Product Line Length
Company objectives influence product-line length, tine objective is lo create a product line to induce Lipselling: 'I'bus General Motors would like to move customers up fro in the Chevrolet to the lluick to the Cadillac. A dille rent objective is to create a product line that facilitates cross-selling: Hewlett-Packard sells printers amvelI as computers. Still another objective is to create a product line that protects against economic ups and downs; EteCtrOlu* offers while goods such as refrigerators, dishwashers, and Va£p|im cleaners under different brand names in the discount, middle-market, and premium segments, in part in case the economy moves Lip or dnwn.J-' Companies seeking high market share and market growth will generally carry longer product lines. Companies that emphasize high profitabil ity will carry shorter lines consisting of carefully chosen i turns.
Product lines tend in Lengthen over tittle. Hxeess manufacturing capacity puts pressure on the product-line manager lo develop new items. The sales force and distributors also pressure ihe company for a more complete prodütf line to satisfy customers. But as items are added, costs rise; design and engineering costs, inventory-carrying costs, man lj fact uring-ehungc<ívcr cosis, order-processing costs, transportation tosis. and new-item promotional costs, Eventually, someone calls a halt: Top management may stop development because ofthsufficient funds or manufacturing capacity. The controller may ca.IL for a study of money-losing items. A pan em of product-line growth followed by massive pruning may repeal itself many times,
A company lengthens its product line In two ways: by line stretching and line filling.
LINE S.'¡ CI NG livery company's product line covers a certain pan of the total possible range. For example, RMW automobiles are located in the upper price range of the automobile market. I.Ene stretching occurs when a company lengthens its product line beyond its current range. The company can stretch its line down-market, up-market, or both ways.
Down-Market Stretch A company posiiioned in the middle market may ivaiu i o ituroditce a lower-priced line for any of three reasons:
1. The company may notice strong growth opportunities as mass retailers such as Wal-Mart, Best Huv, and others all met a growing number of shoppers who wan l value-priced goods.
2. The company may wish to lie up lower-end competitors who might otherwise try to move t!p-markei. If the company lias been attacked by a low-end competitor, it often decides lo counterattack by enieritig the low end of the market.
3. ' the co m puny m ay ft n d ilia 11 he in i ddle m arket is si agn ¡i t ing or ded 11i lug,
A company faces a number of naming choices in deciding to move down-market, Sony; for example, faced three chokes:
1. Use i he name Sony on all of in offerings, (Sony did this,)
2. Introduce lower-priced offerings using a sub-brand name, such as Sony Value l.iue. Oilier companies have done this, such as Gillette with Cilleite Cood News and Ramada Limited. The risks are that ihe Sony name loses some of its. quality image and that some Sony buyers might switch tn the lower-priced offerings.
3. Introduce ihe lower-priced offerings under a different name, without meminning Jinny; but Sony would have to spend a lot of money to build up the new brand name, and the mass merchants may nui even accept a brand that lacks the Sony name.
Moving down-market tarries risks. Kodak Introduced Kodak FÚhlime film 10 etitmler lower-priced brands, but it did not price Kodak Pun lime low enough io match the lower-priced him. It also found some of its tegular customers buying Runtime, sn it was cannibalizing irs core brand, It withdrew the product, tin the other hand, Mercedes successfully introduced its C-Classcars at $30.000 without injuring its ability to sell other Mercedes cars for$]t)lUJlH) and up. John Deem introduced a lower-priced line of la un u a cmrs called Sabre from John Lacere while still selling lis more expensive tractors under the John Deere name.
Tm A piiftl ad for Ga » of Sonoma sts&v.'ing members of (he younoar gestation pi !fie Gaito tanil^. wiffi (he !rsg ■ Mew Generation. Wwti Class'
Up-Market Stretch Companies may wish it) enter the high end of the market for more growth, higher margins, or simply to position themselves as Full-line manufacturers, Many markets have spawned surprising upscale segments; Starbucks in coffee, llaagen-Dj/.s in ice cream, and lividu in bottled water, The leading Japanese auto companies have cacti introduced an upscale automobile: Toyota's Lexius; Nissan's Inflnlil; and Honda's Acura. Note that they invented entirely new names rather than using or including tElCiromi names.
