What Is a Product Line?
A product line is a group of related products all marketed under a single brand name that is sold by the same company. Companies sell multiple product lines under their various brand names, seeking to distinguish them from each other for better usability for consumers.
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. A company's blend of product lines is known as its product mix or product portfolio.
- A product line is a group of connected products marketed under a single brand name by the same company.
- 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.
- Product lines should be abandoned if they prove unprofitable, except in the case of a loss leader.
- The full portfolio of product lines is a company's product mix.
How Product Lines Work
Product lines are created by companies as a marketing strategy to capture the sales of consumers who are already buying the brand. The operating principle is that consumers are more likely to respond positively to brands they know and love and will be willing to buy the new products based on their positive experiences with the brand in the past.
For example, a cosmetic company that's already selling a high-priced product line of makeup (that might include foundation, eyeliner, mascara, and lipstick) under one of its well-known brands might launch a product line under the same brand name but at a lower price point. Product lines can vary in quality, price, and target market. Companies use product lines to gauge trends, which helps them to determine which markets to target.
The Evolution of Product Lines
Companies add new items to their product lines, sometimes referred to as a product-line extension, to introduce brands to new customers. Consumers who have no interest in a company's sporting goods, for example, might be more interested in buying its product line of energy bars or sports beverages. Extending product lines allows companies to maximize their reach.
The way that companies use product lines is evident in the auto industry. Auto manufacturers famously produce various product lines of vehicles to reach the widest possible range of consumers.
For this reason, they produce lines of economy vehicles, environmentally-friendly vehicles, and luxury vehicles all under their leading brands. Some are marketed to families, some to individuals, and others to the young.
Expanding product lines enables a company to target consumers who are either already buying the brand or are likely to buy the brand.
Product Line vs. Product Mix
A product line refers to a particular good or service that a company makes and markets to customers. A food company may extend a product line by adding various similar or related products (e.g., adding mesquite BBQ flavor to its existing potato chips line), and create a more diversified product family. The product family supplies various products under the same brand name that are similar but meet slightly different needs or tastes, potentially attracting more and different customers.
If the company branches out and starts producing pretzels, this would be a different product line altogether, involving different ingredients, processes, and knowledge to make. It would also attract many of the same, but also different customers as its potato chips line. Pretzels, however, would not be in the same product line or family. Thus, adding pretzels expands the firm's product portfolio, also known as its product mix.
The product mix is important to analyze since it can identify which market segments are experiencing what trends. Companies may thus re-brand or restructure underperforming and unprofitable products, while profitable lines may be tagged to include innovative or riskier new additions to that product family.
Mature companies often have diversified product mixes. Internal product development and acquisitions contribute to its product portfolio size over time, and larger enterprises have the infrastructure to support the marketing of a broader offering. Geographic expansion can also augment a product portfolio, with products varying in popularity among cities or countries. Apple, Inc., for example, now has a product mix that includes its wildly popular iPhone devices (within which are various generations, versions, sizes, all at different price points), the iOS app store, its line of laptop & desktop computers, software development, music streaming service, Apple TV, and so on.
Product lines allow companies to reach regions and socioeconomic groups, sometimes even worldwide. In some cases, such as the cosmetic industry, companies also launch product lines under their best-selling brands to capture sales from consumers of various ethnic or age groups. Multinational corporations, such as restaurants, often launch product lines specifically for the countries in which they operate, as is the case with fast-food restaurants operating in Asia.
Unprofitable product lines may still be useful for a company. A loss leader strategy, for example, introduces new customers to a service or product in the hopes of building a customer base and securing future recurring revenue. The product loses money but is sold to attract new customers or sell additional products and services to those customers that are profitable in the future.
Examples of Product Lines
- Microsoft Corporation (MSFT) as a brand sells several highly recognized product lines including Windows, MS Office, and the Xbox.
- Nike Inc. (NKE) has product lines for various sports, such as track and field, basketball, and soccer. The company's product lines include footwear, clothing, and equipment.
- PepsiCo (PEP) owns, among many other lines globally, Frito Lay, Gatorade, Quaker Oats, and Tropicana.
- The various product lines for Starbucks Corporation (SBUX) include coffee, ice cream, and drinkware.
Note that some companies never diversify beyond a single product line. Instead, they focus their efforts on becoming a market leader in just one thing. Michelin, for instance, only produces tires. Crox only makes rubber-based footwear. Gorilla glue only makes adhesives.
Frequently Asked Questions
What Are the Main Types of Product Lines?
While a company's product lines will depend on the particular business segment or industry that it operates in, marketing and organizational scholars have identified four different classifications of product line based on what is needed to bring that line to market. These include:
- New to world: a brand new product or invention, often after research & development investment. These can be highly risky but also highly rewarding if they take off.
- New additions: these are new product lines added by a company to their production, but which are not necessarily new to the world. These arise as competitors enter the market.
- Product revision: replacements or upgrades to existing products are the third category. An iPhone X is a wholly different product from an iPhone 4S.
- Reposition: repositioning takes an existing product and begins marketing to a different audience for a completely different use-case.
What Is Product Line Filling?
Filling refers to adding more items to a product line family in order to address any perceived gaps in the potential customer base. For instance, adding larger sizes to a clothing line can accommodate people with bigger bodies. Having sizes that fit the vast majority of individuals would fill that product line along that dimension.
What Is Product Line Pricing?
Offering different versions of an otherwise same product or service at different price points can help fill a product line based on consumer spending preferences and affluence. Car manufacturers typically offer the same base model for a given year in different trim, ranging from a no-frills economy version to a decked-out luxury version with all the expensive add-ons. These price points will attract different consumers with different budgets.
How Do You Create a Product Line?
A company will develop a product line based on the type of business it is, its particular expertise, and its marketing strategy. Market testing, R&D, and advertising campaigns are all important to bring a product line to market. Unsuccessful product lines that are unprofitable should be abandoned in favor of viable ones.