Uses and benefits of product line extension
- Identifying the needs of a niche market. ...
- Providing product variety for customers. ...
- Meeting changing market needs. ...
- Increasing a brand's portfolio. ...
- Increasing a company's revenue. ...
- Engaging with direct competitors. ...
- Reducing risks associated with product development. ...
- Maintaining customer loyalty. ...
Why do companies add product line extensions to their products?
Product line extensions increase the variety of its existing products so that the products can appeal to a wider and more diversified audience. They also entice the current customers to make more purchases. In terms of services, let’s consider a company offering home design and renovation services.
What is a line extension and how does it work?
A line extension is when you add new flavors, colors, ingredients, shapes, or package sizes to your food or beverage brand. Despite altering the product in some way, on the store shelf your new products would still appear side by side in the same category.
Are line extensions the answer to boosting sales?
In fact, line extensions may be the answer to building sales and moving your company in a whole new direction. Take a cue from big business. Look at how Kraft, for instance, has added Jell-O Instant Pudding and multiple permutations of the Jell-O brand in order to capture new audiences and expand into previously untapped market niches.
Why don't more retailers use Eline extensions?
Line extensions rarely expand category demand, and retailers can’t provide more shelf space to a category just because there are more products. Most important, the costs of overextension can remain hidden.
What are the benefits of extending the product line?
Some of the common benefits a business gets from product line extension are as follows.It Draws In New Customers. ... It Keeps the Existing Customers Excited. ... It Increases Profits. ... It Helps in Achieving Economies of Scale. ... It Enhances Marketing Efficiency. ... It Enables the Business to Occupy Larger Shelf Space.
What is an extension of a product line?
Product line extension (also known as expansion) involves a business adding a new product to one of its pre-existing product lines.
What is product extension strategy?
An extension strategy is a practice used to increase the market share for a given product or service and thus keep it in the maturity phase of the marketing product lifecycle rather than going into decline. Extension strategies include rebranding, price discounting and seeking new markets.
What is a line extension in marketing?
Line extensions occur when a company introduces additional items in the same product category under the same brand name such as new flavors, forms, colors, added ingredients, package sizes. This is as opposed to brand extension which is a new product in a totally different product category.
What is product line extension?
A product line extension is any new product brought to market that is in the same product category that the firm already produces and markets. And a product category is related set of products – such as, dairy products, computer products, furniture, motor vehicles, and so on. The most common product line extensions that we see are often in ...
Why is it important to have a broader product range?
By having a broader range of products within the same product category, makes it more difficult for competitors to find an obvious gap in the marketplace. It would also have the impact of fragmenting the market and splitting segments into niches. This may have the effect of making it non-viable for a competitor to bring a similar product to the market.
What does it mean to remain within the same product category?
This means that the availability of the new product should be quite wide and achieved fairly quickly and probably without the need for excessive trade promotions.
What does it mean when a company provides another variation of an established brand?
If the company provides another variation of an established brand, then they are leveraging the existing loyalty and likeability of the brand. This means that immediate sales and profit are far more likely, as well as increasing overall customer equity and customer lifetime value.
Why is it important to have a range of similar products?
By having a range of similar products (within the same product category), the company can various marketing mix offering for one of these brands/products at a time and is able to generate valuable market information by utilizing the other brands/products as a control. This allows the company to engage in more marketing experimentation and gain greater customer insights.
Why should there be a low cost development?
Low cost of development. Because the company has developed this category product before, there should be a relatively low-cost development – primarily because they have the in-house expertise and knowledge, along with the necessary IT/manufacturing capabilities.
Is product development a simple process?
Having produced a marketed this type of product before, it is highly likely that the new product development process and marketing launch will be quite simple the company to implement. They should be able to do this easily with existing personnel and probably without the need to outsource to consultants or other specialists.
What is Product Line Extension?
When a business has a line of products that are doing well, and it adds more products to it, it is doing what you call product line extension. This differs from coming up with a new product line, where the business introduces a unique product altogether.
How Product Line Extension Helps Your Business
As you can see from the product line extension examples given above, an extension in a company’s line can totally reinvigorate its sales. The new products or new product lines will benefit from the existing customer base and brand image. Some of the common benefits a business gets from product line extension are as follows.
