A product line is a collection of similar products housed under the same brand. The products have similar characteristics and target the same audience. Product lines help entrepreneurs build brand loyalty and expand into new markets. This guide explains what a product line is, how it works, and why it’s important for e-commerce entrepreneurs.
What is a product line?
A product line is a group of products that share a common brand name and are promoted to a similar audience. You’ve likely encountered many product lines in your everyday life, from smartphones to perfumes, clothing, and beverages. These product lines are innovative ways for companies to expand their portfolios while offering customers a diverse product range.
Why product lines matter
Many business niches are intensely competitive, with companies fighting for a relatively small volume of customers. A product line is one of the most effective ways to stand out in competitive markets and capture customers.
Having well-structured product lines helps your business build a loyal customer base. Customers who purchase a single item can become attached to your brand and subsequently buy other items. Some can love your product line enough to make it their number one choice. Product lines help your business remain resilient in the long term.
Types of product lines
Let’s explore the different types of product lines that help your business boost its competitive edge.
New-to-world products
New-to-world product lines are products that are unique in the market. These products require sizable research and development (R&D) costs to address customer needs. Due to their substantial R&D costs, new-to-world product lines are mostly created by large companies.
Product additions
In this case, new products are added to existing product lines. For example, a company that sells a popular brand of personal care products can add a new deodorant to its existing lineup.
Product revisions
Product revisions entail improving your existing product lines. For example, if you have an existing line of hair sprays, you can adjust the bottle size in response to customer demand for larger products at similar prices.
Product repositioning
This case centers on repositioning your brand to align with shifting consumer tastes and to seize new opportunities. For example, if you have a product line primarily marketed to young people, you can modify the marketing slogan to appeal to a broader audience, including both younger and older individuals.
Product line vs. Product mix
A product line and product mix are two related concepts, but they aren’t the same thing, despite being often used interchangeably. A product line is a specific group of similar products offered by a business, whereas a product mix refers to the total set of products a company sells.
A product mix has four main dimensions: Breadth, Depth, Length, and Consistency. Let’s expand more on them below.
Breadth/Width
The breadth is the total number of product categories a company offers. For example, Apple is a popular hardware manufacturer whose categories include smartphones, laptops, desktops, and headphones.
Depth
The depth represents the variety of products within each category. For example, Apple’s smartphones include the iPhone 16, iPhone 16 Plus, iPhone 16 Pro, and many other phones. Its laptop lineup includes the MacBook Pro and MacBook Air. It offers many products in each category, giving it considerable product line depth.
Length
The length is the total number of items in a product mix. For instance, Apple offers dozens of products in different categories, indicating a substantial product range.
Consistency
Consistency reflects how closely related a product mix. Let’s sidestep Apple and consider another popular brand, the apparel giant Nike. Its product mix includes t-shirts, shoes, hats, socks, backpacks, and sports equipment.
Nike’s product mix is closely related, as people who wear sports shoes also wear hats, socks, and t-shirts, and often visit the gym to use sporting equipment. This consistency is key when building a product mix. Imagine if Nike suddenly released a car; it would be inconsistent with its existing product mix and likely have poor sales.
What is product line extension?
Now that we’ve differentiated between a product line and a product mix, it’s crucial to cover how to extend product lines to win customers.
Definition and strategy
Product line extension involves adding new products to expand your customer base. It’s essential for every business that wants to keep up with often unpredictable demand patterns and tough competition.
Sometimes, a new product begins trending and eats away your market share. Expanding into that product helps prevent this problem, as you can retain customers by offering an alternative to the rival product.
Benefits of product line extension
- Higher market share. Creating new products helps you capture new customers and gain a stronger foothold in your niche.
- Improved customer loyalty. As you expand your product line to cater to your customers’ needs, they appreciate your brand more and are more likely to stick with it in the long term.
- Upselling and cross-selling opportunities. Having a diverse product line enables you to suggest new items to customers when they browse through your online catalog. When a customer adds an item to their cart, you can suggest a related item, which can entice them to hit the Add to Cart button.
