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Product Marketing
Reasons for product line expansion
Product line is a group of related products manufactured by a single company and the products are closely related in one way or the other. There are several reasons that can puch a firm towards the expansion of a product line.
Increase sales; Some firms expand their product lines with an intension of increasing the firm's overall sales. This is because when the company expands its product lines, it increases its production and therefore more products will be produced hence increasing the company's sales. (Mc Grath Michael, 2010).
Profit growth; Some firms expand their product lines to increase their profitability through greater sales volume which might be obtained from new products since most people prefer purchasing products from brands which they are familiar with. The expansion of the product lines may be with an aim of enabling a specific item in the firm gain value hence generate larger profits than when the new product had not been introduced.
To reach untapped opportunities; Some firms might expand its product line so as to reach the untapped opportunities which can benefit their business. They can decide to reach the locations which are not serviced...
For example, some local areas which are neglected by the business men and yet they have potential customers (Mayumi Mendoza-Bates, (2011). The expansion of the product line in such a case will ensure that the newly introduced product can comfortably fit into the new market that the firm intends to venture into.
Kim. T. Gordon, (2004) says that expansion of a product line helps a firm to compete more broadly with their competitors in their industries.
Reasons for contracting a product line
Seasonal changes; some products are seasonal in such a way that they are only demanded during a certain period of time. For example, Christmas cards are only demanded in December. This is the reason why some firms contract their product lines when the demand of the product in the larger line they deal in is no longer demanded or may take some time before the demand is back again.
Limited resources; this is also a reason for contracting a product line since the firm cannot produce certain products due to inadequate resources. When a firm has limited resources it will prefer to produce those products which are highly demanded and leave out those that are lowly demanded, this is a strategic way of the firm…
References
Ecofine.com, (2011). Differentiation strategy. Integrated knowledge. Retrieved October 26, 2010
from http://www.ecofine.com/strategy/Differentiation%20 strategy.html
Kim. T. Gordon,(2004). Pros and Cons of expanding your product line
Retrieved October 26, 2010 from http://www.entrepreneur.com/article/71094
26, 2010 from http://powerhomebiz.com/vol75/expand.html
Mc Grath Michael .E.(2010). Marketing Strategy. Retrieved October 26, 2010 from http://www.quickmba.com/marketing strat.shtml>..
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