The Reasons Behind Product-Line Expansions

 Every sector of consumer goods and services has seen a proliferation of items over the past few years, and there are no signs that this trend is slowing down. the majority of businesses are moving full-steam ahead with their line extensions and other product-expansion efforts. However, increasing amounts of evidence show that such aggressive strategies might be dangerous, as John A. Quelch and David Kenny contend in "Extend Profits, Not Product Lines."

Generally, businesses use line extensions as a component of their marketing campaigns for a number of reasons: Line extensions can satiate consumers' wishes by offering a wide variety of goods under a single brand; managers view extensions as a low-cost, low-risk solution to address the needs of multiple customer categories; and managers often use extensions as a short-term competitive weapon to increase a brand’s control over limited shelf space.

However, there is a caution that despite all the ostensible advantages, the costs of needless line extensions are extremely substantial. For instance, when a line is over segmented, the strategic purpose of each product is muddied. A business running the risk of losing customers by expanding its line. Retailers are unable to expand a category's shelf space simply because there are more products, and line extensions rarely increase category demand. Most importantly, overextending oneself might result in hidden.

Here are several recommendations for honing product-line strategies in order to avoid these pitfalls: enhance cost accounting, allocate resources to well-liked products, study consumer behaviour, coordinate marketing initiatives, collaborate with channel partners, and promote an environment that is supportive of product-line deletions. Companies that concentrate on a product line can boost earnings and sales volume.