What is product line decision, focus on lost contribution margin and avoidable fixed costs or prepare comparative

What is the Product Line?

Product Line, in general, is known as a range of products that are either closely related or dependent in terms of their functionality and the target customer groups. In most cases, these products are sold in the same outlets or platform or as combo packages.

Some of the examples of Product Line are as follows,

·         The renowned car manufacturer BMW offers several lines of cars

·         The smartphone brand Apple offers several models of smartphones, laptops, desktops and related accessories as its Product Line.

·         Soft Drink brand Pepsi and Coca-Cola has several ranges of drinks as its line of products.

The products grouped as Product Line has the following similar characteristics,

·         The products are closely related to each other

·         These products are sold to the similar target customers

·         Mostly, all the products in a Product Line will fall under similar price range

·         The market and outlets are often the same for the products falling under a Product Line

·         The products are most likely to have similar functions or with some complementary features

How does the Product Line process work?

A CEO or a company’s executive is the ultimate authority who decides about the launching and adding new products as Product Line. However, the decision is made with the help of following information,

·         The feasibility of the manufacturing of the product or availability of the product

·         Demand and availability of the product in the market

·         Competitors approach towards the idea of adding the product to a Product Line

·         The projected sales prospects of the product after adding it to the Product Line

·         The projected profit prospects of the product after adding it to the Product Line

Product Line Strategies:

A marketing manager’s priority is to strategize the Product Line and decide on the finest mix of products compatible with each other. And thereby, make sure that the chosen products guarantee sales, production, promotion, distribution and pricing.

What is Product Line Decision?

The decision of offering a range of products to solve problems and needs of other products launched by the company is called Product Line Decision. Sometimes, the Product Line Decisions can also be made based on the idea of improving sales via Cross-Selling similar products.

For instance, an automobile manufacturer not just offers cars but different models and several accessories like Alloy Wheels, Mud Flaps, Roof Bars, Car Covers, and Roof Spoilers etc. Similarly, a smartphone manufacturer will not just offer smartphones but various accessories such as wired/wireless earphones, chargers, smartwatches, etc. Launching this type of similar line of products is an outcome of Product Line Decision.

Types of Product Line Decision:

There are three types of Product Line Decisions. They are,

i.                        Product Line Expansion

ii.                        Product Line Reposition

iii.                        Product Line Contraction

Product Line Expansion/Extension

The process of expanding a brand with a new line of products in the same or similar product category is defined as Product Line Expansion or Product Line Extension. The new line of products expanded can differ in terms of various characteristics and features such as color, form, flavor, specifications, design, etc. The ultimate aim of Product Line Expansion is to improve the sales of an established product.

Product Line Reposition

The strategy of shifting the target market of a product is defined as Product Line Reposition. The slight difference between the Product line Expansion and Product Line Reposition is that the repositioning doesn’t involve introducing or adding new products. Instead, the product positioned already was repositioned into a different market audience. The primary reasons for repositioning a Product Line are incorrect initial position of product or lack of growth in the existing target market.

Product Line Contraction

The process of withdrawing a product or range of products from a Product Line is known as Product Line Contraction. This works totally opposite to Product Line Expansion where the number of products in the Product Line is reduced. The important reasons for Product Line Contraction include the following,

·         The decline of demand in the market and lacks the glamor compared to the competitor products

·         The subjective products drains the money and resources of the company without much profit

To release market space for a similar product in another Product Line of the company