MGT601 - SME Management - Lecture Handout 34

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Product Mix

It refers to number of products offered by a company. It is not uncommon to find small firms selling ultiple products. Product mix is done to optimize profits.

Advantages of product mix

  1. It enables the firm to serve different segments of the market.
  2. It gives steady sales & profits to the firm.
  3. The firm can keep all its bases covered.

Demerits of Product Mix

  1. It makes greater demand on firm’s resources in the form of increased investment in production facilities and inventory.
  2. Marketing Problems.

The firm should weigh the pros and cons of a wider versus narrow product mix. The ultimate decision would rest on such considerations as the available resources, existing and future market opportunities and strategies of competitors. Phillips kotler has suggested the following indicators of firm’s sub optional product mix;

  1. Disproportionately high percentage of total profits from a few products;
  2. Insufficient product breadth to exploit sales force;
  3. Excessive productive capacity on a chronic or seasonal basis;
  4. Steadily declining sales or profits.

Development of New Product

Small firms should consider the frequent introduction of new or improved product as part of their market strategy. The procedure for generating new product ideas and implementing them is described below:

  1. Making creative Search for new product ideas
  2. Scrutiny of ideas for their worthwhile ness
  3. Evaluating whether the idea is compatible with firm’s objectives
  4. Establishing technical and market feasibility
  5. Reviewing internal resources and capabilities
  6. Product development and product testing
  7. Test Marketing
  8. Commercial sales

State Assistance in Marketing

  1. Export Promotion Bureau.
  2. Export Promotion Zone Authority.
  3. Small & Medium Enterprise Development Authority.

Export Promotion Bureau


Export Promotion Zone Authority
Small & Medium Enterprise Development Authority (Marketing Services Division)

  • Internal Support
  • External Support
  • Marketing Support to SME
  • Packaging Support
  • Advertisement & Media Support

SMEDA (Marketing Services Division)

  • Internal support
  • External support
  • Marketing support to SME
  • Packaging support
  • Advertisement and media support

Marketing Facts (A World Bank Survey)

  • Most small enterprise work for domestic center.
  • Only 8% work in export sector
  • 4% work for govt. sector
  • Tough bargaining on price 36%
  • Credit customer 34%
  • 28%are optimistic to grow in the next 2 years while the real number is 30%

Related Content: MGT601 - VU Lectures, Handouts, PPT Slides, Assignments, Quizzes, Papers & Books of SME Management