LINE FILLING AND MODERNIZATION AS MARKETING NEEDS
A Product line can be strengthened by adjusting more items within the present range. There are several motives for line filling reaching for incremental profits, trying to satisfy dealers who complain about lost sales because of missing items in the line, tying to utilize excess capacity, trying to be the leading full line company and trying to plug holes to keep out competitors.
Line filling is overdone if it results in self cannibalization and customer confusion. The company needs to differentiate each item in the customerâ€™s mind. Each item should possess a just noticeable difference. They will perceive the difference between boards 2 and 3 feet long and 20 and 30 feet long and not between boards 29 and 30 feet long. The company should also check that the proposed item meets a market need and is not being added simply to satisfy an internal need. The infamous Edsel automobile on which Ford lost $350 million in the late 1950s, met Fordâ€™s internal positioning needs for a car between its Ford and Lincoln lines but not the marketâ€™s needs.
Line Modernization, Featuring and Pruning:
Product lines need to be modernized. A companyâ€™s machine tools might have a 1970s look and lose out to newer styled competitorâ€™s lines. The issue is whether to overhaul the line piecemeal or all at once. A piecemeal approach allows the company to see how customers and dealers take on the new style. It is also less draining on the companyâ€™s cash flow but allows competitors to see changes and start redesigning their own lines.
In rapidly changing product markets modernization is continuous. Companies plan improvements to encourage customer migration to higher valued and better priced items. Microprocessor companies like Intel and AMD and software companies such as Microsoft and Oracle continually introduce more advanced versions of their products. A major issue is timing improvement so they do not appear too early damaging the sales of the current line or too late after the competition has established a strong reputation for more advanced equipment.
The product line manager typically selects one or a few items in the line to feature. Sears will announce a special low priced washing machine to attract customers. At other times managers will feature a high end item to lend prestige to the product line. Sometimes a company finds one end of its line selling well and the other end selling poorly. The company may try to boost demand for the slower sellers especially if they are produced in a factory that is idled by lack of demand but it could be counter argued that the company should promote items that sell well rather than try to prop up weak items.
Product line managers must periodically review the line for deadwood that is depressing profits. The weak items can be identified through sales and cost analysis. A chemical company cut down its line from 217 to 93 products with the largest volume, largest contribution to profits and the greatest long term potential. Pruning is also done when the company is short of production capacity. Companies typically shorten their product lines on periods of tight demand and lengthen their lines in periods of slow demand.