Other companies have included their own name in moving up-market. Gallo introduced Ciallo of Sonoma (priced at S10 lo S30 a bottle) to com pete in the premium yi tie segment, using the fodder's grandchildren as spokespeopie in an intensive push-and-pull campaign. Willi a hip. young, and Tun Image, case sales volume tripled to E>UUnOI)(} in General Electric introduced the CP Profile brand for its brgc appliance offerings in The upscale market,2* Some brands have used modifiers to signal a noticeable, although presumably not dramatic, quality improvement, such as Ultra Dry Pampers, Estra Strength Tylenol, or PowerPrq Dustbuster Plus,
Two-Way Stretch Companies serving the middle market might decide to stretch their line in both directions. Texas Instruments (T|) Introduced its first calculators in the mcdium-price-niedium-quality end of the market. Gradually, it added calculators at the lower end. taking market share away from Bfllvmar, and ai the higher end to compete wiili Hcwlett-Packard. This two-way stretch won 1! early market leadership hi the hand-calculator market.
Holiday Inn Worldwide also Inns performed a two-way stretch of its hotel product lint-The hotel chain broke its domestic hotels into five separate chains to tap into five different benefit segments—the upscale Crowne Plaza, the traditional Holiday fnn, the budget Holiday Inn Impress, and the business-Oriented Holiday Inn Select and Holiday Inn So lies & tiooms. Different bmnded drains received different marketing programs and emphasis. Holiday Inn Impress has been advertised with the humorous "Slay Smitn" advertising campaign showing the brilliant feats that ordinary people could attempt after staying ai tlie Chain. By basin;; the development of these brands t>n distinct consumer targe is with iink|iie needs. Holiday Inn is able to ensure against overlap between brands.
A product line can also he lengthened by adding more items widiin the present range, "¡"here are Several motives for fine filling: reaching for incremental profits, trying to satisfy dealers who complain About lost sales because of missing items in the line, trying to utilize excess capacity, trying to be tile leading full-line company, and trying to plugholes to keep out competitors.
bmw ag
In four yeans BMW lias applied from a one-brand, live-model carmaker into a Wree-brand, 10-mode! powerhouse. Not only has ice carmaker expanded BMW's prcduct ra^ge downward with Mini Coopers and ils compact
1 -series models, but it Has also built il upward wilh Flclls-Royce, while filling the gaps in between wibi its X3 Sperts Activity Vehicle, aid a series coupe The compaay lias used line fiiling successfully to boost its appeal to the m wannabe-rich, the rich, and the super-rich, all wilhuut depiariingi from its jjure premium pORitionin-g.25
Line fiiling Is overdone if it results in sell'-cannibnidation and Customer confusion. The company needs to differentiate each item In tfie cons timer's mind. I inch item should possess a just-noticeable difference. According to Weber's; law, customers ate more attuned to relative than to absolute difference.^ They will perceive the difference between boards
2 and 3 feel long and boards '¿it and -id feet long hut not between boards 23 and 3D feet long. The company should also check that the proposed Item me els a market need and is not being added simply to satisfy an internal need, The infamous Edsel automobile, on which I ord lost S35D million in the late 1950ft met E:nrd's internal positioning needs for a ear between its Ford and Lincoln lines hut not the market's needs,
LINE MODERNIZATION, FEATURING, AND PRUNING Product lines need to be modernised, A company's machine tools might have a 1970s look and lose out to jjewer-stylcd competitors' lines. The issne is whether to overhaul the line piecemeal or all at once, A piecemeal approach allows the mm party to nee how customers and dealers take to the new style. It is also less draining oil the company's eash flow, but it allows competitors to see changes and to start redesigning their own lines.
In rapidly changing product markets, modernisation is emu In nous. Companies plait improvements to encourage customer migration to higher-valued, higher-priced items. Microprocessor companies such as hud and AMD, and software companies such as Microsoft and Oracle, continually introduce more advanced versions of their products. A major issue is thniiijg improvements so they do nut appear too early [damaging sales of the current line) or loo late (after the competition has established a strong reputation lor mure advanced equipment].
The prodttet-Jlne manager typically selects one or a few items in the line 10 feature. Sears will announce a special low-priced washing machine to attract customers, ft' other times, managers will feature it high-end item in lend prestige to the product line. Sometimes a company 11 nils one end of its line selling well anil 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 counterergued that ihc company should promote items thill set! well rather than try to prop up weak items.
Product-line managers must periodically review the line for deadivnod ihai Is depressing profits. "Marketing insight: Rationalizing Brand Portfolios for Growth" describes some
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