Page 363 - Marketing Management

340 PART 5 SHAPING THE MARKET OFFERINGS

market. Line stretching occurs when a company lengthens its product line beyond its current
range, whether down-market, up-market, or both ways.

Down-Market Stretch A company positioned in the middle market may want to introduce a
lower-priced line for any of three reasons:
1. The company may notice strong growth opportunities as mass retailers such as Walmart, 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.
A company faces a number of naming choices in deciding to move a brand down-market:
1. Use the parent brand name on all its offerings. Sony has used its name on products in a variety
of price tiers.
2. Introduce lower-priced offerings using a sub-brand name, such as P&G’s Charmin Basics and
Bounty Basics.
3. Introduce the lower-priced offerings under a different name, such as the Gap’s Old Navy
brand. This strategy is expensive to implement and means brand equity will have to be built
from scratch, but the equity of the parent brand name is protected.
Moving down-market carries risks. Kodak introduced Kodak Funtime Film to counter lower-
priced brands, but it did not price it low enough to match the lower-priced film. It also found some
of its regular customers buying Funtime, so it was cannibalizing its core brand. Kodak withdrew the
product and may have also lost some of its quality image in the process.
On the other hand,Mercedes successfully introduced its C-Class cars at $30,000 without injuring its
ability to sell other Mercedes cars for $100,000.John Deere introduced a lower-priced line of lawn trac-
tors called Sabre from John Deere while still selling its more expensive tractors under the John Deere
name. In these cases, consumers may have been better able to compartmentalize the different brand
offerings and understand functional differences between offerings in higher and lower price tiers.

Up-Market Stretch Companies may wish to enter the high end of the market to achieve more
growth, realize higher margins, or simply position themselves as full-line manufacturers. Many
markets have spawned surprising upscale segments: Starbucks in coffee, Häagen-Dazs in ice cream,
and Evian in bottled water. The leading Japanese auto companies have each introduced an upscale
automobile: Toyota’s Lexus, Nissan’s Infiniti, and Honda’s Acura. They invented entirely new
names, because consumers might not have given the brand “permission” to stretch upward when
those lines were first introduced.
Other companies have included their own name in moving up-market. Gallo sells Gallo Family
Vineyards (priced at $10 to $30 a bottle) with a hip, young image to compete in the premium wine
segment. General Electric introduced the GE Profile brand for its large appliance offerings in the
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upscale market. Some brands have used modifiers to signal a quality improvement, such as Ultra
Dry Pampers, Extra Strength Tylenol, and Power Pro Dustbuster Plus.
Two-Way Stretch Companies serving the middle market might stretch their line in both
directions. Robert Mondavi Winery, now owned by Constellation Brands, sells $35 bottles of wines as
the first premium “New World wine,” but it also sells $125 bottles of Mondavi Reserve at high-end
wineries, restaurants, and vineyards and through direct order, as well as $11 bottles of Woodbridge
created during the grape oversupply of the mid-1990s. Purina Dog Food has stretched up and down
to create a product line differentiated by benefits to dogs, breadth of varieties, ingredients, and price:

• Pro Plan ($34.89/18 lb. bag)—helps dogs live long and healthy lives with high-quality ingredi-
ents (real meat, fish, and poultry)
• Purina ONE ($29.79/18 lb. bag)—meets dogs’ changing and unique nutritional needs and
provides superpremium nutrition for good health
• Purina Dog Chow ($18.49/20 lb. bag)—provides dogs with complete nutrition to build,
replenish, and repair at each life stage
• Alpo by Purina ($10.99/17.6 lb. bag)—offers beef, liver, and cheese flavor combinations and
three meaty varieties