Product Line Strategies

We have looked at product strategy decisions like, packaging, branding, labeling, and support services for specific products and services. However product strategy also calls for building a product line. A product line is a group of products that are strongly related because they function in a same manner, are sold to the similar customer groups, are marketed through the similar types of outlets, or fall within given cost ranges. For instance, Nike produces numerous lines of shoes and Motorola produces numerous lines of telecommunications products.  In developing product line strategies, marketers face a lot tough decisions. The major product line decision involves product line length-a lot items in the product line. The line is too small if the manager may increase profits by adding items; the line is too long if the manager may enhance profits by dropping items. Company objectives and resources affect product line length. Product lines tend to lengthen over time. The sales force and distributors can pressure the product manager for a more total line to satisfy their customers. Or, the manager may want to add items to the product line to form growth in sales and profits. However, since the manager adds items, numerous costs rise: engineering and design costs, inventory costs, transportation costs, built-up changeover costs, and promotional costs to introduce new items. Top management eventually calls a halt to the mushrooming product line. Unnecessary or unprofitable items shall be pruned from the line in a chief effort to increase total profitability. This pattern of uncontrolled product line increase followed by heavy pruning is distinctive and may repeat itself several times.

The company has to manage its product lines carefully. It may systematically increase the length of its product line in two ways: by filling its line and by stretching its line. Product line stretching stretches its line upward, downward or both ways.

Various companies initially locate at the upper end of the market and afterwards stretch their lines downward. A company can stretch downward to plug a market hole that or else would attract a new competitor or to respond to a competitor's attack on the upper end. Or it can add low-end products because it discovers faster growth taking place in the low-end segments.