Definition
A product line is a group of related products produced or developed by a single company. These products function in similar ways, cater to the same market, or are sold in the same types of outlets. Companies may choose to diversify their product line to reach a larger customer base or increase market share.
Key Takeaways
- A product line refers to a group of related products under the same brand, produced by the same company. This strategy of grouping similar products offers convenience and variety to customers, thus stimulating sales.
- Product line depth refers to the number of products within a single line. Companies adopt this strategy not only to cater to various customer needs but also to protect against market fluctuations and changes in consumer preferences.
- Product line extension and expansion into new markets can boost a company’s market presence and profitability. However, it requires careful planning as it may lead to consumer confusion, brand dilution, and increased operational costs.
Importance
The finance term, “Product Line” is important as it refers to a group of related products marketed under a single brand sold by the same company.
Companies create product lines to capitalize on an established brand reputation, making it easier to launch and promote new products.
The success of a product line can greatly impact the company’s profitability and market share.
It also allows the business to segment its market, differentiate from competitors, and create product variations to meet different customer needs and preferences.
Regularly reviewing and updating product lines can help a company keep pace with changing market demands, trends, and customer tastes, hence maintaining its competitive edge in the marketplace.
Explanation
A product line is primarily a collection of goods or services that a company delivers which are closely related, either due to functioning similarly, being sold to a similar market sector, falling under similar price ranges, or being marketed through the same outlets. Businesses come up with new offerings within a product line to capitalise on an established brand’s reputation, anticipate and cater to client requirements, and remain competitive in the market.
The purpose of a product line is to maximise market penetration, profitability, and client retention. Businesses can leverage the success of their existing products to introduce newer products under the same product line, either to cater to an unserved section of their market, or to augment or complement the functions of their existing products.
This strategy can enable them to reach a larger or more diverse segment of their target audience, or to increase their market footprint by appealing to new customers. Besides increasing sales, a well-managed product line can also contribute towards enhancing brand value, customer loyalty and satisfaction.
Examples of Product Line
Apple Inc.: Apple has a diverse product line that initially started with Mac computers and then expanded to include items such as iPod, iPhone, iPad, and Apple Watch. They also have series within each product, like different generations of iPhones or different types of iPads (iPad Mini, iPad Air, iPad Pro). Moreover, their product line also includes software products and services like iCloud, iTunes, and Apple Music.
Coca-Cola: Coca-Cola’s product line consists of various beverages. Initially known for their flagship product, Coca Cola, they have since introduced other drinks like Diet Coke, Coca-Cola Zero, Sprite, Fanta, and more. They also own other brands of beverages including tea, water, and energy drinks, showing a wide diversified product line.
Procter & Gamble: P&G operates in various segments including beauty, grooming, health care, fabric & home care, and baby, feminine & family care. Each of these segments has a unique product line. For example, their beauty line includes brands like Pantene, Olay, and SK-II whereas the home care line consists of Tide, Bounty, and Dawn. This extensive product line allows P&G to cater to a wide range of consumer needs.
FAQs on Product Line
What is a Product Line?
A product line refers to a group of related products all marketed under a single brand sold by the same company. Companies often expand their offerings by adding to existing product lines, because consumers are more likely to purchase products from brands with which they are already familiar.
What is Product Line Depth?
Product line depth refers to the number of product variants a particular product line carries. It represents the number of variations of each product in the line. The depth of the product line can be expanded by adding more variants to a single product within the line.
What is Product Line Width?
Product line width specifies the number of different product lines that a company offers for sale. The width of the product line can be increased by introducing new product lines to the range already offered to the public.
What is Product Line Filling?
Product line filling is a strategy that involves adding new products within an existing product line to compete more broadly in the market. The purpose is to attract more customers and leverage the already recognized brand.
What is the advantage of a strong Product Line?
A strong product line can help a company to maintain better marketing distribution control. It can also pave the way for the chance to cross-sell to customers, and it presents a more professional and comprehensive image of the company to potential customers.
Related Entrepreneurship Terms
- Product Range
- Product Mix
- Market Segmentation
- Brand Extension
- Product Differentiation
Sources for More Information
- Investopedia – A comprehensive online resource for financial terms and concepts
- Entrepreneur – Provides information and advice on entrepreneurship, including products and services
- Harvard Business Review – Offers in-depth articles and research on business and management practices, including product lines
- Business Dictionary – An online dictionary focused on business terminologies
