Skip to content

Managing Existing Products

    Managing Existing Products

    When to Extend Product Lines

    A company can extend its product line using a down-market stretch, an up-market stretch, or a move both ways.


    Describe the nature of a product line extension


    Key Points

    • A line extension should only be considered when the producer can profitably produce a product that compares well with the base product.
    • Changing market environmental factors often indicate when the timing suites a product line extension.
    • The environmental cues help organizations determine if they should stretch down-market, up-market, or both ways.

    Key Terms

    • product line: A product line is the marketing strategy of offering several related products for sale as individual units.


    A product line extension is the use of an established product’s brand name for a new item in the same product platform. Thus, line extension occurs when the company lengthens its product line beyond its current range. The company can extend its product line with a down-market stretch, an up-market stretch, or a move both ways.

    Down-Market Stretch

    A company positioned in the middle market may want to introduce a lower-priced line for any of the three reasons:

    1. The company may notice strong growth opportunities as mass retailers such as Wal-Mart, Best Buy, and others attract a growing number of shoppers who want value-priced goods;
    2. The company may wish to tie up lower-end competitors who might otherwise try to move up-market. If the company has been attacked by a low-end competitor, it often decides to counterattack by entering the low end of the market;
    3. The company may find that the middle market is stagnating or declining.

    Up-Market Stretch

    Companies may wish to enter the high end of the market for more growth, higher margins, or simply to position themselves as full-line manufacturers. Many markets have spawned surprising upscale segments:

    • Starbucks in coffee;
    • Haagen-Dazs in ice cream; and
    • Evian in bottled water.

    Leading Japanese auto companies have each introduced an upscale automobile:

    • Toyota’s Lexus;
    • Nissan’s Infiniti; and
    • Honda’s Acura.

    Note that the companies invented entirely new names rather than using or including their own names

    Two-Way Stretch

    Companies serving the middle market might decide to stretch their line in both directions. Texas Instruments (TI) introduced its first calculators in the medium-price-medium-quality end of the market. Gradually, it added calculators at the lower end taking the share from Bowmar, and at the higher end to compete with Hewlett-Packard. This two-way stretch won Texas Instruments (TI) an early market leadership in the hand-calculator market.

    Examples include:

    Different varieties of Coke - regular Coke, Vanilla Coke, Cherry Coke, and Coke Zero Vanilla.

    Take Your Pick: Coca-Cola’s product line offers a variety of Coke flavors.

    • Zen LXI, Zen VXI;
    • Surf, Surf Excel, Surf Excel Blue;
    • Splendour, Splendour Plus;
    • Coca-Cola, Diet Coke, Vanilla Coke;
    • Clinic All Clear, Clinic Plus; and
    • Reese’s Peanut Butter Cups, Reese’s Pieces and Reese’s Puff Cereal.

    A line extension strategy should only be considered when the producer is certain that the capability exists to efficiently manufacture a product that compares well with the base product. The producer should also be sure of profitable competition in this new market.

    Open chat
    Scan the code
    Can we help you?