What is product line stretching?

What is product line stretching?

Line stretching means lengthening the product line beyond the current range. We can differentiate between downward, upward, and 2-way stretching. A company located at the upper end of the market may choose to stretch the product line downward. Thus, it may attract low-end customers and reach new targets.

Why do companies have broad product line?

Firms sell multiple product lines under their various brand names, often differentiating by price, quality, country, or targeted demographic. Businesses often expand their offerings by adding to existing product lines because consumers are more likely to buy products from brands they already know.

Why do firms enter the global market?

In general, companies go international because they want to grow or expand operations. The benefits of entering international markets include generating more revenue, competing for new sales, investment opportunities, diversifying, reducing costs and recruiting new talent.

Why do firms stretch product lines upward?

Firms often target high quality products and stretch their product line upwards because of several reasons, including: offering high-quality products helps position the overall brand towards being a status brand, which often enables price premiums to be charged across the full product line.

Why do companies stretch lines?

A company does up market product line stretching when it wants more profitability and it wants to have more premium customers. To do so, it must have a solid customer base of itself and it should also have a strong brand equity to showcase itself as premium.

Why is a broad product portfolio important?

Having a broad product portfolio allows the business to spread its risks because as one product declines in a portfolio another may take its place. adding new products to the portfolio or deciding which products and businesses should be eliminated.

What is a product portfolio?

A product portfolio is the collection of all the products or services offered by a company. Product portfolio analysis can provide nuanced views on a stock type, company growth prospects, profit margin drivers, income contributions, market leadership, and operational risk.

How do firms benefit from vertical integration?

Vertical integration helps a company to reduce costs across different parts of its production process. It also creates tighter quality control and guarantees a better flow and control of information across the supply chain. Further benefits of vertical integration include increasing sales and improving profits.

What is horizontal and vertical integration lead to larger companies?

How did horizontal and vertical integration lead to larger companies? Horizontal integration lead to larger companies because it joined together many firms from the same industry to gain control of the oil refining industry. Vertical integration took control of each step in the production and distributing of a product.

Why do firms enter into international business explain by giving advantages of going international?

Taking your business international allows you the opportunity to diversify your markets, so your revenue is more stable. Expanding abroad allows you to get out of a saturated market. Expanding abroad gives you access to new customers and in a market where your competitors do not operate.

Why do companies decide to enter a foreign market quizlet?

To gain access to new customers. To achieve lower costs through economies of scale, experience, and increased purchasing power. To further exploit its core competencies. To gain access to resources and capabilities located in foreign markets.

Why do companies want to enter foreign markets?

The primary reasons that companies opt to expand into foreign markets are to boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions, and escape dealing with strong labor unions.

How does exchange rate affect the competitiveness of a company?

Fluctuating exchange rates pose significant risks to a company’s competitiveness in foreign markets. Exchange rate shifts can produce sometimes favorable and sometimes unfavorable effects on a company’s competitiveness.

How does integrating backward affect a product design?

Integrating backward potentially results in less flexibility in accommodating shifting buyer preferences when a new product design doesn’t include parts and components that the company makes in-house. It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest possible operating costs.

What makes a company a global market leader?

Companies striving for global market leadership pursue strategic alliances or collaborative partnerships with foreign companies in order to revamp the global industry value chain, raise needed financial capital from foreign banks, and wage price wars against foreign competitors.