the store format. Discounters and supermarkets typically have a policy of maintaining a wide but shallow assortment. For specialized stores, on the contrary, the assortment is not wide, but deep.

Rice. 3.10

Rice. 3.11. Store formats

Small format stores with a small area (stalls, shopping pavilions) do not have the opportunity to sell a wide range of products. And no one expects depth from them.

Hypermarkets, on the contrary, have significant space and can have a deep assortment in many (but not all) categories.

Knowing the format gives us an idea of where and in what direction to develop our assortment - in width or depth. Should we introduce new product categories or deepen existing ones? Where to invest money?

Whatever development strategy we choose, one thing is important: the range must be balanced.

Balanced assortment– this is a combination of the optimal number of categories (width) for the buyer and types of goods within the category (depth). Let us emphasize again - for the buyer. In a large hypermarket, the buyer expects that the assortment will be as wide as possible, but his expectations related to the depth of the assortment are different. No one expects that among such an extensive offer of goods there will be all sorts of exotic types of fruits (papaya, mango, rambutan), less common types of meat (horse meat, rabbit), and atypical clothing sizes (40–42 and 54–56). For these products or sizes, the buyer will have to go to specialized stores - where prices are higher, the assortment is not so wide, but there is an opportunity to satisfy even the rarest requests.

However, if the assortment is not balanced, that is, does not meet the buyer’s expectations, then such an assortment is felt as incomplete. Therefore, we will draw a parallel between two concepts - completeness and balance.

If the completeness of the assortment does not correspond to the concept of a given store, then customer requests are not fully satisfied - the assortment is perceived either as “too narrow - there is nothing”, or as “impossible to choose - there is so much!”

The category management methodology allows, with a high degree of probability, balance assortment in such a way that it best meets customer expectations. We will talk in detail about balancing the assortment in the section “Balancing the assortment by depth.” There you can also see examples of a balanced assortment.

During one “trip” to the supermarket, the average “normal” consumer purchases goods from 10–12 categories. The average consumer is not inclined to spend more than 35 minutes on one visit... We subtract the time spent walking through the sales area (5-7 minutes), the time spent at the checkout (5-7 minutes), as well as the minutes spent looking at goods that are subsequently not will be purchased. There are no more than 15–18 minutes left, or one and a half minutes for each category. How many options will be considered during this time? 5–6 – no more. And that’s because 3–4 of them are recognizable brands, which take 6–7 seconds to identify. One or two “new items” (that is, new offers not previously considered by this consumer) will receive 20–30 seconds of consumer attention.

Assortment- a large collection of goods united by a common characteristic (raw materials, purpose, manufacturer, etc.), within which smaller aggregates are distinguished that differ in other characteristics. Thus, the assortment is a system of individual elements, combined into groups according to one particular characteristic. There are certain connections between the groups. Relationships between two elements are usually identified through some classification system.

There are industrial and commercial, simple and complex, enlarged and expanded, combined and mixed assortments of goods.

Industrial range is a set of goods produced by an industry, an enterprise or other manufacturers (catering enterprises, private entrepreneurs, custom tailoring studios, etc.). As a rule, enterprises produce a small number of items of goods, which allows them to improve the technology for manufacturing these goods, improve their quality, improving consumer properties, i.e., enterprises produce a small range of goods that do not differ in the variety of types and varieties.

Trade assortment represents a set of goods sold in a retail chain. A trading network is a collection of all trading enterprises (wholesale and retail) engaged in the sale of goods.

The trade assortment includes a set of goods produced by domestic and foreign manufacturers. It is more diverse than industrial.

The trade assortment can be considered in relation to one or several retail enterprises, or to the entire distribution network. The assortment of a trading enterprise is represented by the range of goods that the enterprise sells.

The assortment of a trade enterprise determines its type (department store, supermarket, grocery store, etc.). In stores of the same type, but with different sales areas, the assortment differs in the number of groups and types of goods. In this case, trading enterprises are divided into universal and specialized, stores with a combined and mixed assortment.

The range of goods presented at a trading enterprise determines the form of trading services.

If the assortment is represented by types of goods that are classified according to no more than three criteria, then such an assortment is called a simple assortment of goods (vegetables, table salt, laundry soap, etc.).

Types of goods that are classified into varieties according to more than three criteria, together make up a complex assortment of goods (shoes, clothing, etc.).

The division of the assortment into enlarged and expanded is based on a scientifically based system of classifying goods into classes, groups, types and varieties.

For example, when studying the assortment of clothing, first all household clothing is classified into groups (outerwear, light dresses, linen items, hats), then into subgroups (for example, in the group of outerwear - coats and suits).

Subgroups are divided into types of products according to the following criteria: type name, gender, age, season of wear, upper material, intended purpose.

According to the style and complexity of processing, the species are divided into varieties. The style is characterized by style, silhouette and cut.

The assessment of an enlarged assortment comes down to establishing the quantitative relationship between individual groups of products and the characteristics of these groups.

A group of goods should be combined according to a number of characteristics: purpose, design features, etc. Thus, clothing is divided into groups according to purpose, and into subgroups according to model and design features.

The expanded assortment is studied according to the types of products presented. Signs of dividing types of clothing into varieties are the style and complexity of processing.

Combined assortment is a set of several groups of goods that are connected by a common demand and satisfy individual needs. For example, the Men's Clothing store sells a combined assortment.

Mixed assortment is a collection of non-food and food products of various groups. The mixed assortment is represented, as a rule, by the largest number of groups and types of goods.

