what is product portfolio? Discuss the product line stretching strategy
Answers
Answer:
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.
Line stretching is an expanding strategy by a company where the new products are launched in the same product line but beyond the current product range with some additional or different features. Line stretching can be done down market, up market or both way.
1) Down Market:
A company may stretch down market when it sees strong growth opportunities in value priced goods or if there is a risk of an attack by a low end competitor but it also involves a lot of risk. For example: Kodak launched Kodak Funtime Film to compete with lower end brands.
2) Up Market:
A company may stretch up market for higher margins or more growth. However, they may not want to carry the same name when they expand upwards. For example: Toyota a low end car producer introduced a new and higher brand Lexus
3) Two way stretch:
When the company stretches in both the directions. For example: Texas Instruments launched calculators in both upper and lower range