Product Marketing Reasons for Product Line Expansion

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 by their competitor's. 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 keeping itself relevant in the market.

Decrease in demand; A firm can decided to contract a product line due to the decrease in demand of some products by producing the products which are highly demanded and leaving out the ones which are lowly demanded. The decrease in demand may be due to the fact that the products are no longer needed by the clients or that the competition in that particular product is too much that it no longer makes business sense to keep manufacturing or stocking it.

Product mix

Product mix refers to the total composite of products offered by a particular organization and it consists of both the product line and individual products. This is where the firm is responsible for more than one category product lines and the management efforts are directed to different product categories.

Many firms have a product mix strategy because of the following:

Product mix strategy is important in a firm because it offers the ability to expand customer base by offering its customers more products within an accessible confinement.

Reduces customer travel and cost; this is because a company produces different products with different functions and therefore a customer is able to shop from one location since many customers prefer to shop in one location rather than travelling to a series of location to shop which wastes customer's time and also it's costly (ecofine.com, 2011).