How Product Line Extension Can be Risky For Your Business?
Despite all its benefits, as we learned from the product line extension examples given above, there are risks associated with this action as well. It is part of a business’s marketing strategy, and any strategy needs to be planned and implemented carefully.
What is product line extension?
Product line extension is a marketing strategy that uses an established brand to introduce a new item into the same product line. The new item may differ slightly from what a company already offers, such as in flavor, color, form, ingredients or packaging size.
Uses and benefits of product line extension
Product line extensions may be beneficial and useful for companies in a variety of ways, such as:
Line extension vs. brand extension
Line extension and brand extension are both marketing strategies that address the expansion of a commercial goods market. However, brand extension is the movement of the company into a new territory or market. This means that a company markets and sells a product that is fundamentally different from their current items.
Tips for product line extension
Use these tips to help implement a product line extension in your own company:
Why do companies have multiple product lines?
Having multiple product lines may allow a growing business to diversify risk and capitalize on its established reputation. And the number of product items (or line extensions) in a product line can attract buyers with different preferences, increase profitability thanks to market segmentation and, for some businesses, ...
How to market a product?
Know Your Product's Life Cycle 1 In the introduction stage, your marketing objectives are to create awareness and stimulate product trials. 2 To achieve the growth stage, you'll need to maximize market share and penetration. 3 Once your product reaches the maturity stage, the task will be to maximize profitability while defending the market share you've earned. 4 When it begins to decline, you'll slowly phase out the weak product, reduce expenditures and focus on retaining cash flow while targeting hard-core loyal customers.
What are the benefits of line extensions?
Product line extension is part of each firm’s advertising technique. It’s a low-risk technique to meet the wants of varied buyer segments and can be utilized as a aggressive weapon to extend a model’s management over the market.
Line extensions vs. model extensions
Model line extension happens when an organization introduces a brand new merchandise in a very totally different product class. It permits an organization the chance to increase its model with recognition from its present merchandise.
Product line extension examples
Now that you’ve got an concept of what line extensions are, let’s take a look at two real-life examples.
Suggestions for making a product line extension technique
The unhealthy information is that there’s no technique to totally predict which product line extensions will resonate along with your viewers earlier than you add them to your retailer.
Attain new markets with product line extensions
Lately, there are methods you may collect data to make a strong subsequent transfer for your corporation with out paying for costly market analysis. A small funding in studying about your viewers and testing new merchandise might help you keep away from over-investing in a product that finally received’t promote.
Product line extension FAQ
Product line extensions mean you can leverage an present model title to promote to new market segments. It provides manufacturers a aggressive benefit and might improve buyer loyalty by providing extra decisions to potential prospects.
Does brand extension affect equity?
The image of a brand arguably drives its equity. Conventional wisdom suggests that advertising is invariably the source of brand image. But, in fact, brand extensions can fundamentally change the image of the parent brand. If the fit is inappropriate, the extension can do substantial harm.
Is there a risk associated with line extensions?
Aaker is Professor, Haas School of Business, University of California, Berkeley, California. As Quelch and Kenny observe, there are risks associated with line extensions, many of which are unforeseen, underestimated, or ignored.
Established and Loyal Customer Base
Existing Expertise
Retailer Relationships
Low Cost of Production
Low Cost of Development
Provides Market Information
- By having a range of similar products (within the same product category), the company can various marketing mix offering for one of these brands/products at a time and is able to generate valuable market information by utilizing the other brands/products as a control. This allows the company to engage in more marketing experimentation and gain grea...
Competitive Barriers
Easy to Implement
Possible Economies of Scale
Supply Relationships
What Is A Product Line Extension?
Benefits of Brand Extension Opportunities
- 1. Generates New Customers
When you get to know product line extensions, you will also understand the importance of attracting new customers. If you add exclusive product lines to your online store, there is no reason why it will raise a few eyebrows within your respective audience. If your added products … - 2. Retains Current Customers
As much as generating new customers is essential, repeat customers also have a significant value to your online store. If you are selling the same product line repeatedly, it will hurt customer loyalty. They will feel bored and consider other online stores that add new product line extension…
Things to Consider For Brand Extension Opportunities
Conclusion