[MUSIC] So how else can we extend our product line or diversify in an attempt to try to serve multiple segments of customers? Here is one. Called vertical differentiation. As the case suggests, for this week Dodot, the leading manufacturing of diapers, is trying to go from a two strategy approach of having only a premium, etapas, product and a super premium activity product into a three prong strategy. This is called vertical differentiation. Where the buyer will have a good, better, and best approach to the market. With the good being the. Roughly speaking position. For the public at 19 cents. The etapas roughly speaking at 26 cents and the activity at 32 cents. This is called vertical differentiation and the idea is to try to capture different in this particular case value-conscious consumers for basic products such as diapers. Alternatively, you can approach through a horizontal differentiation approach. Let's take the case of Coca-Cola. The prices for all those different products the classic, the zero, the lite and the life is exactly the same. However, what we're trying to do is simply to appeal to different tastes. So vertical and horizontal differentiation are how companies go about trying to serve multiple segments of customers. Here are some key take aways about how you should think about your product portfolio, how to design it, and how to manage. First of all, you should start with customer needs. How to best meet those customer needs and particularly how to best Exceed customers' expectations, the concept of the augmented product comes very handy in this particular case. Second, you need to think about distributors. In almost no product or service will you be able to just do it on your own. Oftentimes you will require either suppliers or distributors that will provide after sales services or many other complimentary products or services for your products. Think about how you will also deliver value to them. A point which we will later see, once we discuss how to designed channels of distribution. And finally, you remember that products just like people have a life cycle. Which necessarily means that you ought to be thinking about how to mitigate the risk of depending on just one product. Diversification strategies is an important consideration and we have seen some of the framework for how to think about diversification. Now that we have dealt with products and you have grasped the fundamentals of what are the important decisions for designing and managing products. We're going to move on to section number four, dealing with pricing. Pricing is one of the most important marketing mix elements because,among other things, it is the only one in the whole marketing process that is able to capture some of all the value that you have been creating for customers. [MUSIC]