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A company with an established production process and capacity to produce new products means lower upfront investment. Mercedes could have chosen a safer route by introducing a new brand positioned as by Mercedes. Although a costly strategy, it would have leveraged the maker image while insulating it from any possible degradation associated with a less prestigious car. A survey or a focus group (or just getting out of the office and chatting with customers in line or waiting for their food) would have highlighted the confusion for executives. Companies sell multiple product lines under their various brands. Making a light version, creating a mint flavor, offering a snack version, and creating a special Halloween orange and black cookie, are types of product line extensions. Variety-Seeking Buying Behavior: Definition & Marketing Strategies, Product Development and Business Growth: Process & Strategies. At the same time, some new product ideas that, if properly nurtured, could be launched as significant entries are hijacked by managers of existing brands and marketed suboptimally as line extensions. Increased brand awareness and equity: Line extensions can help to increase brand awareness and equity by giving customers more exposure to the company's products and increasing the chances that they will remember the brand. Line & brand extension Mar. Unilever launched the product a decade ago. Ooooo fancy! Now, people seem to want Teslas first, and if the availability or price isnt acceptable for them, then they look to BMW, Nissan, Hyundai, or Chevrolet. Plus, get practice tests, quizzes, and personalized coaching to help you Now you can get Dove soap in body wash, travel-size bars, unscented, sensitive skin, pink, exfoliating, and more. Usually, people tend to buy . If a company has developed a new technology to solve an old problem, it makes sense to launch a new product alongside the old product and then transition the long-time users to the latest tech. Another risk associated with line extension is the possibility of cannibalizing sales of the company's existing products. The promise means arebrandingof Fair & Lovely because fair is in the brand name, which will be a significant financial hit for Unilever as it is the leading brand in many markets. Whether someone comes into a Honda dealership interested in a sports model or not, they feel better about the brand because it has that excitement. Such environmental shifts are now changing the dynamics of packaged goods. Hemp is a classification of Cannabis plants which have less than 0.3% THC content, or less. Burger King extended their line of french fries with ones with less fat. However you set it up, and whichever feedback method you go with, getting your audiences input and opinions ahead of time can be invaluable when it comes to making your next inventory move. A line extension can be a way to make a brand more relevant, interesting, and visible. The main difference between line extensions and brand extensions is the product category. This strategy aims to expand the number of options available to a customer under a single brand. Line extension can be used as a way to introduce new products that are more appealing to modern consumers, while also supporting and strengthening the company's existing brand. Its a strategy that has worked for Bushbalm, an online skincare retailer. Mr. Clean is owned and managed by Proctor & Gamble. It's easy to realize that Line extension and brand extension are all forms of product extension, but what makes the difference is the line of product. In the last ten years, products have proliferated in every category of consumer goods and services, and the deluge shows few signs of letting up. The brand also offers a frozen food product line, under the nameJack Daniels Meats. Building Your Brand with Brand Line Extensions* This file is third in a five-part series on building and developing a brand in the market. The new product could be a different shape, color, size, or price from an existing product. The company adds new products to an existing line when an extension occurs. brand extension line extension 2 Watch the VOX video if you want to learn more about the effects of Indias preference for light skin. It also took into consideration the increased consumer concern for ethical sourcing and sustainability. The most well-known example of a line extension was Coca-Colas release of Diet Coke in 1982. It was slowly ramping up alongside Cinnamon Coke, but then the buzz around it exploded in mid-November. 119 lessons A successful product-line extension depends on investing in the appropriate cost-accounting systems and the appropriate market-research systems. 