What Are Some Reasons For Contracting A Product Line?

1273 Words Apr 11th, 2016 6 Pages
) What are some reasons a firm might determine it should expand a product line? What are some reasons for contracting a product line? Why do many firms have a product mix strategy?
A product line consist of a specific product introduced in order to suit a specific target market. When a firm decides to extend a product, it’s essentially introducing different models, or modified products. An example that can demonstrate a product line extension would be an IPod. The IPod came in so many different types; Gen 1, Gen 2, Gen 3, Nano, etc.. All these stayed within the same line, and maintained a specific target market, but also kept extending. When a company identifies that the product is not very successful/profitable in the market, contracting may be the best option. Contracting a product line simply means to compress, or to terminate a specific products availability in the market. Perhaps, a company may decide to diversify their products lines, and introduce a variety of new products, this is known as a product mixt strategy. Here a firm doesn’t rely on one product profitability, but in exchange they expand their market, and increase their potential profit.
3) Explain the product life cycle concept. What are the stages of the product life cycle?
The product life cycle concept derives from the phases through which a product undergoes, from its introduction, to its growth in the market, to the maturity it attains in that market, to the very last stage of declination. The…

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