Expanding a product line represents an important growth strategy for small businesses that want to increase revenue, market share and that want to stay at the top of their game. A product line is a group of products or services that can be included in the same category, such as certain facial creams, pet food and toys, IT services, engineering components and anything else that you can think of. Product-line expansion can take a number of forms, including new versions of an existing product, upgrades and improvements to existing products or completely different products.
Advantages of expanding your product line
1.When the Life Cycle determines it
Product-line expansion is essential for any company that has a certain product or line of products in the late stage of its life cycle.
As you probably know by now, products usually go through four stages:
Clearly, when a product enters its declining phase you should think of a strategy to mak eit relevant again. Products are in the decline stage when they no longer meet customer needs or when their performance becomes inferior to products that have taken advantage of newer materials or technologies. To avoid losing business to competitors with higher performance products, companies must upgrade their existing products or develop new products that can compete effectively.
2. Embracing Market Opportunities
Product-line expansion enables companies to take advantage of opportunities in different market sectors.
If we take the pet food business as an example, they might identify profitable opportunities to market pedigree versions of its current offerings.
Another example would be the IT support consultancy that could identify a profitable niche sector in troubleshooting domestic broadband services.
Those companies can expand their product lines by customizing their already existing products and services or introducing new products that match customer needs in the target sectors.
3. Meeting Customer Needs
Introducing products that meet changing customer needs is an important driver of product-line expansion. Encouraging feedback through surveys or monitoring customer comments on social networks provides valuable insight into customers’ needs and preferences.
If you see that a certain product feature that your competition offers is in high demand and receives favorable reviews, it’s a good indicator of an opportunity for line expansion. Inviting customers to collaborate or contribute to product development also highlights opportunities and focuses attention on development priorities.
4. Increasing Customer Loyalty
Expanding a product line can help to increase customer loyalty. Adding new products or alternatives to existing products enables companies to sell more to the customers you’ve already gained, without the effort and cost of acquiring new customers. Companies research the purchasing records of existing customers to identify products that competitors are currently supplying. An engineering components supplier, for example, can develop new products to manufacture or buy in products from other suppliers to offer customers greater variety.
The things that you really need to remember if you want to be competitive in your market is that you’ll need to use market research and speak with customers and marketing partners or distributors and evaluate competitive products. This will help you to validate the present level of demand for the product and the best channels for sales distribution, plus shape the product messaging. If you do your homework and proceed with an analytical eye, your line extension will increase sales, help you reach new markets and build market share overall for your growing business.