Product line extensions can be an excellent way to grow your eCommerce store, but without a plan, it could end up being a waste of your time and resources.
Thus, having a plan and strategy before launching a product line extension will help your team determine what product line should be extended and gain insight into whether it will be successful in your target market.
By following these tips to form your strategy, you can set yourself and your product line extension up for success before it ever launches.
What is a product line extension?
A product line extension refers to a brand expanding an existing product category by adding new product variants.
Offering a wider variety of options to your customers can help any company gain a competitive advantage within that product category.
An example of a company that produces successful product extension lines is Doritos.
Doritos originally produced Toasted-Corn flavored tortilla chips in 1964 but extended their product line to include a Taco flavor in 1967 and Nacho Cheese in 1972. Since then, there have been over 100 flavors of Doritos, some of which were limited-time flavors.
Many businesses find that extending an existing product is a wiser way to grow since it reduces risk over launching an entirely new product.
Types of product line extensions
One of the first steps in extending a product line is deciding what type of product line extension you will create.
The first type is a horizontal extension.
A horizontal product extension aims to maintain the same price and quality but changes factors such as flavor or color to differentiate the products. The example provided above of Doritos would be a horizontal product extension since quality and price stayed the same but offer other flavors.
The second type of product line extension is a vertical extension.
Vertical product extensions increase or decrease quality and price to create more luxury or affordable products, respectively.
In the case of Apple’s iPhone launch in 2019, the company released three versions of their newest iPhone, including the iPhone 11 starting at $499, iPhone 11 Pro starting at $999, and iPhone 11 Pro Max starting at $1,099.
In launching these phones, they wanted to offer their audience a choice of affordable and luxurious models.
In terms of internal components, they all share the same chip, and performance is almost identical. However, there are differences between the products' features regarding battery life, camera capabilities, size, color options, materials, storage capacity, and display.
Advantages of product line extensions
Some of the advantages of extending a product line, whether it be horizontal or vertical, include:
Tips for creating a product line extension strategy
How you plan and strategize your product line extension will make it or break it before the extension ever launches, so it’s important to do your research and prepare properly.
These tips will help you learn how to expand your product line successfully.
Use an analytics tool, such as Google Analytics, to study your current customers and their reasons for buying from you.
By looking at these analytics, you can retain vital information about your customer bases, such as their location, age, and interests.
You can reach out to repeating and one-time customers to understand why they purchase from you regularly or why they haven’t returned to make a second purchase.
This information can help you identify gaps in your product line that may need to be filled by an extension.
You should discuss these findings with your team and start brainstorming product ideas that fill the gap uncovered by your research.
Create ideas with your customer's feedback in mind to create a product of value to them.
Once you have brainstormed with your team to create a list of ideas, pick the best one and begin producing the product.
Your data can help you choose the best product by reviewing which of your ideas meets the needs and wants of most of your customer base.
One of the biggest mistakes a business owner can make is launching a product before testing how the market will respond to it.
Testing your product helps minimize the risk of it failing among your audience, so choose a test market with similar demographic characteristics as your customer base.
Besides testing the product, record their response to other factors, such as the price, advertising, and packaging.
The results of your test market will help you determine whether you should launch the product line extension.
If the market response is positive overall, you can start preparing for the product’s roll-out. However, if the market response is negative, you need to adjust or try something new.
You can’t afford to be biased during this process and end up launching a product that your market didn’t respond well to. This will only lead to losses for your company, so head back to the drawing board to create something new that your customers will love.
Although less risky than a new product, extending a product line isn’t without risk.
As a result, you must do your due diligence to be strategic in your research and planning.
By following these tips, you can select, test, and launch the product line extension that will be most successful for your eCommerce store.
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