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Line Stretching, Products Introduced into a Product Line, Marketing Assignment Help
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>> Line Stretching: Products Introduced into a Product Line
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Line stretching is a strategy applied by a company to add new flavors, new colors, new varieties, new strategy used by the company minimize the costs and leverage the brand equity.
Products are introduced into a product line is known as line stretching. The company produces low range of products as well as high range of products and they are in different ranges of the product line. For example the prices of Mercedes car in automobiles are located in the upper range and upper price. The company uses this line stretch when they increase their length of the product. There are two Ways Company stretches its market that is up market stretch and down market stretch.
In up stretch market, companies apply the strategy of high market for high growth. It looks for the higher margins and positions themselves as upscale segment and full time manufacturers. Coffee of star bucks has applied the up stretch market, in ice cream Hagen Daaz have is in up market stretch, we can think a bottled water of Evian and Proctor and Gamble for the baby products. Intercontinental hotel groups have also applied this strategy. They have appointed well furnished hotels with full, high-quality, amenities including spacious rooms and bathrooms. Their room rates are also very high and they are basically located in prime city-centre locations in major cities or in resorts. They also have a high proportion of international guests. In terms of luxury vehicles, BMW, Mercedes, Lexus, Acura come in upscale segment.
In down stretch market, companies apply the strategy of low market for high growth opportunities. It looks for the higher margins and positions themselves as downscale segment and full time manufacturers. They basically focus on the mass retail such as Spencer, Wal-mart, Big Bazaar, Best buy and there are many other shops that attract millions of customers and they make a strong growth by this strategy. These are for that customer who believe in value and also gives value price for the products.
For example a very big brand named Hindustan Unilever always applies the strategy of lower prices and introduced a lower price strategy and Sony have also applied these strategies which has become a loss for this company and which creates a lot of risks. It also loses its image and quality because it started offering sub-brand as well other companies like I talked about HUL, Gillette, Ramada Limited all have done this but it is one type of risk and when market is moving it carries a risk. But in case of Sony, it spent lot of time and money to introduce a new brand name to build up its brand.
Two way stretch: when company loses the profit, they apply the two way stretch marketing. Sony introduced its first walkman to stretch their lines and to compete in the market. Sony stretched it downward in lower price models. These when started work, then at the time Sony stretched its walkman in upward line and in up stretch market to attract more number of customers with its new models and new technology in a lower range and in a low price models.
Trading up or Brand leveraging: Trading up defines about the high price and high quality of the product to the range of the product for increase in number of sales. It is basically applied to encourage more number of customers and it also helps the customer to buy an expensive product or a big sized product.
Trading down: It reduces the number of features of a product to suit the selling price demanded by customers.
Thus line stretching helps in adding new flavors, new colors, new varieties, new strategy which is used by the company to minimize the costs and leverage and to build the brand equity. It expands an existing range of products by adding new products that are similar to others but it have new features, new modification and new creativity which gives new flavor to the product and helps in increasing the brand. When a company expands its product and strengthens its product then it is stretched on two or three ways like up stretch, down stretch or in both the ways.
For example: In automobile company, Lexus has developed a new line of hybrid vehicles.
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