Formation of an assortment of goods is the process of selecting and establishing a range of goods that meets customer demand and ensures high profitability of a trading enterprise /17, p. 145/.

The most important principle of forming a product range is to ensure its compliance with the nature of the demand of the population served by the enterprise’s clients. It should provide for comprehensive satisfaction of customer demand within the selected market segment. In this regard, the range of goods offered to customers must have sufficient breadth and depth. At the same time, the breadth of the assortment is determined by the number of product groups, subgroups and names of goods included in the nomenclature, and the depth is determined by the number of varieties of goods for each item / 17, p. 145/.

A wide range allows:

Diversify products.

Focus on different consumer requirements.

Encourage one-stop shopping.

At the same time, a wide range requires the investment of resources and knowledge in various product categories.

A deep assortment can:

Satisfy the needs of different customer segments for one product;

Maximize the use of space in retail outlets; prevent the emergence of competitors;

Offer a range of prices and encourage dealer support.

However, deep assortment also increases costs for inventory holding, product modification, and order fulfillment. In addition, certain difficulties may arise in differentiating between two similar product lines. Typically, comparable assortments are easier to manage than disparate assortments. It allows the company to specialize in management and production, create a strong image and ensure stable relationships in sales channels.

However, excessive concentration can make an enterprise vulnerable to threats from the external environment, fluctuations in sales, and slowing growth potential due to the fact that the entire emphasis is on a limited range of products.

The process of forming a product range is carried out in the following four stages:

A list of main groups and subgroups of goods sold in the store is determined;

The distribution of individual groups and subgroups of Thomases is carried out in the context of consumer complexes and microcomplexes;

The number of types and varieties of goods within individual consumer complexes and micro-complexes is determined;

A specific assortment list of goods for a given store is being developed, offered for sale to the customer base served /17, p.138/

The formation of the assortment is preceded by the development of an assortment concept by the enterprise. It represents the targeted construction of an optimal assortment structure and product offering, while taking as a basis the consumer requirements of certain groups and the need to ensure the most efficient use of raw materials, technological and other resources by the enterprise in order to produce products at low costs /8, p.210/ .

The purpose of the assortment concept is to orient the enterprise towards the production of goods that correspond to the structure and diversity of customer demand.

Target orientation and the art of planning are manifested in the embodiment of the real capabilities of the enterprise into a certain combination of products that satisfy the buyer's needs and make a profit.

A typical cycle of assortment planning and its implementation includes a preliminary assessment of the concept, followed by the development of specifications based on consumer requirements, the creation of samples, testing the possibilities of their mass production, and market testing /8, p. 211/.

Assortment policy is the determination of a set of product groups that is most preferable for successful work in the market and ensures the economic efficiency of the enterprise as a whole. Assortment policy objectives include:

Satisfying consumer needs is one of the principles of management, which corresponds to the task of deep segmentation and differentiation of the market and ensures close communication with consumers;

Optimal use of technological knowledge and experience of the enterprise;

Optimization of the financial results of the enterprise - the formation of the assortment is based on the expected profitability and profit margin, which is more common in the practice of enterprises, but can be justified in case of a difficult financial situation, lack of alternatives, etc.;

Winning new customers by expanding the scope of the existing production program. This approach is quite conservative, since it is designed for short-term results and involves the sale of goods by finding new markets;

Compliance with the principle of synergy, which involves expanding the areas of production and services of the enterprise, interconnected by a certain technology, uniform personnel qualifications and other logical dependence /17, p.123/.

In a saturated market, manufacturers and sellers strive to meet diverse needs. When demand exceeds supply, commercial efforts are required to create consumer preferences, which is achieved through, among other means, increasing the breadth of assortment. Breadth acts as one of the criteria for the competitiveness of firms.

What is the consumer’s attitude to the breadth of assortment? On the one hand, the wider the range, the more diverse needs can be satisfied. On the other hand, with an extremely wide range of products, it is difficult for the consumer to navigate this variety, which makes it difficult to choose the right product. The assortment breadth coefficient (Ksh) is determined by the formula:

Ksh = Shd / Shb x 100%, (1)

where, Шд - real latitude;

Shb - base latitude

At the same time, increasing the completeness of the assortment requires trade workers to know the commonality and differences in consumer properties of goods of different types, varieties and names in order to inform consumers about them. Providing such information to the seller is the responsibility of the manufacturer and/or supplier.

It should be taken into account that an excessive increase in the completeness of the assortment can also complicate the consumer’s choice, so the completeness must be rational. Assortment stability is the ability of a set of products to satisfy demand for the same products. A feature of such goods is the presence of stable demand for them /30, p. 25/.

One of the ways to improve the assortment may be to update it. However, updating is not always associated with improved quality of goods and greater satisfaction of needs. New products may have non-fundamental differences from previously produced and discontinued products, for example, changes in packaging, labeling, weight, price, or brand name. Moreover, sometimes in the production of new goods cheaper raw materials and simplified technologies are used, which is associated with a decrease in quality. Therefore, improvement and renewal cannot be considered the same directions in assortment formation /12, p.36/.

Harmonization of the assortment - quantitative and qualitative changes in the state of a set of goods, reflecting the degree of proximity of the real assortment to the optimal one or the best foreign and domestic analogues that most fully correspond to the goals of the organization.

In the Russian consumer market, this direction of assortment formation is relatively new and is expressed in the desire of a number of “elite” stores to form an assortment based on the model of well-known foreign companies.

