Positioning Strategy

The Line Extension Trap

Ries and Trout on their book entitled "Positioning: The Battle for your Mind" discussed the "product line extension" positioning strategy. This particular strategy falls under the chapter "The Power of A Name".

As explained in their book, the "name" of a certain product oftentimes determines its success in the market. This so-called fate can be clearly seen in the case of established brands like Head & Shoulders, DieHard, Close-Up and People wherein consumers (both actual and potential), have clearly identified the above-mentioned brand names to generic products, e.g. in the Philippine context, instead of saying "give me a photocopy of this document", most, if not all, would prefer to say "give me a Xerox copy of this document;" instead of saying "mag-picture-an tayo", people would oftentimes say "mag-Kodakan tayo", etc. (Though the book's author would prefer descriptive names rather than coined ones like Xerox and Kodak).

A study has also revealed that a particular person's name impacts his/her success in life that is why the decision to select a product's name is an essential factor in shaping the bright future of the product in a competitive market.

As to product positioning strategies, the line extension is one of the most common.

Line extension refers to the expansion of an existing product line. For instance, a soft drink manufacturer might introduce a "Diet" or "Cherry" variety to its cola line, while a toy manufacturer might introduce new characters or accessories in its line of action figures. In short, line extension adds variety to its existing product for the sake of reaching a more diverse customer base and enticing existing customers with new options. The company can extend its product line down-market stretch (a company positioned in the middle market may want to introduce a lower-priced line), up-market stretch (companies may wish to enter the high end of the market for more growth, higher margins, or simply to position themselves as full-line manufacturers), or both ways.

Introducing a variation to an existing product line reduces the risk in new product development. Your customers are familiar with your existing product line; provided your line extension offers the same level of quality as existing products in the line and meets specific needs not previously covered by the line, your customers may feel confident choosing the new product.

Creating different versions of a product is a low-risk strategy for product line extension. A software product, for example, can extend in both directions, offering versions for developers, professional users, consumers and students, with a budget version for cost-conscious consumers. Each version can have additional