MARKETING – MAKING CHANGES IN PRODUCT LINE
A firm may add new product items or delete existing ones or do both in its existing product lines. Further, a firm may go up in its technology and use state of the art technology or decide to stretch the product line downwards towards a more simple technology.
Consider the example of a consumer product company. When the firm decides to launch a state of the art washing machines in collaboration with major international firm, it is moving up in technology and this is termed as stretching the product line upwards. It is only in technology that the Electrical firm moves up but also in the customer group that it now attracts. Its washing machines customer is no more a low income housewife but an upper middle and high income housewife. The need served by this washing machine is much more than just washing, cleaning, rinsing and drying. Itâ€™s now a status symbol and perhaps may be visualized as representing a progressive and liberated woman
But what if the Electrical firm decides to launch washing machine at a price equivalent to 40% of the top end washing machine prices, it is stretching its product line downwards. It is now reaching out to the low income consumer who say not be all that educated. But perhaps within her segment she may be perceived as an opinion leader. She buys it for washing her clothes and also to demonstrate her â€œ superior being â€œ to her neighbors, friends and the peer group
Adding or stretching a product line, upwards or downwards is done due to the structural change in the market place-the most important being customer life styles and demographic characteristics like rising incomes and lower proportion of consumer income being spent on food and other essential items.
But, at times a firm may stretch its product line downwards because it has a brand image in a particular market segment and would now like to expand its market share in the target market. So, a downward stretch may also be undertaken to take advantage of a brand name and market opportunity created by changing consumer life-styles.