Page 136 - DMGT408DMGT203_Marketing Management

Unit 6: Products, Services and Brands

Notes
Example: Parker pen stretched downward and introduced ballpoint pen at low-price.
This hurt Parker as a high-class product. Another risk is that introducing a lower-end item might
cannibalise (eat away sales) the company’s high-end item.

Upward Stretch: In this situation, companies operating at low-end may opt to enter high-
end because of better opportunities as a result of faster market growth, or the need to
create an image of full line company.

Example: Videocon entered the market with a twin-tub low-end washing machine.
Subsequently, after the introduction of IFB automatic washing machine and entry of other
players the market expanded. The average household income of middle class also showed
positive trends. To take advantage of a market growing at the higher-end, Videocon also
introduced an automatic washing machine. Maruti Udyog introduced its medium-priced models
such as Maruti Zen, Maruti Esteem, Wagon R, Alto, and Swift after it had entered the market
with its low-end Maruti 800 and Maruti Omni. Toyota introduced its Lexus luxury car as a
standalone product (with no outward link to Toyota) for just this very reason. It did not want it
to be in any way affected by Toyota’s no-doubt superb, but mass market image.

There may be certain risks associated with upward line stretching. These may include
prospective customers’ perceptions that the newcomer in the high-end category may not
produce high-quality products, or competitors already well established in the high-end
market may retaliate by introducing items in the low-end of the market.

Example: Long established footwear company Bata failed in its attempt when it tried
upward stretch and finally introduced its Power line of economical sports shoes.

Both-way Stretch: Companies operating in the medium range of the market, may decide
to stretch product line(s) both ways for reasons of opportunities arising in different market
segments. The main risk is that it may prompt some customers to trade down. However,
companies often prefer to retain their customers by providing low-end alternatives rather
than losing them to competitors.
Line Filling: A company may decide to lengthen the existing product line(s) by adding more items.
The possible objectives leading to line filling may include realising incremental profits, meeting
dealers’ demands in response to their complaints that they lose sales because of missing items in
the lines, excess capacity pressures, and trying to fill up vacant item slots to keep out competitors.

Example: Videocon and some other TV and AC manufacturers have introduced models
at various price-points right through high-end to low-end. Similarly, IBM, HPCompaq, Acer, and
Sony etc., have introduced laptop PCs at various feature-price points ranging from high-end to
low-end.
Line filling may sometimes leads to cannibalisation, apart from confusing customers about the
products’ positioning unless the company succeeds in clearly differentiating each item
meaningfully in customers’ minds.
Line Pruning: Line pruning is just the opposite to line stretching and involves a deliberate
decision to cut down the number of items in product line(s). Over a period of time, market
conditions and customer preferences change, and companies find that some of their product
lines contain some unnecessary variants and pack sizes. Another reason for line pruning can be
the shortage of current production capacity. It is necessary for product managers to periodically

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