Growth Guide: How To Nail Your Product Line Extension

So you've got a killer product, but you know that a successful business is one that scales hopefully upwards. Which means you might just be facing the big old question, how do I extend my product line without messing it up? Well, you're not alone, my friend. This is a mammoth strategic move that can feel insurmountable for many businesses. Here's the good news. In this video we're going to explore the need to nose and top tips you need for to get it right. We'll cover types of product line extensions, benefits impact profit potential and the two big product line paradoxes you'll need to grapple with our biggest top tip straight off the bat. Don't confuse a product extension with a brand extension because they are not. They're not the same. For example, Diet Coke, Coke Zero, Coca Cola, Cherry were all product line extensions to the original Coca Cola. They extended the company's product line but didn't expand it into an entirely new category. But if Coca Cola decided to lever its brand equity to enter the protein bar market, for example, that would be a brand extension. Now, in the world of product line extensions, there are two types you need to know about. First up, there are horizontal extensions. This is where you keep the same price and quality of your product, but change things like color or ingredients to differentiate the products. AKA Cherry, Coca Cola and vertical extensions. These involve increasing or decreasing the quality and price of a product. This could be launching a new luxury or pro version of your current offering. Take streaming giant Spotify for example. Spotify has a free ad supported version for casual users. But they also offer Spotify Premium which allows users to add an ad free experience with heightened functionality in return for monthly subscription fee. Of course, a premium product will require a different approach to an ad support one. So if you want to find the best strategy for your product launch, click the link in the description and read our free product. Go to Market Kit or keep watching as we explore the benefits of a product line extension. Now's a good time to dig into two product line extension paradoxes. We've painted a pretty rosy picture so far, but this isn't without its challenges. Number one is the choice paradox. It kind of follows that the more products you have, the wider the customer base you can sell to. Or at least you would expect that, except doesn't quite work in that way. Landmark research from Sheena Iyenger and Mark Lepper showed that when you give customers too much choice, it actually harms your sales. They ended up running a simple experiment. They set up a stall that sold Jam at a local grocery store. On certain days the stall offered six flavors of jam. On others it offered 24. And the results were quite emphatic. On the 24 flavor days, they attracted 60% of the consumers but had a 4% conversion. On the six flavor days, they attracted 40% of the consumers but had an incredible 30% conversion rate. So how can you make every day a six flavor day for your business? Well, for starters, don't get carried away with the number of variations you offer. And then ask yourself these two questions. What's the hook? How's this new product actually different? If your new line isn't differentiated enough, it will confuse customers. What's the default? What's the standard option you offer your customers? If your website displays a particular variation first, which one is? This will help customers make a faster decision, and faster decisions increase the likelihood of a sale. Which brings us to paradox number two, the differentiation paradox. Successful product line extensions address a new customer need. But if your new product is too different, it will actually put customers off. Back in the 80s, Levi's decided to extend its product line to include three piece suits. There were already a heavy weight in the menswear market and were known for quality. So why didn't it work? Customers associated Levi's with ruggedness and heavyweight durability. I think people associate me with that as well. That's not what customers look for in tailored suits. So how can you avoid a product line extension fumble like this? Well, know thyself. Discuss internally what your brand really stands for and compare that with what customers associate your brand with. This will help you do more than just find value gaps in the market. It'll help you identify the value gaps you have the brain capital to actually nail. Our top tips to getting that kind of info. Ask customers for feedback, read product reviews, follow industry hashtags, and if you're still at a loss, work with a corporate reputation management consultant. So there are five big potential benefits to note and the first is market expansion. A product line extension can help you reach a new market segment or widen your customer base. And if that's your goal, the first thing you'll need to consider is your current product. Product and ideal customers. What customer needs does your product solve? What customer preferences do you cater to? What's your key audience demographic? Once you have these in hand, it's time to deep dive into your market. Your aim here should be to identify the customers customer needs and customer preferences you currently don't cover. But realistically could. Next assess which variations or additions to Your existing product line might help you cater to those customers needs or preferences. For example, imagine your lead product was a subscription based wellbeing app designed to help business leaders manage work related stress. But your research has identified a huge unmet need for a product designed to help students manage study stress. A great market expansion move could be to extend your product line to offer a lighter version of your flagship app. One that gives students a more budget friendly