What are the two ways in which a company can extend its product line?
What will be an ideal response?
A product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. A company can expand its product line in two ways: by line filling or line stretching. Product line filling involves adding more items within the present range of the line. There are several reasons for product line filling: reaching for extra profits, satisfying dealers, using excess capacity, being the leading full-line company, and plugging holes to keep out competitors. However, line filling is overdone if it results in cannibalization and customer confusion. The company should ensure that new items are noticeably different from existing ones. Product line stretching occurs when a company lengthens its product line beyond its current range. The company can stretch its line downward, upward, or both ways. Companies located at the upper end of the market can stretch their lines downward. Companies can also stretch their product lines upward. Sometimes, companies stretch upward to add prestige to their current products.
You might also like to view...
When the average costing method is used in process costing, all costs incurred by a department or production process are divided by the equivalent units produced during the period to determine the average cost per unit produced
Indicate whether the statement is true or false
If a company fails to make an adjusting entry for accrued revenues, the net income will be overstated
Indicate whether the statement is true or false
Which of the following can result from improving quality?
a. higher customer satisfaction b. higher costs c. reduced compliance d. loss of market share
Answer the following statement(s) true (T) or false (F)
1. Deming’s quality control method is often referred to now as total quality management. 2. Quality circles do not involve employees in improving the work environment and the quality of the output by making suggestions to upper management for areas of improvement. 3. Organizational cultures also exist within local or national cultures that have their own influence on the behaviors of organizational members. 4. The ability to effectively adopt change became the difference between successful and mediocre organizations. 5. To illustrate why organizations often succeed at learning, Argyris developed two models of managerial thinking: Model I and Model II.