Line stretching occurs when this range is lengthened. This stretching could be upward, downward or both ways.
Line stretching occurs when this
range is lengthened. This stretching could be upward, downward or both ways.
Most of the companies have range of products in its existing product
lines, like Videocon has a range of TVs in its product line, right from budget
TVs to premium TVs. Videocon entered the market targeting elite consumers.
Later, it introduced 14 inch private to yuppies, Bazooka for Richie, Turbo
tough to middle income aspirants, and Budgedt lien to the low income price
Here a company operates in the
lower end of the market. By upward stretch, it proposes to enter the higher
end. Perhaps, it is motivated by higher margin of profits, higher growth rate
or a position of a full-range marketer. This decision has its own risks.
marketer might assault the stretcher by stretching downwards. Besides, it is a
question of credibility of a lower-end marketer -whether he will be able to
produce high quality products. There is one more risk. The existing
infrastructure of a low-end marketer may not be competent to deal with the
Hindustan Lever introduced Surf Ultra to match Ariel of P&G and then
introduced Surf excel-all in the premium category. Philips had its two in ones
in the price range of Rs.1000-2000. To entice high quality conscious upend end
consumers it introduced Power house a in the price range of Rs.6000-9000 range
and powerplay in Rs 15,000-25,000.
Lets start with an example: like
all of you know parker, parker started with pens only at high price but if we
look at parker today we can see products available in the range of 50 Rupees
which no one could have though of in older times.
Many companies start with
high-end products, but later stretch downwards by adding 1ow-priced products.
The down-end products are advertised heavily so as to pull customers to the
whole line on the basis of price.
Hindusthan Lever introduced Wheel a low priced detergent to compete with
Nirma when it found that Surf had lost its market share to Nirma. When Ariel
Microsystems did not generate expected revenues, P&G introduced a green
alternate at a reduced price and new products like New Ariel Super soaker at
much lower price.
This strategy needs careful
handling. The budget brand being promoted should not dilute the overall brand
image. Besides, the budget brand must be available. Consumers should not get a
feeling that they were hooked to bait, for switching later. Downward stretch is
practiced in the following situations:
1. A competitor stretches upward and
challenges the marketer. He counter-attacks him stretching downwards
2. Most companies start at the upper end, and then roll
3. The high-end market has a slow growth rate.
4. By filling the gap at the low-end, new competition
5. Downward stretch has its own
risks. The down-end item might cannibalize the high-end items. Besides, our
downward stretch might provoke a competitor to move upward. Down-end product
may not be managed properly as the company may not have that capacity. It may
dilute the brand image of the company’s products. It is, however, needs careful
consideration - a product line should not have a gap at the lower-end. It
exposes the company to competition, e.g., American car companies faced the
competition from small-sized, Japanese cars at the lower-end of the market.
Two way stretch
Beside upward and downward
stretch you can even stretch in two ways like several companies serve the
middle-end market. They can stretch their product line in both the directions.
A hotel company operating hotels in the comfort category where each room
has a tariff 2000-3000 a day might decide to have elite upper-end hotels with
tariffs of Rs. 5000-7000 a lower-end budget hotels with tariffs of Rs. 600-1500
a day. Ashoka group of ITC has thus elite 5-Star hotels, at the upper-end
comfort hotels at the middle-end and budget hotels like Ashoka Yatri Niwas at
Tags : MARKETING MANAGEMENT - Product Mix Decisions
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