Product Line Decision

PRESENTATION
Product Line Decisions 

Made by students
Of Group # 1408
Goryatcheva Margarita
Medvedeva Asya
1
 Product Line Decisions
• A product line is a group of products that
are closely related.
They
• function in a similar manner
• are sold to the same customer groups
• are marketed through the same types of
outlets, or fall within given price ranges
2

Product Line-Length Decision:
• Dropping items
• Increasing items:
- Stretching the line
- Filling the line
3
 Product Line-Stretching
Decision
Every company’s product line covers a
certain range of the products offered by
the industry as a whole.
There are 3 of basic price-ranges:
1.Low
2.Medium
3.High
These ranges can also be intervening to
each other.
4
 Examples of Price Range
BMW Toyota
Medium-high Low-to-Medium
price range price range
Lamborghini Auto WAZ

High price Low price range
range
5
 Product Stretching
It is a product lengthening beyond the
current range.
This process can be held:
Downwards Two-ways Upwards
6
Price Downward Stretch 
High
Present
Products
New
Products
Low
Quality
Low High7
Downward Stretch

Many companies initially locate in the Upper-end of
the market and later….
Stretch their lines downwards.
WHY?
1.To Respond to the ATTACK in the Upper-End-
Invading the Low-End
2.To Plug an empty hole by Low-End EARLIER than
competitors
3.To Expand the assortment GAINING market share
4. To Fend-Off from Low-Priced CLONES
8
Downward Stretch
 Taking Risks:
1.Making competitors counteract by moving to
HIGHER End
2.Company’s dealers may not be able to handle
Low-End’s
3.Low-End may cannibalize the High-End…
 9
The case General Electric
GE is a Market Leader in CAT Medical Scanners for hospitals.
The company learned that a Japanese competitor penetrates
into the market with its compact, highly advanced, less
expensive machines.
Decision:
Introducing the GE’s lower-prices canners on market.
After-Effects:
GE’s low-priced version would hurt the high-price items of CAT scanner.
Solution: GE’s Manager:
“Aren’t We better off to cannibalize ourselves than to

let Japanese do it?”
10
 Is it a Failure or a Success?
American companies: Japanese companies:
Is a failure to plug Is a success to plug

low-ends low-ends
Resist to build Major opening in

smaller cars, copying producing low-end
machines etc. electronics,
chemicals. Moving in
quickly.
11
Price Upward Stretch 
High
New
Products
Present
Products
Low
Quality
12
Low High
Upward Stretch

Many companies at the Lower-End may want to
enter the High-End…..
Stretch their lines upwards.
WHY?
1.Attracted by faster GROWING margins in High-End.

2.Aimed to position themselves as FULL-LINE
manufacturers
3.Intended to create PRESTIGE image
13
Upward Stretch
 Taking Risks:
1.Competitors may have the same goals
2.Rivals strike back by entering lower end of the
market.
3.Prospective customers may not believe in
“Reasonable” quality of goods
4.Distribution and salespeople may lack the talent
to serve the higher end of the market
14
Price Two-Way Stretch 
High
w P r oducts
Ne
nt
Prese s
rod uct
P
New Pro
du cts
Low
Quality
15
Low High
Two-Way Stretch

Companies in the middle range of the market may
decide to…..
Stretch their lines in Two Directions.
WHY?
1.To hold-off copycats of company’s bestsellers
2.To be aimed at different target-market
3.To test the blood of all markets at one time

16
Two-way Stretch
 Taking Risks:
1.Trading down of some customers by
discovering the advantage of cheaper
items
2.Capturing the customers by competitors
3.Decline in high-End sales
17
The case Marriott Hotels
The Marriott Hotel group performed a two-way stretch of its hotel
product line. Along with regular Marriott Hotel it added the Marriott
Marquise line to serve the upper end of the market, the Courtyard,
Residence Inn and Fairfield to serve the low-end of market.
Decision:
Establishing particular services in each segment of hotels to mold the loyalty of
customers
After-Effects:
Conscious customers may soon discover reasonably-priced rooms of
the lower chain
Solution:
“Marriott would rather capture it’s customers who move downward
than passing keys to competitors”
18
 Product Line-Filling
Decision
• - adding more items within the present range of
the line.
Reasons:
• Reaching for extra profits
• Trying to satisfy dealers
• Trying to use excess capacity
• Trying to be the leading full-line company
• Trying to plug holes to keep out competitors
19
 Product Line-Modernization
Decision
• The central issue:
whether to overhaul the line piecemeal or all
in once
+ allows the company to see how customers
and dealers like the new styles before
changing the whole line
- allows competitors to see changes and
start redesigning their own lines
20
 Product Line-Featuring
Decision
- selecting one
or a few items in the
line to feature.
21

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PRESENTATION

Product Line Decisions 

Lamborghini Auto WAZ

Downwards Two-ways Upwards

Solution: GE’s Manager:

“Aren’t We better off to cannibalize ourselves than to

Is a failure to plug Is a success to plug

Resist to build Major opening in

1.Attracted by faster GROWING margins in High-End.

1.To hold-off copycats of company’s bestsellers

2.To be aimed at different target-market

3.To test the blood of all markets at one time

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