1 Product line stretching Product line stretching occurs when a company

1 product line stretching product line stretching

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1. Product line stretching: Product line stretching occurs when a company lengthens its product line beyond its current range, The company can stretch its line downward , upward , or both ways : A. Downward stretch: Many companies initially locate at the upper end of the market and later stretch their lines downward . A company may stretch downward to plug a market hole that otherwise would attract a new competitor or to respond to a competitor's attack on the upper end. Or it may add low-end products because it finds faster growth taking place in the low-end segments. Mercedes-Ben stretched downward for all these reasons. B. Upward stretch: Companies that locate at the lower end of the market may want to stretch their product lines upward . Sometimes, companies stretch upward in order to add prestige to their current products . They may be attracted by a faster growth rate or higher margins at the higher end, or they may simply want to position themselves as full-line manufacturers. Thus, each of the leading Japanese auto companies introduced an up market automobile: Toyota launched Lexus; Nissan launched Infinity; and Honda launched Acura. They used entirely new names rather than their own names. C. Two-way stretch: Companies that locate in the middle range of the market may decide to stretch their lines in both directions . Marriott did this with its hotel product line. The major risk with this strategy is that some travelers will trade down after finding that the lower- price hotels in the Marriott chain give them pretty much everything they want. However, Marriott would cither capture its customers who move downward than lose them to competitors. 2. Product line-filling decisions: o An alternative to product line stretching is product line filling adding more items within the present range of the line . o There are several reasons for product line filling: Reaching for extra profits , Satisfying dealers , using excess capacity , Being the leading full-line company , And plugging holes to keep out competitors . o Thus, Sony filled its Walkman line by adding solar-powered and waterproof Walkmans and an ultra light model that attaches to a sweatband for joggers, bicyclers, tennis players, and other exercisers. However, line filling is overdone if it results in cannibalization and customer confusion. The company should ensure that new items are noticeably different from existing ones. 10 هثدحم هخسن 1/31/2012
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BE200 Summary Prepared by: Honey Bonny (( دمحموبأ An organization with several product lines has a product mix. A product mix (or product portfolio or product assortment ) consists of all the product lines and items that a particular seller offers for sale . For example: Avon's product mix consists of four major product lines: cosmetics, jewelry, fashions, and household items. Each product line consists of several sublimes. For example, cosmetics breaks down into lipstick, eyeliner, powder, and so on. Each line and sublime has many individual items.
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