The Importance of Planning Product or Service Lines

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  • 0:03 Product Lines
  • 1:08 Familiarity
  • 2:03 Brand Diversification…
  • 3:09 Creates Value
  • 4:13 Lesson Summary
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Lesson Transcript
Instructor: LeRon Haire
In this lesson, we will define what a product/service line is, along with addressing the factors which make product/service lines so important and providing examples of several product lines.

Product Lines

Have you ever known of any business that has started on Day One as a complete success? Most businesses begin slowly, and the successful ones eventually grow and evolve into a successful venture. One of the primary factors related to the success, or lack thereof, of a business is product or service lines.

A product line is a set of related products which are sold to consumers under a sole name or brand. Organizations may have several product lines in an effort to reach many different consumers. Before we take a look at some of the reasons why product lines are important, let's take a glimpse at a few examples of well-known companies with multiple product lines:

  • Johnson & Johnson has baby products, mouthwash, band-aids, and lotion
  • Proctor & Gamble has paper towels, female hygiene products, shampoo, and laundry detergent
  • Kodak has cameras, projectors, printers, and software
  • Coca-Cola has soft drinks, water, clothing apparel, and tea

Now let's take a look at some of the factors which make product lines important, starting with familiarity.

Familiarity

One of the great things about businesses building strong reputations with the general public is that they have the opportunity to capitalize on those relationships. For example, let us assume that you have been a consumer of Johnson & Johnson's baby products for each of your two kids. You are now in the store and shopping for some typical household products. When you look on the store shelves, you realize that Johnson & Johnson is also responsible for mouthwash and lotion products as well.

Although you have previously always depended on another brand for these products, you decide to select the Johnson & Johnson products this time around because you are familiar and satisfied with the quality of their other products. Many businesses succeed with establishing additional product lines because of the prior success and popularity of their previous products. A good rule of thumb is that customers have a better chance of buying products from an organization or brand that they are familiar with.

Brand Diversification Through Market Penetration

The most successful businesses in the world are masters at penetrating the market. The phrase 'penetrating the market' simply means that businesses are attempting to increase the market share of their products through different strategies. One of those strategies is by having diversified, or different, products lines. For example, Coca-Cola established a very successful business by providing a cola soft drink beverage to consumers. However, at some point, Coca-Cola decided that it wanted to expand its empire by diversifying and entering markets other than the one that it had conquered.

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