In addition, this direction is typical for large firms, corporations, joint-stock companies with subsidiaries in different regions. As an example, we can cite the harmonized assortment of such companies as “Russian Bistro”, “GUM”, etc. The choice of one direction or another requires knowledge of the factors influencing the formation of the assortment /12, p. 36/.

Thus, the success of forming a product range directly depends on the sale of goods. First of all, it is determined by their compliance with the demand of the population, the dynamism of which is constantly increasing under the influence of growing customer demands, fashion, market conditions, etc., so the response to changes in demand must be very fast. In such conditions, it is difficult to obtain reliable information about demand, and the likelihood of errors in its assessment is high.

Composition of homogeneous products by type, grade and brand

List of types and varieties of products and goods, distinguished by individual indicators

1. Types of assortment

2. Product range

3. Formation of assortment

4. Assortment planning

5. Assortment structure

6. Product range

Deciding on the breadth of product range

The decision to increase the product range

The decision to saturate the product range

Product nomenclature decisions

Assortment - This composition of homogeneous products by type, grade and brand.

Assortment- This a list of types and varieties of products and goods, distinguished by individual indicators (characteristics).

Assortment - This composition and ratio of various types of products, goods, services in manufacturing and trading enterprises; a list of types and varieties of products and goods, distinguished by individual indicators (characteristics).

Types aassortmentA

A distinction is made between a range of services, a range of products and a trade range:

range of services - a set of services offered to consumers. Based on the level of detail, the range of services is divided into three main types: group, specific and intraspecific.

product range - composition, ratio of individual types of products in the products of an enterprise, industry, group of goods, taking into account their quality and grade.

In marketing, the characteristics of an assortment are: width, depth, stability and height of the assortment.

assortment of goods - a group of goods related to each other either due to the similarity of their scope of operation (application), or within the same price range.

Assortment of goods - according to GOST R 51303-99 - a set of goods combined according to any one or a set of characteristics.

It is customary to distinguish between group and expanded assortment (nomenclature). A group assortment is a list of various types of products for industrial and technical purposes and consumer goods; by expanded A. we mean the composition of products and goods of the same type, distinguished by individual characteristics - brands, profiles, article, model, style, height, size, color, design, packaging, recipe, packaging, etc.

In modern conditions of a market economy in Russia, the range of various goods has increased many times over, a significant part of which is represented by products of insufficiently high quality and does not meet modern world requirements.

Errors in choosing a product, ignorance of its properties, characteristics, storage conditions, transportation, and incorrect assessment of its quality can result in major losses and damages for the entrepreneur. Therefore, future entrepreneurs need basic understanding of commodity science of various groups of goods.

Market success is now the main criterion for assessing the activities of domestic enterprises, and their market opportunities are determined by a properly developed and consistently implemented product policy. It is on the basis of studying the market and the prospects for its development that the enterprise receives initial information to resolve issues related to the formation of the assortment, its management and improvement.

A strategic approach is required to solve the problems of commodity policy at any economic level. This means that any decision in this area must be made not only from the point of view of current interests, but also taking into account how it “works” for the ultimate goals. This approach requires concentrating efforts on the main areas.

Product range

The set of goods offered by a manufacturer on the market is called an assortment.

The nomenclature, or product range, is the entire set of products produced by the enterprise. It includes various types of goods. The type of product is divided into assortment groups (types) in accordance with functional features, quality, and price. Each group consists of assortment items (varieties or brands), which form the lowest level of classification.

A wide range allows you to diversify products; cater to different consumer requirements and encourage one-stop shopping. At the same time, it requires the investment of resources and knowledge in various product categories. A deep assortment can satisfy the needs of different customer segments for one product; maximize the use of space in retail outlets; prevent the emergence of competitors; offer a range of prices and encourage dealer support.

However, it also increases the costs of holding inventory, modifying products, and fulfilling orders. In addition, certain difficulties may arise in differentiating between two similar product lines. Typically, comparable assortments are easier to manage than disparate assortments. It allows an enterprise to specialize in marketing and production, create a strong image and ensure stable relationships in distribution channels. However, excessive concentration can make the enterprise vulnerable to threats from the external environment, fluctuations in sales, and slowing growth potential due to the fact that the entire emphasis is on a limited range of products.

Nomenclature literally means a list of names. Thus, the product range is a list of names of products manufactured by the enterprise. As for the product nomenclature, this is a list of groups of goods offered by a specific seller. The seller can offer customers products from one or many manufacturers, using the product range of each of them in full or in part. Nomenclature as an economic category has a consolidated character. We can talk, for example, about men's, women's or children's shoes, bedroom or dining sets, televisions or tape recorders, caramel or chocolate. Essentially, these are assortment groups, and the product range is a list of assortment groups of products or goods.

Product range literally means a selection of items, a set of their names according to some characteristics. From this point of view, the range can be simple or complex, narrow or wide. This classification provides for the identification of groups of homogeneous products or goods based on type, variety, brand, etc. Assortment groups are formed within which items have a certain similarity. And you can also distinguish between the range of products (the UFO is produced by the enterprise) and the range of goods (what is offered to consumers by this seller).

The group assortment of goods shows a list of enlarged product groups that make up the product range. So, a grocery store can sell gastronomic and grocery products, and a sporting goods store can sell summer and winter sports equipment.

The product assortment reflects the presence of a number of types in a product group. For example, dairy products may contain kefir, cream, cottage cheese, etc. Men's footwear includes such concepts as boots, boots, shoes, sandals.

