What is meant by product line expansion?
Product line extension (also known as expansion) involves a business adding a new product to one of its pre-existing product lines.
What is product line decision with example?
A product line is a group of products that are closely related because they function similarly, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. For example; Toyota produces several lines of cars.
What is contraction strategy?
Contraction Strategy Contraction strategies decrease the size or scope of operations for an organization either at the corporate level or business level. Contraction strategies include divestiture, liquidation, harvesting, and retrenchment.
What are the product line strategies?
There are four key product mix strategies:
- Expansion: A company increases the number of product lines or depth (i.e., product variations) within lines.
- Contraction: A company narrows its product mix to eliminate lower-performing products or lines or to simplify remaining products or lines.
Why are product line extensions important?
Why are brand line extensions important? Brand line extensions reduce risk associated with new product development. Due to the established success of the parent brand, consumers will have instant recognition of the product name and will be more likely to try the new line extension.
What are the benefits of product line extension?
Some of the common benefits a business gets from product line extension are as follows.
- It Draws In New Customers.
- It Keeps the Existing Customers Excited.
- It Increases Profits.
- It Helps in Achieving Economies of Scale.
- It Enhances Marketing Efficiency.
- It Enables the Business to Occupy Larger Shelf Space.
What is product line filling example?
Product line filling is the addition of further items to the current line of products that a company is dealing in. Eg. Maruti Suzuki had launched Alto in the year 2000 which was a product between two other models of Maruti- Maruti 800 and Maruti Zen.
What is product and product line decisions?
Product line refers to a group of same products. Product line decisions refer to decisions relating to addition or deletion of product from the existing product line. Addition and deletions in product can be explained as follows: Line Stretching Decisions: Line stretching implies increasing the length of product line.
What are two disadvantages of a contraction product mix strategy?
What are two disadvantages of a contraction product-mix strategy? The fewer products or lines a company has, the greater the financial risk to the company if one of them fails. Competitors may also step in to provide the products and draw away customers.
What is product modification?
any substantial change made to the attributes (size, shape, colour, style, price, etc.) of a product; modification of a product is usually undertaken in an attempt to revitalise it in order to increase demand.
Why would a company use a contraction product mix strategy?
Why would a business use a trading-down product-mix strategy? To attract a new target market by using trading down, the company is adding products or lines that are less expensive than what it previously offered.
What are the 5 product mix strategies?
Five product mix pricing situations
- Product line pricing – the products in the product line.
- Optional product pricing – optional or accessory products.
- Captive product pricing – complementary products.
- By-product pricing – by-products.
- Product bundle pricing – several products.
What is product line contraction strategy?
Product Line Contraction Strategy. If a product is not profitable, it should be dropped. However, before dropping it, due consideration must be given to such factors as low prices and efficient promotional programme to increase its profit performance. There are certain products such as spare parts, which, by nature,…
What are product lines and how do they work?
Product lines are created by companies as a marketing strategy to capture the sales of consumers who are already buying the brand. The operating principle is that consumers are more likely to respond positively to brands they know and love and will be willing to buy the new products based on their positive experiences with the brand in the past.
What is the difference between product elimination and product contraction?
The decision of product elimination is seldom clear-cut. Product contraction involves identifying items before they are ready for elimination and then deleting them on a planned basis. A marketer must look at indications in either the product’s performance or the marketplace in general.
What are the key questions to consider when preparing a product-line contraction?
So, before embarking on a product-line contraction strategy, the firm should compare each item with that of the competitor’s and assess its relative strength or weaknesses. Specifically, it should seek an answer to questions such as the following: Why are the products used? Where are the products used? When are the products used?
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