Free Product Variety Influences Cost Essay Sample

The influence of product variety and its impact on the cost could not be denied. A company recognizes that customers buy their products for numerous advantages, and, therefore, if they offer more choices along with some packages to save the customers some money, then they would be able to grab more customers.
However, from a company’s perspective, the variety of a product, even though, allows them to sell more, but sometimes, at a loss of revenue. Following factors are involved in this aspect:
Fruit drink companies such as Nestle, Liquiteria, etc. have to produce juices of various flavors (for example; mango, apple, pineapple, etc.) to meet customer’s expectations, this leads to cost of developing more productions units for generating bulk quantities of fruit drinks.
Furthermore, at times, variety in product also demands huge capital investments rather than development of smaller production units. For example, chemical companies have to create a whole set-up worth millions in order to generate a new variety of product.
Shoes manufacturing companies such as Teva, Urban Sole, etc. have to take into account even the small details during the production phase in the variety of designs they manufacture. Therefore, this frequent changing in setups leads to increment in product maintenance costs such as change in engineering design and manufacturing process.
The more variety a company offers in a product, the more cost it has to bear on its advertisement. Since, advertisement is one of the most common channels through which the manufacturers market their products.
Increase in product variety also leads to increment in cost of performing business as it has a direct impact on others cost factors such as ordering of different material, its shipping, and expediting and storage costs.