The intraspecific assortment of goods represents varieties of products, dividing the species into parts. Thus, cottage cheese can be of different degrees of fat content, samovars can be of different capacities, shoes can be of different styles, fabrics can be of different colors, etc. The intraspecific assortment of goods can have different depth of development and detail. In this sense, we can talk about the degree of complexity of the assortment. For example, medications used for a specific human disease can be presented for external or internal use, in the form of tablets or liquids, have different packaging, packaging, etc.

In relation to industrial enterprises, a production range of products is established, and in relation to trading enterprises - a trade range of goods. The first of them reflects the specialization of the enterprise and serves as the basis for concluding supply contracts. In the second case, there are grounds to judge the extent of the ability of a trading enterprise to satisfy the needs of the population and distinguish between specialized and universal trading enterprises.

With good reason, the stated provisions on the nomenclature and range of products can be attributed to the performance of work and the provision of services, in relation to which groups, types, and subtypes of products are also distinguished.

Planning the nomenclature and range of products can and should be based on the entrepreneur’s knowledge of the needs of the market and its condition. Such knowledge is achieved as a result of activities called marketing. There are many definitions used in marketing at different times and by different authors. Taken together, all of them, despite the variety of formulations, come down to one judgment - market research, demand analysis, sales forecast, ensuring the most complete satisfaction of social needs. Satisfaction, in turn, is achieved by the development and production of new products that meet current demand, the establishment of product sales communications, and the creation of service services that accompany the process of using the product.

The product range includes certain types of goods.

The type of product is divided into product groups in accordance with functional features, quality and price. For example, book publications can be divided into the following assortment groups: scientific literature, popular science, industrial and instructional, educational, program and methodological, fiction, children's, official documentary, reference, socio-political literature.

Each assortment group consists of assortment positions, which are the simplest unit of structure. For example, educational literature is divided into textbooks and teaching aids.

A product range is characterized by breadth (the number of product groups), depth (the number of items in each product group) and comparability (the relationship between the product groups offered in terms of consumer community, end use, distribution channels and prices).

Formation of assortment

Forming an assortment is the problem of selecting specific goods, their individual series, determining the relationships between “old” and “new” goods, single and mass-produced goods, “high-tech” and “ordinary” goods, materialized goods, licenses and “know-how”. When forming an assortment, problems arise in establishing a pricing policy, requirements for product quality, determining guarantees and the level of service, etc. It is also important to determine whether the manufacturer is going to play the role of a leader in creating fundamentally new types of products or is forced to follow other manufacturers.

The formation of the assortment is preceded by the development of an assortment concept by the enterprise. It represents the targeted construction of an optimal assortment structure, product offering, while, on the one hand, the consumer requirements of certain groups (market segments) are taken as a basis, and on the other hand, the need to ensure the most efficient use of raw materials, technological, financial and other resources by the enterprise in order to produce products at low costs.

Assortment planning

Assortment policy - determining the set of product groups that is most preferable for successful work in the market and ensuring the economic efficiency of the enterprise as a whole.

The objectives of assortment policy may be different. This:

satisfying consumer needs is one of the basic principles of marketing, which corresponds to the task of deep segmentation and differentiation of the market and ensures a close connection with consumers;

optimal use of technological knowledge and experience of the enterprise;

optimization of the financial results of the enterprise - the formation of the assortment is based on the expected profitability and profit margin, which is more common in the practice of enterprises, but can be justified in case of a difficult financial situation, lack of alternatives, etc.;

winning new customers by expanding the scope of the existing production program. This approach is quite conservative, since it is designed for short-term results and involves extending the life cycle of obsolete publications by finding new markets;

compliance with the principles of flexibility by diversifying the areas of activity of the enterprise in the printing industry and including non-traditional industries;

compliance with the principle of synergy, which involves expanding the areas of production and services of the enterprise, interconnected by a certain technology, uniform personnel qualifications and other logical dependence.

A wide range of products strengthens the company’s market position and expands sales volume.

The assortment policy determines the optimal ratio of a set of publications that are different in life cycle stages, but are simultaneously on the market. Optimization of the range of publications that are simultaneously on the market, but differ in the degree of novelty, allows enterprises in the printing industry to be guaranteed relatively stable general conditions for ensuring sales volumes, covering costs and achieving profits.

The assortment strategy can also be built in the following areas:

product differentiation is associated with an enterprise distinguishing its publications as special ones, different from those of competitors, and ensuring separate “niches” of demand for them;

narrow product specialization is determined by the enterprise’s work in a rather narrow market segment and is associated with limited sales of products for a number of reasons. Sometimes narrow specialization as a product policy option is perceived as a forced measure, since the enterprise does not have sufficient resources to carry out successful work on a wide range of product ranges or due to the specifics of the product itself, as well as the peculiarities of the technological process. The reason may also be the deep segmentation of the market for this publication. In some cases, a policy of narrow product specialization is optimal for the efficient operation of a small enterprise or when an enterprise periodically changes its narrow specialization, using it to develop new markets or adapting to the changing nature of demand;

product diversification implies a significant expansion of the scope of the enterprise’s activities and the production of a large number of, as a rule, unrelated publications. This policy ensures significant sustainability and stability of the enterprise, as it serves as a guarantee against the risk of decreased demand and crisis phenomena in the production of one publication;

Commodity vertical integration pursues the goal of expanding the activities of an enterprise by mastering (or annexing) production or services along one technological chain. It makes it possible to save on production and distribution costs due to the use of cheaper raw materials and basic components of main products, advanced technology and experience of integrated production, access to a new sales network and new markets, etc.

