What is the Product Line?
Product Line refers to the collection of related products that are marketed under a single brand, which may be the flagship brand for the concerned company. Typically, companies extend their product offerings by adding new variants to the existing products with the expectation that the existing consumers will buy products from the brands that they are already purchasing.
The concept revolves around the idea of leveraging brand awareness and customer loyalty. People usually are driven towards products of those brands that they have used in the past because they feel they can trust any new product under that brand. So, it is advisable to add a new product variant under an existing line of product or brand.
Some of the larger companies have multiple product lines that are marketed under various brand names, which is a strategy to differentiate the products from each other so that the companies are able to target the requisite customer segment easily for each brand.
How does Product Line Work?
The product line is considered one of the best marketing strategies that companies often use to expand market reach by capturing the sales of customers that are already loyal buyers of the brand. As already explained above, the operating principle of this marketing strategy is that consumers respond affirmatively to brands that they already know and, as such, are more likely to buy the new products on the basis of their positive brand experience or something adjacent to brand recall.
For instance, a bakery based company may have various products under different brand names, some targeting price-sensitive consumers while some other for consumers who value quality more than the price, alongside other regular product lines.
Examples of Product Line
Some of the prime examples are discussed below –
- Amul offers a plethora of product lines that are closely related to each other but still different. Its product includes milk, flavored milk, chocolate, butter, curd, yogurt, ghee, etc.
- PepsiCo, as a global brand, has many other sub-brands that catered to different product segments, such as Frito Lay, Quaker Oats, Gatorade, and Tropicana.
- Microsoft Corporation offers a series of products for different segments. It sells several well-recognized product lines that include MS Office, Windows, and Xbox.
Product Line Extension
The term “product line extension” refers to the situation where a company introduces a new product that somewhat different than the company’s existing range of products. The idea behind this strategy is to expand the number of options available to a customer under a single brand. Some of the major benefits of the extension are as follows –
- It reduces the risk of introducing new products in the market. The existing customers that are familiar with the old set of products become the consumer of the new product.
- It helps in widening the choices offered to the customers that result in more market share. The choices can be in terms of higher and low price versions that cater to different customer requirements and segments.
- It can help grow business by leveraging the established and loyal customer base.
- Long-standing relationships with retailers and suppliers support marketability.
- Owing to existing expertise, it results in low cost of production, which is also partly due to economies of scaleEconomies Of ScaleEconomies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. .
- It helps in catering to the variety of needs of the consumers.
- Any kind of mistake in product line extension may result in loss of brand recall and reliability.
- The new variant may generate damaging implications for the original product, which can be catastrophic for the entire brand.
- There are chances of failure in case the product line extension has no competitive advantage over its rival brands in the concerned category.
So, it can be seen that marketing professionals consider that the product line offers the company a competitive edge over its rivals. As such, companies continue to add new products or extend the existing in order to improve their product mix to build a strong competitive advantage. However, it is equally important to maintain each line efficiently; otherwise, it can have an adverse impact on the reputation of the company.
This article has been a guide to what is Product Line and its definition. Here we discuss how does product line work along with examples, extension, analysis, advantages, disadvantages, and differences. You may refer to the following articles to learn more about finance.