5.6:
Product Line Decisions
A product line is a group of related products manufactured by a single company, often sharing similar functionalities, targeted at specific demographic groups, or marketed together.
Brands have multiple product lines to target diverse markets, maximize profit potential, and diversify risks.
For example, Apple's product lines include- iPhones, iPads, and Macs.
Line filling and line stretching are the two ways to expand a product line.
When Apple launches a new iPhone, it is part of line filling, which involves adding more items to the existing product line.
Brands will introduce products that enhance profitability and eliminate those that don't contribute to profits to stay competitive.
Conversely, line stretching strategies involve adding new product lines, both upward and downward, to address market gaps and competition.
For instance, BMW introduced the Mini Cooper and Compact 1-Series, representing downward stretching that catered to budget-conscious consumers and expanded market reach.
It launched Rolls Royce for the premium segment, representing upward stretching, which targeted affluent customers and elevated prestige and profit margins.
5.6 Product Line Decisions
A product line refers to a group of related products sold by the same company under a single brand. Companies create a product line to leverage brand loyalty and meet a spectrum of customer needs.
- • Product line decisions, including line filling and line stretching, are significant strategies brands utilize to optimize market reach and profitability.
- • Line filling entails introducing more items within the existing range of a product line to compete more comprehensively in the industry. This strategy is often used to target every possible niche in a market, limiting space for competitors and catering to diverse customer needs.
- • Conversely, line stretching involves extending a company's product line beyond its current range, either upwards to cater to a more premium segment or downwards to accommodate a lower-end market. The objective is to reach new customers, defend the existing market, or create a growth path. Stretch perceptions can significantly influence consumer responses to brand line stretches, affecting their perceived value and purchase decisions.
- • These strategies are vital as they help businesses differentiate their offerings, meet varying consumer demands, and gain a competitive advantage.