When determining the optimal assortment policy and product range, we proceed from two principles:

The principle of synergy means that the range of goods and services produced must be internally connected and individual goods and types of services must complement each other. This principle ensures broad economies of scale in the enterprise's activities through mutual support of various product groups or areas of economic activity. However, in the event of market fluctuations, such a system for constructing an assortment policy is highly vulnerable;

the principle of strategic flexibility is based on the conglomerate construction of strategic business zones and product ranges, which depend on various technologies, balance risky and stable product groups, etc., so that unexpected events in one area cannot have a serious impact on the development of another area and on the general results of the enterprise's overall activities.

The main factors determining the range of products of an enterprise and the need to expand and diversify its product range include:

R&D in the industry in question;

changes occurring in the product range of competing enterprises;

changes in demand for the products produced by the enterprise on the market, which requires the development of a product policy that would allow it to resist the narrowing of the market and skillfully take advantage of the expansion of market opportunities;

desire and preference of buyers to purchase a large number of products from one enterprise;

optimal sales of several types of products to the sales network at the same time;

development of trade according to special orders of individual consumers, providing for individual production of products of specified properties and characteristics;

the desire to avoid the presence of unused or unused capacity through the production of other, additional types of products;

the desire to use by-products to produce new types of products and increase the overall efficiency of the enterprise.

The product policy of an enterprise requires changes if there is excess production capacity for a long period; the main profit comes from two or three types of products; there is not a sufficient number of types of products corresponding to market opportunities and the volume of demand; The company's sales volume and profit are constantly declining.

Of great importance is the choice of the range of products that would allow an enterprise in the printing industry to increase sales revenue and, accordingly, profit.

The essence of product assortment planning is defined as planning all types of activities aimed at selecting products for future production and bringing the technical, functional and aesthetic properties of these products into the most complete compliance with the requirements of potential consumers.

The main elements (or phases) of product range planning are:

1) identifying current and potential (unsatisfied) customer needs; analysis of the ways of using the relevant products, as well as the characteristics of the behavior of buyers (consumers) in this market segment;

2) evaluation of competing analogue products from the same angle;

3) analysis of consumer assessments of the quality of manufactured products, i.e. determining the degree of their compliance with the needs of buyers (consumers) in terms of the ability to satisfy a specific need in functional and aesthetic terms;

4) determining which products should be added to the current product range and which products should be excluded from it for reasons of insufficient profitability, obsolescence, decreased competitiveness, etc. This also includes deciding whether production should be diversified into areas that go beyond the existing specialization;

5) consideration of proposals for the development of new products, improvement of developed products, as well as new methods and areas of application of manufactured goods;

6) developing specifications for new or improved products in accordance with customer requirements;

7) study, with the help of specialists in scientific and technical products and developments, the prospects for the production of new or improved products, including issues of prices, costs and profitability;

8) testing of products with the involvement of potential consumers to identify their compliance with consumer demand across the entire range of key indicators: quality, appearance, strength, ease of use, trouble-free operation; packaging, price, consumer value;

9) development of special recommendations for product manufacturers regarding its quality, size, name, price, packaging, maintenance, etc. in accordance with the results of testing, trial sales, etc.;

10) preparation of recommendations for the sale of products, including: determining the timing and schedule for introducing a new or improved product to the market, the scale and initial form of its sale (for example, only test sales in specially selected cities, development of individual regional markets, or direct entry into the national market ), product sales plans, development of a program for advertising campaigns and other sales promotion activities.

It is important to keep in mind that product range planning is a continuous process that continues throughout the entire life cycle of a product, from the inception of an idea to its removal from sale.

Assortment planning technology has the following initial conditions:

The assortment concept is expressed in the form of a system of indicators that characterize the optimal possible development of the production range of a given type of product. These include: a variety of types and varieties of goods, the frequency of updating the assortment, the level of price ratio for goods of a given type, etc. The goal of the assortment concept is to orient the enterprise towards the production of goods that correspond to the structure and variety of customer demand.

Target orientation and the art of planning are manifested in the embodiment of the real and potential capabilities of the enterprise into a certain combination of products that satisfy the buyer's needs and make a profit.

A typical assortment planning and implementation cycle includes a preliminary assessment of the concept, followed by the development of specifications based on customer requirements, the creation of samples, testing the feasibility of their mass production, and market testing.

Assortment structure

The product assortment of a retail enterprise differs in its structure from the assortment of a wholesale company, namely in that it can combine different groups of goods (food, electronics, furniture, household chemicals, watches, etc.), while wholesalers have to one degree or another, specialization.

By breadth, the assortment is divided into:

wide range (1-100 thousand items);

limited range (< 1000 наименований);

narrow assortment (< 200 наименований);

specialized assortment.

When making decisions on the assortment, it is necessary to take into account the degree of proximity between goods of different product groups, the capabilities of the enterprise (financial, personnel, warehouse, etc.), customer requirements, and the presence of competitors.

From a financial point of view, the formation of the assortment takes into account the turnover of goods, the size of turnover and the profit received.

The range is expanded for several reasons, including:

For some products in the main range, it is necessary to have complementary products (complementary products);

The activity of a wholesale company with this assortment is unprofitable (low turnover);

other marketing tasks are solved: new products are promoted, the enterprise switches to larger retail segments, etc.

Based on the classification of types of product range discussed above, as well as the characteristics of the product itself and the tasks set by the store owners, the following types of retail enterprises can be distinguished.

Specialty stores offering a narrow but rich assortment that can satisfy the specific needs of the buyer. The structure of the assortment can be aimed both at a wide offer of different options for one type of product (stores selling bicycles, tennis equipment, jeans, etc.), and at meeting the needs of a narrow segment of consumers (a store for newborns, a clothing store for tall people etc.).

