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Product Line Decisions

Production-Mix Decisions:

An organization is required to bring changes in product mix to make it adaptable according to the needs of consumer. Product mix decisions refer to addition, deletion or modification of product in product mix. Primary aim of product mix decisions is sales and profit maximization.

Product mix decisions can be explained as follows:

  • Product Line Decisions
    • Line stretching decisions
      • Downward Stretching
      • Upward stretching
      • Two Way Stretching
      • Line Filling Decisions

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Product Line Decisions:

Product line refers to a group of same products. Product line decisions refer to decisions relating to addition or deletion of product from the existing product line. Addition and deletions in product can be explained as follows:

Line Stretching Decisions:

Line stretching implies increasing the length of product line. It can take place in three directions.

a) Downward Stretching:

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Downward stretching refers to addition of a new product into existing product line but at a lesser price. For example; TATA introduced low cost car “Nano” in the market.

b) Upward Stretching:

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Upward stretching is the opposite of downward stretching. When an organization adds a new product in the current product line but at higher price than the existing one, it is called upward stretching. For example; Parle started with low cost biscuits like Parle G then introduced high cost product of same category like Hide and Seek.

c) Two-way Stretching:

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Two way stretching refers to addition of product in product line in both the directions. So, a low priced as well as a high priced product are added at the same time in product line. Marriot- Hotels & Resorts started Renaissance Hotels to serve upper end of the market and Town Place suites to serve lower section of the market.

Line Filling Decisions:

Product line filling involves adding a new product in the existing product line to face competition and increase consumer base. Under product line filling price of the new product is normally same. For example, Maruti Suzuki introduced Alto when Maruti Zen was already available in the same range.

Line Pruning Decisions:

Line pruning decisions refer to removal of unprofitable product from the product line. For example Pepsi launched Pepsi Gold but the product was not successful in the market. So after some time it was removed from the market.

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