Extend Profits, Not Product Lines (HBR OnPoint Enhanced Edition)

In the last 10 years, products have proliferated in every category of consumer goods and services, and the deluge shows few signs of letting up. Most companies are pursuing product expansion strategies--in particular, line extensions--full steam ahead. But more and more evidence is indicating the pitfalls of such aggressive tactics. The strategic role of each product becomes muddled when a line is oversegmented. Also, a company that extends its line risks undermining brand loyalty. Some companies, such as Procter & Gamble, Chrysler, and a leading U.S. snack foods company, have discovered that a carefully focused and well-managed line can increase profits and sales volume. Quelch and Kenny describe how marketing managers can sharpen their product-line strategies by improving cost accounting, allocating resources to popular products, researching consumer behavior, coordinating marketing efforts, working with channel partners, and fostering a climate in which product-line deletions are not only accepted but also encouraged.