Department stores offer a wide range of, primarily, non-food products. Located in prestigious locations in the city, department stores attract a large number of customers. In general, department stores are characterized by an average level of service with average and high prices for goods.

To increase turnover, department stores are developing food sales and also renting out part of their retail space to independent retailers.

Universal food stores (bantams, department stores, supermarkets, hypermarkets) differ in the breadth of their assortment and the area of their sales floor.

This Russian legislation does not define the rules for dividing stores into certain types, so a department store can have its own name (market, minimarket, supermarket, etc.).

Achieving correspondence between the structural and assortment supply of goods by an enterprise and the demand for them is associated with determining and forecasting the assortment structure. A forecast of the assortment structure for a long-term period, which would take into account such important features of the product for the consumer as aesthetic characteristics, exact sizes, and a specific price, is unlikely. The point is not in detailing the assortment according to consumer properties (for example, in terms of colors, product sizes, price ratios), but, for example, in the optimal variety of assortment according to certain criteria (types of televisions, sets of kitchen utensils, appropriate price gradations, etc. .) with a view to specific groups (segments) of consumers.

Only the development trend of the assortment is predicted (and more precisely, the assortment structure of demand and product supply). Thus, it is possible to determine what variety of televisions will meet the requirements of different consumer groups, but it is unrealistic to predict the need for specific models (with a set of specific properties) for the future. These forecasts, taking into account the influence of the factor of interchangeability of goods, must be considered in conjunction. The forecast of the assortment development trend should show such a trajectory of process development that will ensure the achievement of the planned compliance of the enterprise's product offering with the changing assortment structure of demand in the market in the future.

So, the essence of the problem of forming an assortment is planning almost all types of activities aimed at selecting products for future production and sale on the market and bringing the characteristics of these products into line with consumer requirements. Formation based on planning of a product range is a continuous process that continues throughout the entire life cycle of a product, starting from the moment the idea of its creation is conceived and ending with its withdrawal from the product program.

Assortment management involves coordinating interrelated activities - scientific, technical and design, comprehensive market research, organizing sales, service, advertising, and stimulating demand. The difficulty in solving this problem lies in the difficulty of combining all these elements to achieve the final goal - optimizing the assortment taking into account the strategic market goals set by the enterprise. If this cannot be achieved, then it may turn out that the assortment will begin to include products developed more for the convenience of the production departments of the enterprise rather than for the consumer. From the point of view of the marketing concept, this is directly contrary to what needs to be actually done. The tasks of planning and assortment formation are primarily to prepare a “consumer” specification for the product, transfer it to the design department, and then ensure that the prototype is tested, modified if necessary, and brought to the level of consumer requirements.

In other words, in the formation of the assortment, the final say should belong to the heads of the enterprise’s marketing service, who must decide when it is more appropriate to invest in product modification, rather than incur additional increasing costs for advertising and selling an obsolete product or reducing its price. It is the head of the enterprise's marketing service who must decide whether the time has come to introduce new products to the range to replace existing ones or in addition to them.

The formation of an assortment, as practice shows, can be carried out using various methods, depending on the scale of sales, the specifics of the products being manufactured, the goals and objectives facing the manufacturer. At the same time, they are united by the fact that assortment management is usually subordinate to the head of the marketing service. In certain cases, it is advisable to create a permanent body chaired by the general director (his deputy), which would include the heads of leading services and departments of the enterprise as permanent members. Its main task is to make fundamental decisions regarding the assortment, including: withdrawal of unprofitable types of products, their individual models, standard sizes; determining the need for research and development to create new and modify existing products; approval of plans and programs for the development of new or improvement of existing products; allocation of financial resources for approved programs and plans.

The pressing question for the manufacturer is whether it is necessary to develop a standard product suitable for all selected markets, or to adapt it to the specific requirements and characteristics of each individual segment, creating for this a certain number of modifications of the basic product. Both cases have their pros and cons. So, although the creation of a standard product, uniform for all markets, is very tempting, it is practically impossible. At the same time, the differentiation policy does not justify itself economically where market conditions allow for partial or complete standardization (universalization) of the product.

The benefits of this kind of standardization of goods include: reduction in costs of production, distribution, sales and service; unification of marketing mix elements; acceleration of return on investment, etc. Incomplete use (in comparison with differentiation) of the potential market opportunities, insufficiently flexible marketing response to changing market conditions in this case hinder innovation.

Product modification makes it possible to more fully use the “absorbing” capabilities of markets, taking into account the specifics of their requirements in certain regions of the country and foreign countries, to fill those product niches where there is no competition or it is insignificant. However, determining such a direction in the assortment strategy is an expensive matter associated with the need to modernize and expand production capacities, diversify and rebuild the sales network and, of course, expand the marketing mix. Ultimately, the use of standardization, differentiation, or a combination of these depends on the specific operating conditions of the manufacturer and is determined by the final result - the level of economic efficiency of sales and its volume achieved using these methods.

Another important element of the assortment and product policy in general is the removal of ineffective products from the program. Goods that are obsolete and economically ineffective, although perhaps in some demand, may be confiscated. The decision to remove or retain a product in the enterprise program is preceded by an assessment of the quality of the performance indicators of each product on the market. In this case, it is necessary to take into account combined information from all markets where they are sold in order to establish the real sales volume and the level of profitability (profitability) in dynamics that each of its products provides to the manufacturer.

