Published by MBA Skool Team, Last Updated: January 22, 2018
What is Downward Stretching?
Downward stretching occurs when a new product is introduced into an already established line of products. Often the new product is launched at a lower price point than its peers in the same brand. The objective of downward stretching is to use the brand equity or existing positive brand image of an existing line of products to launch new items.
A company positioned in the higher end of the market may want to introduce a middle priced line for many reasons like
o The higher end of the market might be witnessing low/stagnant growth
o The company may want to tie in a larger customer base and hope that they will eventually graduate to the premium priced line
o The middle priced section might be witnessing strong growth and the company may want to take advantage of the opportunity
For example, Armani has the Emporio Armani and A/X Armani Exchange lines, which is a downward stretch from the Giorgio Armani line to enable young, relatively price sensitive customers to experience the Armani brand and graduate towards the premium collection. The materials for these are thus cheaper and the fashion trendier than Giorgio Armani.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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