- Risk mitigation. Product line extension minimizes your exposure to specific products. If one product stops selling as well as before, you can compensate for it with other items in your catalog. Otherwise, a sales drop for a single product could harm your bottom line.
Product line pricing
Setting pricing for a product line can get complex, especially for trending products with intense competition. However, you can apply specific strategies to set the optimal price that’ll win customers. Let’s explore the main product line pricing strategies below.
Understanding product line pricing models
Captive pricing
This strategy involves setting a lower price for the primary product and higher prices for complementary accessories. For example, if you have a personal care product line, you can sell toothpaste at a low price and offer an accompanying toothbrush and tongue scraper at higher prices. This strategy helps you earn more revenue from customers who are already invested in the base product.
Loss leader pricing
The loss leader strategy entails selling a product that is at a loss or breakeven to attract customers. However, this break-even or money-losing product serves the key purpose of attracting customers to your store. These customers can then buy other products that earn you sizable profit margins.
For example, if you run a clothing store, you can sell an appealing t-shirt at a loss, aiming for customers to visit your store for the t-shirt and end up purchasing other items like shoes and jewelry.
Price bundling
You can sell a collection of products at a discounted price compared to purchasing them individually. A customer may not want to order each item individually, but seeing these items in a discounted bundle increases the chances of hitting the Add to Cart button.
Factors affecting pricing decisions
- Cost of goods sold. The main factor affecting your pricing is the cost of obtaining the product in the first place. For example, if you run a dropshipping business and acquire an item for $10 from the supplier, you’ll ideally sell it for more than $10 to make a profit.
- Demand. If a product experiences unusually high demand, you may need to reduce the price to outdo competitors, or increase the price if the product is in short supply.
- Brand value. If you’ve built a unique brand known for premium quality, you can get away with higher prices than the competition.
Creating and managing a product line
Creating and managing your product line in the long term requires careful planning. Let’s explore the steps that help you succeed at it.
Steps to create a successful product line
- Define your product line
The first step is to define and validate your product line. This step requires extensive research to understand your audience’s pain points and help you solve them.
For example, if you run a home decor business, you may observe an increasing demand for eco-friendly products. This demand is a problem you can solve by selling environmentally friendly home decor products.
Along with your customer’s needs, analyze your main competitors and general market trends to inform your strategy. For instance, there’s a general trend towards eco-friendly products in many niches, so offering eco-friendly home decor will likely be rewarding in the long run.
- Develop your product line strategy
The next step is to establish a clear strategy for your product line, including its target audience, pricing, marketing channels, and unique selling point. These details should be precise, so take sufficient time to think about them, and don’t hesitate to adjust when needed.
- Product line launch
Establish a clear process to obtain inventory for your product line. For example, as a dropshipper, you can obtain products from third-party manufacturers while focusing on design and marketing. With your products secured, you can launch your product line to the public and boost your revenue.
Managing product line growth
After launching your product line, you need to continually gather customer feedback and use it to make product adjustments. For example, if many customers complain about the packaging, it’s a hint to change the packaging to retain your customer base.
You should monitor sales and evaluate if they meet your desired targets. If they aren’t meeting your targets, you can create customer surveys that’ll inform you about potential issues that can be resolved to boost sales. Your competitors are always working and iterating, so you can’t afford to be complacent. A successful product line requires ongoing management and improvement.
Examples of successful product lines
Let’s take a look at some successful product line examples that can inspire you to create yours.
Apple’s product line
Apple is a popular hardware manufacturer whose distinctive logo is showcased on smartphones, laptops, desktops, smartwatches, and many other gadgets.
Over the decades, Apple has built a reputation for offering high-performance, sleek-looking products. Its iPhones, iPads, MacBooks, and smartwatches are priced way higher than the competition, yet millions of customers still buy these gadgets because of Apple’s association with high-quality, premium products.
