A product line
extension is the use of an established product's brand name for a new item
in the same product category. Line Extensions occur when a company introduces
additional items in the same product category under the same brand name such as
new flavors, forms, colors, added ingredients, package sizes.
Benefits:
1) Product line
extension is important for those companies that have product in the late stage
of its life cycle. New line helps a product to grow again.
2) Product-line
expansion enables companies to take advantage of opportunities in different
market sectors.
3) Introducing
products that meet changing customer needs is an important driver of
product-line expansion.
4) Expanding a
product line can help to increase customer loyalty.
5) Adding new
products or variants of existing products enables companies to sell more to
existing customers, without the effort and cost of acquiring new customers.
6) Product line extension Improve the brand image.
7) It provides a path for innovation
of a new product.
8) It reduces superficial risk.
9) It Increases the likelihood of
gaining distribution and trial.
10) It Increase the efficiency of
promotional overheads.
11) It reduces the cost of launching
a new product and also reduces follow up cost.
11) It avoids the costs of
developing a new brand.
12) It facilitate new product
acceptance, revitalize the brand.
13) It gives a new opportunity for
packaging and labeling and attracts customers.
Some drawbacks of product line extension is given below:
Drawbacks:
1) Product line
extension sometimes confuses customers or customer may become frustrated.
2) It can damage
the parent brand image.
3) It can create
conflicts with retailers.
4) Sometimes it
limits the ability to develop new brands.
5) It weakens the
brand meaning.
6) It destroyed one
category identification.
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