531. P&G has an extensive portfolio of cleaning solutions under the Mr. Clean brand as well as a licensed line of hard products such as brushes, mops, and toilet bowl cleaners. But even when line extensions fail, they dont necessarily damage their parents fatally. Overexposure can be especially damaging to luxury brands that rely on a certain level of exclusivity to maintain their appeal. Marketers would do better if they thought of themselves as biologists studying the evolution of a species rather than as accountants studying each element of cost. David R. Beatty. Therefore, one of my favorite adages applies: Dont mess with success.. Line extension refers to an addition to the product line of a specific brand, usually in the same category. Overall, a brand extension involves expanding the company into new product categories where its less known. copyright 2003-2022 Study.com. Adding a new product brings an element of excitement to the brand. Were now able to rapidly prototype, test things out very quickly with consumers, and make a decision.. Whereas brand extension involves using an existing name or identity to launch a new product in a different category. David R. Beatty is President, Weston Foods Ltd., Toronto, Ontario, Canada. Alexander L. Biel is President, Alexander L. Biel & Associates, Mill Valley, California. Adrenal Energy Formula, 120 vegetarian capsules. Mass production 3. (Buy the boom onBarnes and NobleorAmazon. This gives the global brand a chance to take up more market share and grow sales for the corporation. Focus on understanding their current pain points and look at ways to make your . Acetyl-L-Carnitine Arginate, 90 capsules. To refresh a company's existing product lineup: Over time, a company's existing product lineup may become stale and in need of refreshment. If the Product Line Extension if not very well received by the target audience, it affects the. Brand recognition, the watchword of marketers today, bolsters the egos of many senior managers at the expense of brand loyalty. (Am I right? The bad news is that theres no way to fully predict which product line extensions will resonate with your audience before you add them to your store. In the same year, Nissan released the Hypermini, which was a tiny commuter car for the urban market in Japan. The settlers of the new world came over on boats with sails made of hemp, and King James decreed that the American colonists in Jamestown were to cultivate and export hemp plants. The market was confused, and both products failed. The combination of new and limited time only invites customers to try the product, and the products can become a talking point. But Crystal Pepsi did not start as a failure; the idea resonated with the market, and it successfully launched. Product line extensions can be classified into two types: The Horizontal and the Vertical Extension. As a result, weed became illegal. Product Line Extensions: What They Are, Examples, and Tips for Forming Your Strategy, How to Source Products to Sell Online- Top Apps + Tricks, The 13 Best Dropshipping Suppliers in 2022, AliExpress Dropshipping- How to Dropship From AliExpress, Amazon Dropshipping Guide- How To Dropship on Amazon (2022), 24 Free Shopify Apps to Help You Build, Manage, and Grow Your Store, How to Create a Successful Affiliate Program for Your Business, How to Write a Perfect Business Plan in 9 Steps, The 19 Best Dropshipping Clothing Suppliers to Grow your Business in 2022. A Honda Civic hatchback with a powerful, high revving, and fun-to-drive DOHC engine. However, this strategy would have limited the attractive user image that the Mercedes 190 quickly developed and donated to the parent brand. They could have tested this approach in select stores and measured the results if they wanted to reduce the risk. Ling extensions may act as a serious drain on company resources 6. Its like a teacher waved a magic wand and did the work for me. Line extensions have the potential of inhibiting or neutralizing competitor moves. But nothing lasts forever, and cultural views of cannabis have changed nearly a century later. [Honda and McLaren was] one of the most successful partnerships in recent Formula One history. Honda extended their line of compact cars with an sport hatchback. All other trademarks and copyrights are the property of their respective owners. Make sure the extensions you plan to create are based on audience research and trend, and align with what people actually want. Brand line extension occurs when a company introduces a new item in a completely different product category. But the S version didnt capture the excitement that the competitive Volkswagen GTI was, so Honda dropped the trim level after just one year. Line extensions rarely expand category demand, and retailers cant provide more shelf space to a category just because there are more products. The key difference between line extension and brand extension is that line extension typically involves creating new products that are variations of or closely related to their existing products. Given the proclivity of heavy wine drinkers to seek variety in their varietal wine choice, it makes sense for Mondavi to offer a range of consistently high-quality varietals to increase the brands share of requirements. Weve covered Mr. Clean before in our examples of umbrella brands. No problem! [Honda and McLaren