STRATEGIC ANALYSIS OF PRODUCT LINE EXTENSIONS : A STUDY OF ORAL REHYDRATION SOLUTION INDUSTRY

Abstract

Recently,z manyz brandsz havez enteredz allz categoryz ofz consumerz goodsz and/orz services,z andz thez trendz doesz notz seemz toz bez dyingz downz anyz timez soon.z Firmsz arez mainlyz followingz product-z expansionz strategies,z especiallyz thez linez extensionsz strategy.z Butz increasingz evidencez showsz usz thatz suchz aggressivez tacticsz canz bez problematic.z Thisz studyz looksz atz thez existingz literaturez onz Productz linez extensionz studiesz andz triesz toz establishz thez majorz aimsz behindz these,z despitez notz increasingz categoryz demand.z Manufacturersz seez extensionsz asz az low-cost,z low-riskz wayz toz meetz thez needsz ofz differentz customerz segments;z linez extensionsz canz fulfilz consumers’z desiresz byz offeringz az widez rangez underz az singlez brand;z andz extensionsz arez oftenz usedz asz az short-termz competitivez weaponz toz increasez az brand’sz controlz overz limitedz retailingz shelfz space. There is a certain degree involved in line extensions and they often fail. Hence there are some key pointers that evolve from the literature to avoid such failures. These can be summed up as not forgetting the core business, not losing the brand purpose (Line Extensions should convey the same emotions and functions that contributed to the success of the line’s original flagship product) and remembering consumers and markets- The failure to meet consumer needs, regardless of brand, creates unhappy customers. In the light of the same, this study looks at the Oral Rehydration Solutions Market with a focus on Johnson and Johnson’s ORSL (Oral Rehydration Solution- Liquid). With consumers’ increasingly fast paced lifestyle, the need for fortified functional beverages has increased manifold- hence the focus on the industry. The study aims to find out whether ORSL FOS is a successful product line extension of the ORSL brand and apply the results from the analysis to product line extensions. ORSL Base is recommended for fast track recovery in patients suffering from fever, URTI (Upper Respiratory Tract Infection), flu and common cold, FOS is recommended for gut recovery from antibiotic associated dysbiosis. To conduct the analysis, the study uses a mix of both qualitative metrics- Online primary survey questionnaire on product line extensions, personal in depth interviews of target group consumers, Nielsen Buzzmetrics Brand Association map, Study of sales data and multi-level multi-variate regression model. A five-point hypothesis was tested in order to see whether ORSL FOS is a successful product line extension. These are: • ORSL FOS generates volumes comparable to original product • ORSL FOS sees annual growth • Customers understand its (ORSL FOS) difference from the ORSL original product. • ORSL FOS satisfies a new need compared to the ORSL original product • ORSL FOS has same core competencies as the original product (ORSL Base) All of these were proved true except the first one and hence FOS was concluded to be a successful product line extension. Further, learnings from FOS were used to derive conclusions and lessons for product line extensions.