PRODUCT LINE ANALYSIS

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.

For example, a cosmetic company that's already selling a high-priced product line of makeup
under one of its well-known brands might launch a product line under the same brand name
but at a lower price point. Product lines can vary in quality, price, and target market.
Companies use product lines to gauge trends, which helps them to determine which markets to
target.

EXAMPLES OF PRODUCT LINES

Coca-Cola would have the following product lines: soft drinks, water, sports drinks, energy drinks, and
juices. As we know, Coke offers a broad variety of soft drinks marketed under different brands. They
also have a multi-brand approach to their other product lines. As you should see, each related set of
products is considered to be a product line.

If we take the example of Apple – their product lines would include: smart phones, MP3 players, tablets,
computers, smart watches, and online services. Under each of these product lines they would offer a
variety of different products.

Product line managers need to know the sales and profits of each item in their line to
determine which items to build, maintain, harvest, or divest. They also need to understand
each product line’s market profile and image.

The analysis provides information for two key decision areas: product line length and product
mix pricing.

PRODUCT LINE LENGTH

Company objectives influence product line length.

 Create a product line to induce-up selling.

 Create a product line that facilitates cross-selling.
 Protect against economic ups and downs.

A company lengthens its product in two ways: line stretching and line filling.

Line stretching occurs when a company lengthens its product line beyond its current range,
whether down-market, up-market or both ways.