Thus, the manufacturer must organize systematic monitoring of the product’s behavior on the market and its life cycle. Only under this condition will complete and reliable information be obtained, allowing you to make the right decisions. To facilitate solving the problem, you should have a methodology for assessing the position of the product in the various markets where the enterprise operates, and the methodology should be relatively simple.

Making a final decision to withdraw a product from the program or to continue its sale can be simplified if, already at the product development stage, quantitative requirements for it are established: the level (standard) of payback, sales volume and/or profit (taking into account the full cost of resources). If a product ceases to meet these criteria, then the nature of the decision to seize it is thereby predetermined.

A product that has exhausted its market potential and is not withdrawn from the production program in time brings large losses, requiring expenditures of funds, effort and time disproportionate to the results obtained. Therefore, if the manufacturer does not have a clear system of criteria for removing goods from the production and sales program and does not systematically analyze the goods being manufactured and sold, then its assortment will inevitably be “overloaded” with ineffective products with all the ensuing negative consequences for the manufacturer.

In market conditions, planning is one of the most important conditions for organizing the effective operation of an enterprise. Planning covers all the main areas of its production and economic activities - sales, finance, production, procurement, scientific and design developments, which are closely interrelated. This activity is based on identifying and forecasting demand, analysis and assessment of available resources and prospects for the development of economic conditions. This implies the need to link planning with marketing and control in order to constantly adjust production and sales indicators following changes in market demand. Assortment planning is the first and main step in the strategic planning of a company’s presence in the market.

Product policy presupposes certain targeted actions of the commodity producer or the presence of premeditated principles of behavior. It is designed to ensure continuity of decisions and measures for the formation of the assortment and its management; maintaining the competitiveness of goods at the required level; finding optimal product niches (segments) for goods; development and implementation of packaging, labeling and product servicing strategies. A well-thought-out product policy not only allows you to optimize the process of updating the product range, but also serves as a kind of indicator for the management of the enterprise of the general direction of actions that can correct current situations.

Product range

Product line - a group of products that are closely related, either because they function similarly, or because they are sold to the same groups of customers, or through the same types of outlets, or within the same range prices

Thus, the General Motors Corporation produces a range of cars, and the Revlon Corporation produces a range of cosmetics.

Each product range requires its own marketing strategy. In most companies, work with each product range is assigned to a separate person. This manager will have to make a number of important decisions regarding the breadth of the product range and the goods that represent it.

Deciding on the breadth of product range

The product range manager must decide on the breadth of the product range. The assortment is too narrow if profits can be increased by adding new products to it, and too wide if profits can be increased by excluding a number of products from it.

The breadth of the product range is partly determined by the goals that the company sets for itself. Firms trying to be known as suppliers of a comprehensive range and/or seeking to gain a large market share or expand it usually have a wide range of products. They are less concerned about the situation when one or another of the goods they produce does not make a profit. Firms that are primarily interested in the high profitability of their business usually have a narrowed range of profitable products.

Over time, the product range usually expands. A company can expand its product range in two ways: by increasing it or by saturating it.

The decision to increase the product range

The product range of any firm is part of the overall product range offered by the industry as a whole. For example, in the automobile market, BMW cars occupy a place among mid- and high-cost models. Range expansion occurs when a firm expands beyond what it currently produces. This buildup can go either down, or up, or in both directions at the same time.

Building down. Many firms initially locate themselves in the upper echelon of the market and subsequently gradually expand their range to cover the lower echelons. Growing down may be aimed at containing competitors, attacking them, or penetrating the fastest growing market segments.

One of the huge miscalculations of a number of American firms was their reluctance to expand their product range down into the lower echelons of their markets. The General Motors Corporation opposed the production of smaller cars, the Xerox Corporation opposed smaller copiers, and the Harley-Davidson Corporation opposed the production of smaller motorcycles. In all these cases, Japanese firms, recognizing great opportunities, acted quickly and successfully.

Building up. Firms operating in the lower echelons of the market may want to penetrate the upper echelons. They may be attracted by the higher growth rates of the upper echelons of the market or their increased profitability. Or perhaps the company simply wants to position itself as a manufacturer with a comprehensive range.

The decision to scale up can be risky. Competitors in higher echelons are not only well entrenched in their positions, but can also launch a counterattack by starting to penetrate the lower echelons of the market. Potential buyers may not believe that a new company is able to produce high quality products. Finally, a firm's sales agents and distributors may simply lack the skills and knowledge to serve the upper echelons of the market.

Bilateral extension. A company operating in the middle echelon of the market may decide to expand its product range both up and down at the same time. An example is the strategy of Texas Instruments in the pocket calculator market. Before the company appeared in this market, its lower echelons in terms of price and quality were mainly captured by the Bowmar company, and the upper echelons in terms of the same price and quality indicators were captured by the Hewlett Packard corporation.

The Texas Instruments company offered its first calculators to the middle echelon of the market as products of average price and average level of quality. Gradually, she began to expand her range in both directions. It offered better calculators at the same prices, or even lower, than Bowmar, and eventually eliminated it as a competitor. At the same time, Texas Instruments developed high-quality calculators, began selling them cheaper than Hewlett-Packard's calculators, and took a good share of the latter's sales in the upper echelons of the market. This two-pronged strategy helped Texas Instruments gain leadership in the pocket calculator market.

The decision to saturate the product range

Expansion of the product range can also occur through the addition of new products within its existing framework. There are several reasons why they resort to saturation of the assortment:

1) the desire to receive additional profits,

2) attempts to satisfy dealers complaining about gaps in the existing assortment,

3) the desire to use unused production capacities,

4) attempts to become a leading company with an exhaustive range

5) the desire to eliminate gaps in order to prevent competitors from entering.

