Product line decisions pdf

Low 2. Medium 3. High These ranges can also be intervening to each other. Stretch their lines downwards. The company learned that a Japanese competitor penetrates into the market with its compact, highly advanced, less expensive machines. American companies: Japanese companies: Is a failure to plug low-ends Is a success to plug low-ends Resist to build smaller cars, copying machines etc. Marketing Influences Financial Influences Product Influences Concept of Product Life Cycle Stages of Life Cycle 1.

Introduction 2. Growth 3. Maturity 4. Decline The old TV is getting replaced by.. This old roofing tile industry is now switching to More examples for product replacement The PLC Graph Graph with Profit curve An old PLC Curve!! Thank You!! Cynthia Wallace Dec. No problem. Heena Chopra Jun. SimranWalia9 Feb. KHemanthsai Feb. These could include heavy-duty vehicles, consumer cars and motorcycles.

Also here, separate product line decisions need to be made. The primary one of the product line decisions is the product line length. This means nothing else than the number of items in a product line. Certainly, the product line is too short if the company could increase profits by adding items to it. However, it is too long if profits could be augmented by dropping items.

In order to find that out, each item in the product line should be assessed on a regular basis in terms of sales and profits.

The product line length can be influenced by company objectives and resources. For instance, a company might want to maintain longer product lines to protect against economic swings.

Expanding the product line is the second one of the product line decisions. Companies interested in high short-term gains usually maintain shorter lines. Design and engineering costs, inventory costs, manufacturing change over costs, order processing costs, transportation costs, and promotional costs go up as a result of introducing new items. In such a situation, the company screens the whole product line and decides to drop unprofitable items and thus keeps the product line under control.

Product line stretching takes place when a company lengthens its product line beyond its current range. A company can increase the length of the product line with three product line stretching Methods;. Companies at the lower end of the market may be enticed to enter the higher end by a faster growth rate or higher margins.

Besides, they may intend to emerge as a full-line manufacturer and add prestige to their existing products. This up strategy targets the product for a higher level and a higher-priced market segment. It may be higher income, more status, better quality, or some other factor that makes the repositioned product appear better than the original one. In reality, this is the most difficult, costly, and time-consuming approach to repositioning, especially if the brand remains the same.

It may so happen consumers are not easily or quickly convinced that a once medium or lower priced product is now a status product commanding a high price. Many companies may start with the upper end of the market and later stretch their lines downward.

This happens due to many reasons. A company may have first entered the upper end to establish a quality image and decided to come downward later. A company may add a low-end product to capture a portion of the market that otherwise would attract a new competitor. It may locate faster growth taking place at the low end. Trading down is relatively easier to accomplish, although not necessarily more desirable.

It is likely that consumers believe they are getting a more prestigious product for a price comparable to lesser status competing items. This strategy is sometimes adopted in conjunction with product line expansion when family branding is used. So long there is a big difference in market levels does not exist, an addition to the line can reap the benefits of an association with higher status branded products.

Here is that the traded down product will injure the image of the higher status ones. Companies operating in the middle range of the market may go for stretching their lines in both directions. The risk involved in this strategy is that the target buyers of the upper end may move to the lower end. The company may even lose these buyers to its competitors.

Trading across is repositioning the product to appeal to the same buyer as in the original segment. Under this strategy, the product could simply be targeted after a different group of upper, middle, or lower class buyers. This strategy can help in solving some image confusion problems.

It is often used when the product has achieved a high degree of success in the original segment. The executive uses that recognition advantageously in appealing to other groups at the same level. The product line contraction strategy is followed to reduce the number of items the company offers for sale. Such a product tends to acquire a bad image that can carry over into the rest of the product mix. There are certain reasons for which a company may hesitate to eliminate or contract its product line.