Setting product Strategy - Q4

1. Setting Product Strategy
How can a company build and manage its
Product mix and product lines?

9. UP - Market Stretch
A company may want to introduce a high-priced line for any of the
following reasons:
1. Enter the high end of the market.
2. The objective of the firm may be to have higher growth, increase its
margins, or to simply project itself as a full line mfgg firm.
3. E.g. Lipton Yellow Label(HUL) is a high end stretch withRs. 75 for
250gms tea.
4. A company serving in middle market might indulge in stretching its
product line both ways – upward and downward

10. Down-Market Stretch
A company positioned in the middle market may want to introduce a
lower-priced line for any of three reasons:
1. The company may notice strong growth opportunities as mass retailers such as
Walmart, Best Buy, and others attract a growing number of shoppers who want
value-priced goods.
2. The company may wish to tie up lower-end competitors who might otherwise try
to move up-market. If the company has been attacked by a low-end competitor,
it often decides to counterattack by entering the low end of the market.
3. The company may find that the middle market is stagnating or declining.

11. On the other hand,Mercedes successfully introduced its C-Class cars at $30,000
without injuring its ability to sell other Mercedes cars for $100,000. John Deere
introduced a lower-priced line of lawn tractors called Sabre from John Deere while
still selling its more expensive tractors under the John Deere name. In these cases,
consumers may have been better able to compartmentalize the different brand
offerings and understand functional differences between offerings in higher and
lower price tiers.
Moving down-market carries risks. Kodak introduced Kodak Funtime Film to
counter lowerpriced brands, but it did not price it low enough to match the
lower-priced film. It also found some of its regular customers buying Funtime,
so it was cannibalizing its core brand. Kodak withdrew the product and may
have also lost some of its quality image in the process.