LINE STRETCHING IN MARKETING
Every company product line covers a certain part of the total possible range. For example BMW automobiles are located in the upper price range of the automobile market. Line stretching occurs when a company lengthens its product line beyond the current product range. The company can stretch its line down market or up market or both ways.
Down Market stretch:
A company positioned in the middle market may want to introduce a lower priced line for any of these reasons:
1. The company may notice strong growth opportunities as mass retailers such as Wal Mart, Big Bazaar, Best Buy and others attract a growing number of shoppers who want Value-priced goods.
2. The company may wish to tie up lower end competitors who might otherwise try to move up market. If the company has been attacked by low end competitor, it often decides to counter attack by entering the low end of the market.
3. The company may find that the middle market is stagnating or declining.
A company faces a number of naming choices in deciding to move down market. Sony for example faced three choices:
A. Use the name Sony on all of its offerings
B. Introduce lower price offerings using a sub-brand name such as Sony Value line. Other companies have done this, such as Gillette, Good News, Ramada Limited, Hindusthan Lever etc., The risks are that the Sony name loses some of its quality image and that some Sony buyers might switch to the lower priced offerings.
C. Introduce the lower price offerings under a different name without mentioning Sony but Sony would have to spend a lot of money to build up the new brand name, and the mass merchants may no even accept a brand that lacks the Sony name.
Moving down market carries risks. Kodak introduced Kodak Funtime film to counter lower priced brands, but it did not price Kodak Funtime low enough to match the lower priced film. It also found some of its regular customers buying Funtime, so it was cannibalizing its core brand. It withdrew the product.
On the other hand Mercedes successfully introduced its â€˜Câ€™ class cars at $30,000 without injuring its ability to sell other Mercedes cars for $100,000 and up.
Up â€“ Market stretch:
Companies may wish to enter the high end of the market for more growth, higher margins or simply to position themselves as full time manufacturers. Many markets have spawned surprising upscale segments: Star Bucks in coffee, Haagen Daaz in Ice cream and Evian in bottled water. The leading Japanese auto companies have each introduced an upscale automobile namely Toyotaâ€™s Lexus, Nissanâ€™s Infiniti and Hondaâ€™s Acura. It may be noted that they invented entirely new names rather than using or including their own names.
Two way stretch:
Companies serving the middle market might decide to stretch their line in both directions. Texas instruments introduced its first calculators on the medium price and medium quality end of the market. Gradually it added calculators to the lower end taking market share away from Bowmar and at the higher end to compete with Hewlett Packard.