Oversaturation of assortment leads to a decrease in overall profits, as products begin to undermine each other's sales, and consumers become confused. When releasing new products, a company should make sure that the new product is noticeably different from existing products.

Product nomenclature decisions

If an organization has several assortment groups of goods, they speak of a product range. We define the product range as follows:

Product nomenclature is the totality of all assortment groups of goods and product units offered to customers by a specific seller. The Avon product range includes products from three main product groups: cosmetics, jewelry, and household goods. The range of each of them consists of several subgroups of goods. For example, the assortment of cosmetic products can be divided into the following product subgroups: lipstick, blush, powder, etc. The assortment as a whole and each subgroup consists of many individual products. In total, the Avon product range includes 1,300 different products. A large department store carries approximately 10,000 products, a typical K-Mart deals with 15,000, and the General Electric Corporation produces approximately 250,000 different products.

The company's product range can be described in terms of its breadth, richness, depth and harmony. By the breadth of the product range of the Procter & Gamble corporation, they mean the total number of product ranges produced by the company. In Fig. 53 The breadth of the product range is represented by six assortment groups of goods. (In fact, the corporation also produces many products from other product groups, including dental elixirs, toilet paper, etc.)

By the saturation of the product range of the Procter and Gamble corporation, they mean the total number of individual products that make it up. By the depth of the product range, corporations mean the offering options for each individual product within the assortment group. So, if Crest toothpaste is offered in three different packaging and with two flavors (regular and menthol), this means that the depth of its offer is six.

By harmonious product range we mean the degree of proximity between products of different product groups in terms of their end use, requirements for the organization of production, distribution channels or some other indicators. Procter & Gamble's product lines are harmonious because they are all consumer goods that pass through the same distribution channels. At the same time, they are less harmonious in terms of differences in the functions performed by products for customers.

These four parameters characterizing the product range help the company determine its product policy. A firm can expand its operations in four ways. It can expand the product range by including new product groups. It can increase the saturation of existing assortment groups of goods, approaching the position of a company with an exhaustive assortment. It can offer more options for each of the available products, i.e., deepen its product range. And finally, depending on whether it seeks to gain a strong reputation in one area or operate in several areas at once, a company can purposefully achieve greater or, conversely, less harmony between products of different product groups.

Thus, we see that product policy is a multidimensional and complex area of activity that requires making decisions about the specific features of product nomenclature, product range, use of brand names, packaging and services. These decisions must be made not only on the basis of a full understanding of customer needs and the strategic approaches taken by competitors, but also with increasing attention to public opinion and legislation affecting the field of commodity production.

When making product production decisions, marketing managers must be sure to consider all applicable laws and regulations. Here are the main points to pay special attention to.

Adding new products and removing old ones. The implementation of decisions to replenish the product range with new assortment groups of goods, especially through the acquisition of other companies, which threatens to cause a decrease in the level of competition, may be prevented by the Kefauver-Seller Act of 1950. Decisions on the discontinuation of old products must be made taking into account those legal obligations formalized in written or implied, which the company has to its suppliers, dealers or customers in one way or another connected with the product being discontinued.

Protection of patent rights. When developing new products, a company must comply with the provisions of patent law. It is not allowed to create a product that is “unfairly similar” to another company’s existing product. An example of this is the lawsuit by Polaroid, which tried to prevent the sale of a new Kodak instant camera on the grounds that the appearance of this camera was associated with a violation of the corresponding patents held by Polaroid.

Quality and safety of goods. Manufacturers of foods, drugs, cosmetics and some fibers are required to strictly adhere to specific laws regarding the quality and safety of their products. The Federal Food, Drug, and Cosmetic Act protects consumers from unsafe and contaminated food, drug, and cosmetic products. A number of laws provide for inspection of the sanitary condition of meat and poultry processing enterprises. Laws have been passed regarding safety standards regarding the production of goods such as textiles, chemicals, automobiles, toys, medicines and poisons. The Consumer Product Safety Act, passed in 1972, established the Consumer Product Safety Commission, which has the power to ban or confiscate dangerous products and impose severe penalties on violators of the law. A consumer who is injured as a result of using a product with a design defect may have legal action against the manufacturer or dealer. Every year, more than 1 million lawsuits are filed regarding the quality of products. As a result, cases of goods being withdrawn from sale have increased significantly. General Motors Corp. spent $3.5 million in postage alone when it had to notify 6.5 million car owners about engine mounting defects.

Product quality guarantees. In an attempt to convince consumers of the good quality of their products, many manufacturers offer written guarantees. However, these warranties often contain disclaimers and the warranties themselves are written in language that is incomprehensible to the average consumer. It often turns out that he is not entitled to the services, repairs and replacements that he believed were included in the warranty.

To protect consumers, Congress passed the Magnuson Moss Warranty and Federal Trade Commission Act in 1975. This law requires that full warranties meet a number of minimum requirements, including provisions for repair “within a reasonable period of time without charge,” or replacement of the product, or full reimbursement to the consumer if the product does not work and “after a reasonable number of attempts.” repair it. Otherwise, the company must clearly state that it provides only a limited warranty. The law has already forced some manufacturers to replace full warranties with limited ones, and others to completely abandon warranties as a marketing tool.

Sources

ru.wikipedia.org Wikipedia - the free encyclopedia

www.slovopedia.com Slovopedia

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