way to get access to the help they need. This would not only increase your market reach, it'll also increase your potential sales opportunities. But it's not just all about those new customers. As beautiful as they are, product line extensions can also help with customer satisfaction and retention. Your customers needs, preferences and expectations don't remain static. They evolve sometimes very quickly, like a Charmander into a Charmanian. Pretty sure that's how that goes. A product line extension can be a great way to keep pace with this evolution. To make sure you're capturing the right data to act on this, run customer satisfaction surveys. Make sure those surveys include questions like what improvements would you like to see? And is there something we should be doing differently? If you want a deep dive into how to nail your customer surveys, check out our video on that very subject. The answers to the survey questions alongside the findings of your customer facing teams can then be used to inform the kind of product line extension you can pursue. Remember, satisfied customers are more likely to remain loyal, make repeat purchases and recommend the brand to others. The next benefit is revenue growth. When you nail market expansion, customer satisfaction and customer retention, you lay the foundations for solid revenue growth. A broader product line and wider customer support base increases your overall sales potential which when done right, is great for revenue. That's because your product offering now caters to a wider set of customer needs and preferences. It certainly worked for Diet Coke. Within a year of their product line extension, Diet Coke was the number one selling diet soft drink in the US and displaced 7 up and the number three overall soft drink in the US behind the original Coca Cola and Pepsi. Pretty remarkable. The year of Diet Coke's release, Coca Cola's revenue increased by 6.1%, the largest increase in over six years. But once again, it's not only about revenue from new customers. If you keep your current customers satisfied, you may just find they start trying different products within your center product line which will give you a great short term revenue boost as well. Which brings us to benefit number four, competitive advantage. Take a moment to consider which areas your big competitors might have an advantage over you. Yes, it's okay to admit that. And yes, it's okay to feel a little jealous of them. Naturally, you'll want to counter your competitor's advantage and create more points at which you have an edge over them. Product line extension has your back here. To ensure you set off in the right direction, combine the input you get from customer surveys with some good old fashioned competitor research. This will help you identify any valuable gaps in the market you can fill. What will these gaps look like? Maybe features not covered by competitors customers seeking a specific new solution, A high growth regional audience not catered to with current products. Analyzing these gaps can help you figure out the kind of product line differentiation that will provide you with a competitive advantage and make sure your business stays relevant in a crowded market. The final benefit here is cost efficiency. Remember, a product line extension involves product differentiation within a category you're already in. This means you won't be developing a new product from scratch, and that means you'll be able to leverage your existing manufacturing process, supply chains, and even marketing resources. All of which is going to save you costs in key areas like research and development, production setup and marketing training. This is where a product line extension can really give you the edge over a brand extension. But at this point you're probably wondering, this all sounds good, but does a product line extension actually positively impact my brand? In short, it's a big ol yes. Get your product line extension right and you'll see a big positive impact on brand perception, loyalty and recognition. Let's talk brand perception first. Increasing customer perceptions of your brand is one of the biggest goals of marketing. But many of the things you aim to communicate through marketing innovativeness, empathy, adaptability, trustworthiness are possible to communicate with a product line extension. That's because they demonstrate your brand's ability to innovate, evolve and respond to customer feedback and stay relevant in a competitive market. Next up, brand loyalty. When you move beyond having a single flagship product, it showcases a deep knowledge of your target category. And that's a key part of building a level of trust that keeps your customers coming back. Finally, brand awareness. Unsurprisingly, a product extension increases the visibility of your business, attracting new customers, meeting more needs, and in some cases, taking up more physical shelf space. It all leads to you leaving a bigger stamp on the market. And even more encouragingly, research has found that high quality extensions improve overall brand perceptions far more than low quality extensions harm them, which means it really is a risk worth taking. And that, as I say, is that. Ready to start your product line extension journey? Click the link in the description and get our ultimate product Go to Market Kit. It's jam packed with planning and communication templates that will make your Go to Market journey an absolute breeze. If you found this video useful or uncovered another product line paradox we need to know about, drop us a comment below. Below. And don't forget to subscribe. So you're the first to catch every new release. Now, if you'll excuse me, I'm gonna extend myself to the cookie jar. All right, it's time for a little, little afternoon snack. Until then, I'll see you next time. I can't find this client info.

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