Product LineDefined with Examples & More
A product line refers to a group of related products all sold by a company under the same brand.
Often one company may offer several product lines and accompanying brand names in order to distinguish their products for different customer groups.
When introducing new products, a company will often add to existing product lines with which consumers are already familiar.
In this way, companies can benefit from consumers’ propensity to choose products from brands with which they are familiar.
A company’s combined total of product lines is referred to as its product mix.
Product Lines Explained
Product lines refer to a collection of related goods all sold under one brand.
Often the goods in a given product line are complementary; however, this may not always be the case.
Generally, these goods will be related by either their function, the target market, or their price range.
Companies introduce products under a product line as a marketing strategy in order to benefit from brand loyalty.
The assumption behind this is that if consumers enjoy and trust a brand, they will be more likely to purchase products from the same brand in the future.
Companies will often use this consumer behavior to introduce new products to a market, assuming that consumers will be more likely to purchase the good because it is from a brand they have had positive experiences with in the past.
If a brand has a positive reputation in the market, a company may introduce products to new markets underneath the same brand in order to expand its reach.
For example, a manufacturer of high-priced cars may introduce products under the same brand at a lower price in order to reach new consumers.
Often product lines act as a way for companies to track market trends, market to particular consumer markets, and determine which industries to target.
Managing Product Lines
In order to effectively manage product lines, a company must track sales of products within each of its product lines.
Products may need to be added or dropped from product lines, as well as other actions.
Here are three of the most important actions that may need to be taken in order to maximize the profitability of product lines.
Line stretching means lengthening an existing product line in any of three dimensions, including:
- Upward Stretching: This entails adding products to an existing line at a higher price level.
- Downward Stretching: Downward stretching means adding new products to an existing line at a lower price.
- Two-Way Stretching: This means adding new products to an existing line in both directions.
Line filling means adding new products to an existing product line in order to fill in gaps.
This can grow a company’s customer base and prevent potential competitors from entering the market.
Line pruning means cutting unprofitable products from an existing product line.
Product Lines Vs. Product Mix
A product line refers to the goods and services that a company provides under a given brand.
For example, a potato chip manufacturer may provide a variety of flavors of potato chips under the same brand name.
It may regularly add to this product line, such as by introducing seasonal flavors under the same brand name.
However, the same company may see an opportunity to expand by selling french fries.
In order to enter this new market without risking damage to its existing brand, should the venture fail, the company chooses to introduce itself to the market under a new brand name.
In this case, the company did not add to its existing product line but instead introduced a new one.
Now the parent company has two distinct brands underneath it, and collectively these product lines are referred to as the company’s product mix.
The concept of a product mix is important in allowing a company to analyze market trends and ensure that it is able to remain profitable.
By analyzing the performance of its different product lines, a company can identify when certain brands are over- or under-performing and restructure its operations accordingly.
If a product line is flagging, then a company may decide to reduce its presence in the market, which may entail cutting certain products from the brand, selling the brand to a competitor, or simply ending the product line altogether.
Correspondingly, if a product line is performing well, a company may choose to add an additional product to the line and invest more into innovation and expansion under the brand.
A mature company often possesses a diversified product mix, including a wide breadth of product lines.
Internal development as well as acquisitions both lead to a growing portfolio of brands as time passes.
Another factor that can lead companies to a growing product mix is geographic expansion.
In many cases, products may face varying levels of success in different geographic markets leading a company to expand or reduce offerings in different regions.
Larger companies often have a well-developed infrastructure for marketing many distinct product lines.
These companies can benefit from the reduced dependence on the success of any given product line and can adapt their offerings to address changing market conditions.
Product lines often enable companies to more effectively market their products to distinct regions and market segments.
These can enable brands to benefit from adding products to their most highly performing brands in order to maximize profits among distinct age groups and geographic areas.
In many cases, a brand may launch products, particularly for certain geographic regions in which they operate.
Even an unprofitable product line may still be valuable to a parent company with multiple lines.
For example, a company may employ a loss leader strategy in which a particular product or service may be priced low enough that it loses money but attracts consumers allowing the brand to build a customer base.
This can allow the company to potentially sell products from other lines in its product mix, which do earn profits.
Product Line Examples
There are many examples of companies successfully using the concept of product lines, and examining a few of them can help to better understand how product lines work.
Here are some of the most successful companies with several product lines:
Microsoft is a widely recognized corporation with a diverse range of technology brands.
These include its Windows line of computer operating systems, its office software suite Microsoft Office, its game console Xbox, and several other product lines which enable it to maintain a wide range of operating areas.
PepsiCo possesses a wide range of product lines throughout the food and beverage industry.
In fact, 23 of its product lines possessed more than $1 billion in annual revenue in 2021, and the company as a whole possessed more than $70 billion in net revenue in the year.
This makes the company the second largest food and beverage business in the world.
Well-known product lines owned by the company include its Pepsi Cola soft drink line, Lay’s potato chips, and Quaker foods and snacks.
What Are the Types of Product Lines?
Product lines generally include products that are related by price, function, quality, or other factors.
How a company chooses to divide its products will generally depend on the market or industry in which it operates.
However, there are four primary classifications for product lines which include:
- New Lines: These are new products that often originate from significant research and development. This is the riskiest type of product line; however, they can offer high rewards.
- Additions: This category includes new additions to the market of existing products. Often this results as a company enters an existing market.
- Revised Products: These are lines including revised or upgraded products, such as a new generation of an existing line of products.
- Repositioning: This takes currently existing products and repositions them for sale for a different purpose and target market.
Do All Companies Diversify?
No. Some companies choose never to diversify beyond one product line.
They instead focus all of their efforts on growing their share in one market.
An example of this is Roku, which though relatively new to the market, offers only one product line based on internet-connected media players for televisions.
What Is Product Filling?
Product filling is the process of adding additional items to a product line to fill in any market gaps which are losing a brand’s potential customers.
An example of this would be a cosmetic company with a line of adult lipstick and lip balms for adult women adding products targeted at young and teenage girls.
What Is a Product Line Pricing Strategy?
A product line pricing strategy divides lines of goods and services into distinct tiers of pricing in order to create distinct cost categories for consumers based on their budget.
A very common example of this is car manufacturers, who often provide distinct product lines based on price levels.
For example, Toyota Motor Corporation provides several low- and mid-priced models under the Toyota brand as well as high-priced options under the Lexus brand name.
By dividing its products under these distinct lines, the company is able to more effectively market its products to consumers with different budgets.
How Do You Do a Product Line?
Companies develop product lines based on the markets they operate in and their marketing strategies.
Product lines will often be brought to market based on the success of market testing, research and development, and other factors.
Many potential product lines will be rejected before being brought to market.
- A product line refers to an array of related products, each sold under the same brand name.
- Products within a product line may be related by functionality, price, geographic area, or target market.
- A single company may offer many different product lines, and some companies can offer several hundred.
- Companies often expand their product offerings by adding to an existing product line to benefit from consumers’ familiarity with the brand.
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