Question

What is meant by product line ? Elaborate the various Line Management Strategies.

Answer 1

Product Line - It is a group of related products sold by a company under a single brand. Varied product line helps a company to create varied branding and thus catering to different segment of the customers effectively. It is generally seen that customer purchase only those products to which they experience a greater conformity. Thus, to make products or create new product line is a technique used by producers to make their brand closer to the customers.

The Product Line determines the Product Mix of the company, which is further categorized by parameters - Width (Number of Product Lines), Depth (Number of Sub brands), Length (Number of Variation of the brand in terms of packaging, etc) and Consistency (Closeness of each product with each other in terms of target market).

Line Management requires us to analysis each item in the product, understand their contribution towards sales and profit, their Market positioning and Market share and thus determine which item to build, maintain, harvest or divest. Therefore, we are required to implement strategies so as to up-sell in the market, or cross-sell the product or maintain a product line which will keep the revenue stabilized during the economic ups and downs.

The Line Management strategies can be basically categorized into two categories-

• Line Stretching - Strategy where the company decides to lengthen its product line beyond its current range. The techniques used to meet this objective are-
  • Down Market Stretch - The company positioned in the Higher or middle market would want to introduce a lower priced product line. Example- Luxury car manufacturer Mercedes introducing a lost cost car in the market.
  • Upmarket Stretch - The company positioned in the lower market would like to enter the high end market for more growth, higher margins or just to position themselves as full-line manufacturer. Example- Low cost car manufacturer Toyota making an upmarket stretch by using Toyota Lexus.
  • Two-Way Stretch - Company serving the middle market decides to enter the lower and higher market so as to increase its customer base. Example - Motorola introducing Cheap Mobile phones and High end expensive phones.
• Line Filling - Strategy where the company decides to lengthen its product line by adding more items within its current range. This is usually done to meet specific needs of the customers, to have diverse range of products or to utilize the excess production capacity effectively.

Please Like & Provide your reviews in comments. :-)