was] one of the most successful partnerships in recent Formula One history. The biggest market for Lux White Impress is India, but the soap is distributed and marketed all over South-East Asia and beyond. Extensions can offer: Reduced risk: When a brand already has recognition, it can be less risky to release a new product. And while youre thinking about how to gather your audiences input, you want to make sure youre planning to hear from multiple sources. How to Find and Source a Winning Product to Sell. Whether or not to extend a product line is, above all, a matter of common sense. Many a time if the firm is not well researched about the market dynamics and the evolving tastes of the customers, the Product Line Extension can backfire and affect the sales and brand value of the original product. Mr. Clean All Purpose Cleaner, Mr. Clean Multi Surface Cleaner, Mr. Clean All Purpose Antibacterial Cleaner, Mr. Clean Clean Freak Multi-Surface Spray (Lemon Zest), (Lavender), (Spring Fresh). Failure to adapt product lines to either of these types of change means extinction. The clear bottle ultimately made the drink spoil in direct sunlight, much to the disgust of the customer who tried to drink it. Managing True Innovation. 7-Keto DHEA Metabolite, 100 mg, 60 vegetarian capsules. Line extension is a low cost and low risk strategy to extend existing brand names to new product categories. Furthermore, a company that extends its line risks undermining brand loyalty. A line extension is a strategy to offer customers more options by changing your existing product lines slightly. Take Hanes for example. The bottle also doesnt require to be straight up and down like a standard spray bottle; the Clean Freak Mist bottle can be shot sideways or even completely upside down. We state in our article that line extensions can be strategically sound and extremely profitable. This shift will ultimately damage the egos and finances of many senior managers. Dramatic shifts in the environment force great bursts of change. Some notable examples include: Some benefits of line extensions include: Line extension is when a slightly different product is created from an existing product line. What do you think? Its a marketing strategy where a company creates a new product in one of its existing categories targeting a specific customer group. The second most common reason is purely a human failing. Although niche markets may represent marginal businesses, they may strategically represent important footholds for competitors. Starbucks line extension: Starbucks is a well-known and popular coffee chain with thousands of locations worldwide. History is yet to be written. Product Line Overview & Examples | What is Product Line? That is the spirit in which I interpret Quelch and Kennys suggestions for steering a course between variety and redundancy. When a company launches too many products under the same brand, it can become difficult for consumers to keep track of all of the different products and understand how they differ from one another. How many customers will we lose if we drop this stock-keeping unit (SKU)? An additional risk is a possibility of overexposing your brand name by using it on too many different products. Typically a line extension is a new flavor, scent, formula, color, size, or style of a product in a current product line. Crystal Pepsi could have been a success, and we could still have it on the shelves today. The Product Line Extension can be in the form of new colors, forms, shapes, sizes, flavors, packaging, and ingredients. TV commercial The Thirstiest Time of the Year, which featured a claymation depiction of Lebron James. A: There are many reasons to add new products-or line extensions-to your company's product mix. Line Filling: Anatomy, Examples, Factors, Case Study, Product Failure Definition, Reasons and 19 Examples, What is Product Launch Examples, Types, Advantages, Trade Marketing: Definition, Strategies, Advantages, Disadvantages, Customer Appreciation Definition, Importance, Ideas and Strategies, Economic Value Definition, Methods, Formula, Duty of Care Definition, Role and Examples, Economic Value Added (EVA) Definition, Steps and Calculation, Economic Depreciation Definition, Overview, Equation and Causes, When the firm comes up with the business strategy of Product Line Extension, it attracts the same line of the, With more number of products in a similar line and type, the brand gets more shelf space in the retail stores. It is also very crucial to ask them if they are actually looking for any sort of variations in the product in terms of color, shapes, flavor, size, packaging, and more. What kept it from success was the attachment Pepsi executives had to their original idea, rather than iterating on it. As you walk by the freezer, you search for a flavor that you want. Customers nowexpect to have multiple options availableto them when shopping. Get unlimited access to over 84,000 lessons. A company therefore must regularly pare the product and brand lineup to give others a chance. Cinnamon