Line Extension

Posted in Marketing and Strategy Terms, Total Reads: 1813
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Definition: Line Extension

A product line extension may be defined as the use of an established product’s brand name for a new item in the same product category.


Product Line is a particular category of product that is offered by a company.


The objective is to serve different customer needs while taking advantage of an already established products brand name.

 

Line extension can be done in three ways:-

• Down market stretch- A company positioned in the upper or the middle segment of the market may decide to introduce low priced products. This may be due to strong growth opportunities in the low priced market segment, competitors trying to eat up market share by entering the low priced range or the company feels the upper end of the market is stagnating.

For example:- Gillette was known for its upper end shaving razors. But it introduced Gillette Vector as a low priced Gillette Vector to cater to the lower end of the market.


• Up- Market stretch-Companies may wish to enter the upper end of the market for more growth, higher margins, or simply to position themselves as full-line manufacturers.

For example:- Bisleri introduced a special variant of packaged water ‘Bisleri Vedica’, claimed to be having special minerals.


• Two way stretch-Companies serving the middle market might decide to stretch their line in both directions. This is usually done to gain market dominance.

For example:- Titan first introduced watches in the middle price segment. It then stretched its range to premium segment watches (Titan edge, Nebula and Xylus) and the economy segment (Titan Sonata).


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