Lecture 21: Product Decisions

IIT Roorkee July 20182 minutes read

Brand management involves making decisions at the product mix and product line levels, with companies modifying product lines based on factors like customer demand, competition, and technology. Line stretching strategies can enhance product life cycles, with examples in the automotive sector showcasing how product line extensions and modifications can lead to incremental profits and meet customer demands for variety.

Insights

  • Product decisions in brand management are split into product mix level decisions and product line level decisions, with the latter focusing on strategies like line stretching and line extension to cater to customer demand, competition, and technological advancements.
  • Companies engage in various forms of line stretching, such as upmarket stretch, downmarket stretching, and two-way stretching, to expand their product range and cater to different market segments, ultimately aiming to enhance product life cycles, add variety, and maximize profitability through incremental profits and meeting customer preferences.

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Recent questions

  • What are product line level decisions?

    Product line level decisions involve strategies related to a company's objectives influencing product line expansion. Companies may choose to keep selling a product for years with minimal alterations based on customer demand and profitability. Modifying a product line depends on factors like customer desire, competition, and technological advancements. Line stretching occurs when a company expands its product line beyond its current range, influenced by market leadership and product managers' desires. Line stretching can enhance product life cycles and add variants to existing products to prevent decline.

  • What is upmarket stretch in brand management?

    Upmarket stretch involves entering the high-end market for growth, higher margins, or positioning as full-line manufacturers. Companies like Toyota with Lexus and Nissan with Infiniti introduced new names for premium offerings to appeal to customers. This strategy allows companies to target a more affluent customer base and differentiate their products from competitors by offering luxury features and higher quality.

  • What is downmarket stretching in product management?

    Downmarket stretching involves developing products for a larger customer base with lower prices, like Ikea's furniture. This strategy aims to reach a broader market segment by offering affordable products while maintaining quality and brand reputation. Companies can expand their customer base and increase sales volume by introducing budget-friendly options without compromising on value.

  • What is two-way stretching in brand management?

    Two-way stretching involves companies serving the middle market expanding their product line in both high-end and low-end directions, like Toyota with Corolla, Camry, Vios, and Lexus. This strategy allows companies to cater to different customer segments with varying preferences and purchasing power. By offering products at different price points and quality levels, companies can maximize market coverage and increase overall revenue.

  • Why is product line extension important in brand management?

    Product line extension involves adding more items within the current range, different from stretching where products are taken in different directions. Examples in the automotive sector show how the same platform and engine can lead to slightly or vastly different products. Reasons for extending product lines include incremental profits, satisfying dealers, utilizing excess capacity, and meeting customer demands for variety. By introducing new variants or models within the existing product line, companies can capitalize on brand loyalty, increase market share, and adapt to changing consumer preferences.

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Summary

00:00

Product Line Decisions in Brand Management

  • Product decisions in brand management are divided into product mix level decisions and product line level decisions.
  • Product line level decisions involve strategies related to a company's objectives influencing product line expansion.
  • Companies may choose to keep selling a product for years with minimal alterations based on customer demand and profitability.
  • Modifying a product line depends on factors like customer desire, competition, and technological advancements.
  • Line stretching occurs when a company expands its product line beyond its current range, influenced by market leadership and product managers' desires.
  • Line stretching can enhance product life cycles and add variants to existing products to prevent decline.
  • Upmarket stretch involves entering the high-end market for growth, higher margins, or positioning as full-line manufacturers.
  • Companies like Toyota with Lexus and Nissan with Infiniti introduced new names for premium offerings to appeal to customers.
  • Downmarket stretching involves developing products for a larger customer base with lower prices, like Ikea's furniture.
  • Two-way stretching involves companies serving the middle market expanding their product line in both high-end and low-end directions, like Toyota with Corolla, Camry, Vios, and Lexus.

19:32

"Maximizing profits through product line extension"

  • Product line extension involves adding more items within the current range, different from stretching where products are taken in different directions.
  • Examples in the automotive sector show how the same platform and engine can lead to slightly or vastly different products.
  • Reasons for extending product lines include incremental profits, satisfying dealers, utilizing excess capacity, and meeting customer demands for variety.
  • Product line modifications involve altering existing products with new varieties in colors, styles, features, and sizes.
  • Product line pruning involves removing items due to stagnation, obsolescence, loss of appeal, changes in company objectives, or conflicts with other products.
  • Decisions about intangible product aspects are crucial as customers seek more than just tangible functions from products.
  • Key characteristics external to the physical product include branding, packaging, product services, and software companies offering training institutions to enhance product performance.
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