A Business Encyclopedia

Product Line

Definition: Product Line can be understood as an array of related products, under a specific brand, offered by a particular company to its customers. For instance: Amul offers a series of closely related products such as milk, butter, ghee, dahi, yoghurt, ice cream, srikhand, Gulab jamun, flavoured milk, chocolate, etc.

There are many companies which are engaged in multiple product lines, i.e. depending on the type and nature of the target audience, the product line is added by the company. For example, A biscuit manufacturing company may have a special product line for price-sensitive people and another line geared towards quality sensitive people, along with its regular line of products.

Some examples of companies with multiple product lines are Proctor & Gamble (P&G), Indian Tobacco Company (ITC), Hindustan Unilever Limited (HUL), etc.

Product Line Extension

When a new product is introduced by the company which is a quite different from the company’s current range of products is called Product line extension. It expands the choice of the customers under a single brand. The merits of product line extension are:

  1. Risk: The risk of new product development reduces when the new variant is launched to the existing product line. The present customers are familiar with the existing product line and if a new product offers the same quality and fulfils the needs of the customers, that it claims, then it results in the reduction of risk
  2. Customer Loyalty: When a company extends its product line by introducing a varied product, the customers will choose the company’s product over its competitors which will help in maintaining customer loyalty.
  3. Market expansion: It is obvious that the extension in the product line will widen the choice of customers and thus increase market share. The company can also offer higher and low price version to cater different customer segments, which meets customer requirements.
  4. Branding: Customers are likely to buy the product offered by an existing and familiar brand. Nevertheless, branding becomes difficult when the company offers low-priced line products, asĀ it may harm the parent brand if less quality is offered. In such a case it is better to offer a low-priced product with different brand name.
  5. Product versions: Introducing a number of versions of a single product, is considered as low-risk strategy, wherein each version may have some additional or reduced features, as compared to the basic one. This may help in attracting more and more customers.

Making an addition to the existing line of products is considered as the best strategy to expand the business as people are usually attracted towards the products of those brands which they have already used or which they can easily rely upon.

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