Product line management is a challenge in many industries — and the car market has especially difficult decisions to make. One of the questions relates to product line length — the number of individual products in a product line.
Some automakers often have a higher end model not so much for sales as to enhance the image of the brand — think Chevrolet Corvette. On the other hand, a high end automaker may produce a lower, entry level model to help consumers (perhaps those younger or on their way up) to begin using the brand. In this case a brand hopes the customer later buys the higher priced (and usually more profitable) products and generates high lifetime value. A risk is that the lower end model makes the brand less exclusive — one of the primary appeals of a higher end brand. To learn more about this phenomena in the automobile market, and to get a good example for class discussion, see “The Downside of Low-End Luxury Cars” (Bloomberg Businessweek, July 17, 2014).