some time, Nirma had only a single detergent brand and subsequently added a new product line by introducing a bathing soap. HLL realized the serious threat from Nirma washing powder and introduced cheaper versions of detergents. Companies make decisions that concern either adding new items in existing product lines, deleting products from existing product lines, or adding new product lines. Another aspect relates to upgrading the existing technology either to reduce the product costs or to improve quality, for stretching (downwards, upwards, or both ways), or line filling. Product managers need to closely examine the sales and profits of each item in a product line decisions. The findings will help them decide whether to build, maintain, harvest, or divest different items in a particular product line decisions. A product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlet, or fall within given price ranges. Diana’s perfume became so popular that she always running out of stock. To cope with the excess demand, she later experiment with manufacturing and selling the first five scents of fragrance that nobody had before such as violet, white, rose, lily, and white musk. Manufacturing through the plant that she and her brother built enabled her to fulfil at the quantity that required by the customers. She was a successful sales lady in the town, pioneering the direct selling method of encouraging customers to buy the products. 18
Product Line Stretching Product lines tend to lengthen over the years for different reasons such as excess manufacturing capacity, new market opportunities, demand from sales force and resellers for a richer product line to satisfy customers with varied preferences, and competitive compulsions. Lengthening of lines raises costs in many areas and decisions are based on a careful appraisal. However, at some point in time somebody, often the top management intervenes and stops this. i. Downward Line Stretch Companies sometimes introduce new products with an objective of communicating an image of technical excellence and high quality and locate at the upper end of the market. Subsequently, the company might stretch downwards due to competitor’s attack by introducing a low-end product in response to a competitive attack, or a company may introduce a low-end product to fill up a vacant slot that may seem attractive to a new competitor. Another possibility is that market may become more attractive at low-end due to faster growth rate. For example, P&G introduced its Ariel Microsystem detergent at the high-end assuring high quality. Customer response was not encouraging and the company saw more opportunities at a lower end and introduced cheaper green alternative Ariel Super Soaker. Mercedes have offered its E-Class model to compete at much lower price point than its high- end S-Class models.
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- Fall '15
- Marketing, Diana