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Setting Product Strategy How can a company build and manage its Product mix and product lines?
| Date post: | 15-Feb-2017 |
| Category: |
Marketing |
| Upload: | sameer-mathur |
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Setting Product Strategy
How can a company build and manage its
Product mix and product lines?
UP - Market Stretch A company may want to introduce a high-priced line for any of the following reasons:
1. Enter the high end of the market.
2. The objective of the firm may be to have higher growth, increase its margins, or to simply project itself as a full line mfgg firm.
3. E.g. Lipton Yellow Label(HUL) is a high end stretch withRs. 75 for 250gms tea.
4. A company serving in middle market might indulge in stretching its product line both ways – upward and downward
Down-Market Stretch A company positioned in the middle market may want to introduce alower-priced line for any of three reasons:
1. The company may notice strong growth opportunities as mass retailers such as Walmart, 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 a low-end competitor, it often decides to counterattack by entering the low end of the market.
3. The company may find that the middle market is stagnating or declining.
On the other hand,Mercedes successfully introduced its C-Class cars at $30,000 without injuring its ability to sell
other Mercedes cars for $100,000. John Deere introduced a lower-priced line of lawn tractors called Sabre from John
Deere while still selling its more expensive tractors under the John Deere name. In these cases, consumers may have been better able to compartmentalize the different brand offerings and understand functional differences between
offerings in higher and lower price tiers.
Moving down-market carries risks. Kodak introduced Kodak Funtime Film to counter lowerpriced brands, but it did not price it 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. Kodak withdrew the product and may have also lost some of
its quality image in the process.