Coca-Cola was based on a flavor of Coke Zero, which was offered in England in the holiday season of 2018. So Cinnamon Coca-Cola failed to make the splash that Sprite Cranberry did, but I am sure the product still met the expectations of the people at Coca-Cola. Proctor and Gamble want to innovate on their entrenched lines pf business before an outside player forces them to. Those who dont respond vigorously will be wiped out. Line extensions refers back to the strategy of increasing an present product line. Look professional and help customers connect with your business, Find a domain, explore stock images, and amplify your brand, Use Shopifys powerful features to start selling, Sell at retail locations, pop-ups, and beyond, Transform an existing website or blog into an online store, Provide fast, smooth checkout experiences, Reach millions of shoppers and boost sales, Sell your products wholesale to retailers from across the US, Reach buyers in new markets with international selling tools, Get paid faster, avoid monthly fees, and manage your finances. To respond to environmental concerns: As consumers become more aware of environmental issues, they may seek out products that are more environmentally friendly. The firm can conduct surveys with the customers on a one to one basis or through the digital mediums. Another challenge of a product line extension is that the firm is now producing a wider variety of products. But the essence of life and products is change. In fact, line extensions may be the answer to building sales and moving your company in a whole new . Its a quick way to get those products out into the world, and when you see which ones perform well, you can switch to printing them yourself or holding inventory without the risk of pre-ordering all of your original designs. Line extension can be used as a way to address these concerns and position a company as being environmentally responsible. General Mills faces a risk in creating a new cereal fortified with beta-carotene and vitamin E. But it also faces the risk that such a segment may be a precursor to a larger trend that, if ignored, might generate a strategically altered landscape with a first-mover competitor holding a considerable advantage. | {{course.flashcardSetCount}} For example, Pepsi's recent introduction of the 1893 line of craft sodas was a response to the growing popularity of artisanal beverages. The Nissan Leaf features an electric motor instead of an internal combustion engine. Contrary to the predictions of some positioning gurus, it beat Tab cold. Unilever India extended their line of soaps with a promoting lighter skin. Many companies find it hard to persuade their best managers to take the career risk involved in working on a big new product idea for two to three years. Defining Line Extension as a "New Formulation". One might achieve this by 'filling' a product line or 'stretching' it. With a product line extension, you have an existing brand. Maybe you want a light version of the classic soda pop. Have a look at your finances to check if you have extra funds in hand to launch a Product Line Extension. There are two types of product line extensions: These line extensions are typically related to the products a brand already creates. The strategic role of each product, for example, becomes muddled when a line is oversegmented. It was used to target the growing weight- and calorie-conscious market. 7. We are all familiar with the spray bottles, which use the mechanical action of squeezing the trigger to propel a fan of droplets onto a surface. Here in North America, there are many products to change our appearance: hair color, tanning sprays, even breast augmentation. The traditional view of choice is that it is a bad thing and that having more choices can lead todecision fatigue. Colgate-Palmolive extended their line of toothpastes with one that has hemp seed oil. Nissan extended their line of compact cars with an electric car. This includes some aspects of how customers perceive and experience the brandits imagebut not necessarily all aspects. Both took a large investment of marketing funds to distinguish them from current company products as well as competitors. The sauce products are sold as Hellmanns in central and eastern US and Canada, and Best Foods on the west coast. Cokes product was a diet soda with artificial sweeteners, which cut right against Crystal Pepsis brand image of being natural. A. Acetyl-L-Carnitine, 500 mg, 100 vegetarian capsules. A product line extension is the launch of a new product in a product category where the brand already sells products. The company ultimately withdrew the product-line extensions. Could Crest and Colgate have ignored the threat from Arm & Hammers baking-soda toothpaste? The new product sells alongside the existing products. I have long doubted the marketing wisdom of most product-line extensions, which seem doomed to fail for one simple reason: they serve manufacturers needs rather than those of consumers. 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