You can attribute Apple’s success to its unique marketing strategy, which emphasizes a premium feel. It has continually focused on releasing sleek-looking hardware with sophisticated features that set it apart from competitors.
Starbucks’ product line
Starbucks is the world’s leading specialty coffee chain. Customers flock to its over 36,000 stores across 80 countries to enjoy high-quality coffee products and experience the serenity that Starbucks emphasizes by providing comfortable seating, free Wi-Fi, and excellent customer service.
The Starbucks brand is widely recognized worldwide. Many coffee shops exist, but Starbucks is the first choice because of its diverse and high-quality coffee product line. From coffee to tea to baked products, Starbucks emphasizes premium quality across its product line.
Microsoft’s product line
Microsoft is a massive technology company with a diverse product portfolio. Originally famous for its Windows operating system, Microsoft has since diversified into other services, including cloud computing (Azure), gaming (Xbox), and hardware (Surface).
A diverse product line has made Microsoft resilient in the fast-moving tech industry. It has remained dominant since its founding in 1975, unlike most tech companies of that era that have fizzled out. Microsoft demonstrates the importance of having a diverse product line that boosts revenue and makes your business less vulnerable to changing customer demand.
Special considerations when managing a product line
Running a product line has its distinctive challenges. You need special considerations to make your product line run effectively, including:
Product line reach
If you observe positive results with your product line, you can explore opportunities to expand it further and increase market share. For example, if you start with a product line of eyeshadows and mascara and get good sales, you can expand into other cosmetic products like lipstick, contour kits, brushes, and primers.
Additions to your product line should have the same feel as the previous products. Suppose your brand is built around affordability; the other products should also be budget-friendly, as customers now expect that from you. You can always expand your product line, but do so carefully and ensure it aligns with your existing brand values.
Identifying and managing unprofitable product lines
Statistically, all your efforts as an entrepreneur won’t work. Some products may struggle to gain traction with customers due to intense competition, a poor market fit, and other factors.
If you notice that a product line is not performing well, you can make adjustments, such as revising your marketing slogans, updating the packaging, or lowering the price. If you still don’t get the desired results, you can scrap the product line entirely and focus on others.
With competitors always at your doorsteps, there’s little need to dwell on products not generating sales after repeated attempts. Monitor your sales metrics to identify unperforming products that can be discontinued. Similarly, identify the best-performing products to focus your marketing efforts on.
FAQs about product lines
What is product line filling?
Filling entails adding new products to an existing product line to address customer needs. For example, if you have a product line of jewelry made from emeralds, you can release new versions made of gold and silver if you observe increasing customer demand for these materials. Product line filling enables businesses to diversify their product portfolio and boost revenue.
How do you decide to drop a product line?
You can remove a product line that isn’t generating enough revenue to cover its development and procurement costs. This way, you’ll focus on the product lines bringing in the best results.
However, you shouldn’t drop product lines immediately if you notice poor sales. You can adjust your marketing strategy and product characteristics and monitor for improved results. If sales don’t improve after repeated attempts, you can then drop the product line to focus on others.
What is the difference between a product line extension and a brand extension?
A product line extension involves adding new products within the same category as the existing line, whereas a brand extension entails introducing completely new products under the same brand name.
For example, whenever Apple releases a new iPhone, that’s a product line extension. However, when Apple unveiled the AirPods wireless earbuds in 2016, it was a brand extension, as the company hadn’t produced earbuds before that time.
Conclusion
Product lines help your business outshine competitors and remain successful in the long term. This guide outlines what you should know about product lines, including how to create and manage them effectively. A successful product line requires a robust supply chain that will ensure a steady flow of high-quality products to your customers. Zendrop is the perfect supply chain partner that ensures high-quality products at competitive prices. We offer a diverse range of products from suppliers vetted for their high quality, excellent customer service, and industry-leading delivery times. Choose Zendrop today as your dropshipping partner to create a successful product line.
