The authors see several reasons why companies rely on line extensions as part of their marketing strategies: managers perceive extensions as a low-cost, low-risk way to meet the needs of various customer segments; line extensions can satisfy consumers’ desires by providing a wide variety of goods under a single brand; and managers often use extensions as a short-term competitive weapon to increase a brand’s control over limited shelf space.
But for all the perceived benefits, the authors warn, the costs of wanton line extensions are dangerously high. The strategic role of each product, for example, becomes muddled when a line is oversegmented. Furthermore, a company that extends its line risks undermining brand loyalty. Line extensions rarely expand category demand, and retailers can’t provide more shelf space to a category just because there are more products. Most important, the costs of overextension can remain hidden
The authors see several reasons why companies rely on line extensions as part of their marketing strategies: managers perceive extensions as a low-cost, low-risk way to meet the needs of various customer segments; line extensions can satisfy consumers’ desires by providing a wide variety of goods under a single brand; and managers often use extensions as a short-term competitive weapon to increase a brand’s control over limited shelf space.But for all the perceived benefits, the authors warn, the costs of wanton line extensions are dangerously high. The strategic role of each product, for example, becomes muddled when a line is oversegmented. Furthermore, a company that extends its line risks undermining brand loyalty. Line extensions rarely expand category demand, and retailers can’t provide more shelf space to a category just because there are more products. Most important, the costs of overextension can remain hidden
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