As humans, our existential instinct is to reinvent and adapt to keep the lifecycle going within our circle, giving way to innovation. Similarly, brands in an industry bring out new products every cycle to keep the consumers interested and pave the way for customers to try and experience different products.
Companies add new items every quarter to upgrade their custom products with an additional line to attract new customers who weren’t on board before. This continuous innovation of products is known as Product Line.
What is Product Line?
The term product line refers to the range of related products marketed and sold by the same company under a single brand name. These products may be related to each other based on their function, target market, price, or brand name. Companies often expand their product range by adding new products to the existing product line as customers find a brand name more trustworthy.
Products in a particular product line can be or cannot be similar; a company can carry one or more product lines. The number of products offered by the product line is referred to as ‘product line depth’. A company should maintain balance in product line depth; adding too many products may dilute the brand perception, or having fewer products may affect the availability of choices for customers.
One can find an example of a product line at cosmetic companies where the company offers a product line that includes multiple products such as lipstick, foundation, primer, blush, etc.
How Do Product Lines Work?
Launching a new product line is considered a successful marketing strategy. Customers are more likely to buy products of the brand they are familiar with or already using its product. Companies use the product line to expand their market reach by selling newly-launched products to existing long-time customers. This way, the company captures more sales as customers are more likely to buy products based on their previous experience with the brand. The main operating principle is that the customer is more likely to approach the brand they are familiar with positively.
One of India’s most popular dairy product brands has been Amul, much loved by consumers over the years. Recently, Amul launched a product line of chocolates, which customers have shown interest in because they trust the brand. The dark chocolate bar introduced by them has been popular among consumers ever since it was introduced, owing to its exotic flavours and reasonable prices.
Advantages of Product Line Extension
- Loyal Customer Base
If a company is well branded and established , customers are likely to be satisfied to purchase different products from the same brand , this way the customer base is strong and increases customer lifetime value. For example- Coca Cola is the original product , but Diet Coke has attracted health conscious audience as well.
- Low Cost Production
Since a product already exists in the same brand , a product line extension within the same company would acquire lower costs due to existing expertise and materials. For example – Levis jeans are made of the same material but fit to different body types.
- Competitive Barrier
Competitors will find it hard to find a product gap in the company as one company would release all the product line extensions ,thereby leaving no gap for competitor analysis.
- In House Promotions
Since there’s an already existing product , the promotions of a new product line would be easier to promote due to existing retailer and wholesaler relationships. This would also provide more shelf space for similar company brands in retailer shops. For example – Britannia has a vast product line and covers the diary product section , hence all their confectionary and diary products are served together.
Key Difference Between Product line vs Product Mix
Understanding the critical difference between a product line and a product mix helps company owners decide how many product lines would benefit them. People often get confused between product line and product mix as both are manufactured and sold by a single company. Here is the simplified explanation of the difference between the two.
The product line is the range of products sold by the company, whereas the product mix is the total collection of all the product lines launched by the company. The company may have large or small product mixes based on the number of product lines and the company’s financial condition.
Price range, functionality, target audience and brand recognition are the factors that determine the company’s product line. Products with a similar target audience may form a product line, and products with almost the same price range may have a different product line. A company’s age, size, brand value and financial status play a significant role in forming a product mix. Companies with enormous valuations are likely to have a higher product mix than companies with lower valuations.
Companies can practice cross-selling within product mixes but not in a product line. The term cross-selling means selling co-related products to a customer or a product that might be helpful to them when they make a similar purchase. For example, if a stationery company has two product lines of pencils and sharpeners, customers are more likely to buy sharpeners along with a pencil. If a company sells only pencils or sharpeners, there would be fewer chances of cross-selling.
What is Product Line Pricing?
Product line pricing is about the practice of reviewing and setting prices for products in coordination with one another.
Product line pricing is practical when there are substantial price gaps between each line so that the customer is well-informed of the quality difference between product lines. Retailers use the process of product line pricing to separate goods into various pricing categories creating different quality standards in the mind of customers. Many companies nowadays develop product lines instead of manufacturing a single product. So, product line pricing sets the price based on the cost difference between different product lines. The larger the number of features and the product’s benefits, the higher the customer would be willing to pay for it. This form of pricing assists the company increase its turnover and profits.
The standard product line pricing strategies include – captive pricing, leader pricing, bait pricing, price lining, and price bundling. You get a shampoo sachet free when you buy a sanitiser in discount offers.
An example of product line pricing could be when you stay in hotels. As a customer, you might want to know the budget offers of Primary rooms and VIP rooms in your preferred hotel, and might pay extra for executive chambers as they come with added benefits of an accessible minibar and an indoor swimming pool. These count as products of a product line in the Hospitality sector.
Product extensions help companies expand their product line to many socio-economic groups and widen their reach worldwide. These strategies are a great hit with multinational companies. They have a vast customer base in different social groups, so companies can introduce new lines of products to tap into a potential target market.