Have you recently taken a look at your electronic product catalogue and thought, “I need something more?” Then it might be time for you to look towards expanding your product catalogue.
Big businesses are well-known for spotting a gap in the market and then diversifying what they already provide to fill that gap. For example, the Coca-Cola Company started out by selling only Coca-Cola but has since expanded their line to include Diet Coke, Coke Zero and others. Small businesses should (and can) follow suit as product line expansion has the potential to increase both market share and revenue.
Why expand your product catalogue?
There are three main types of product line expansion. You can add new versions of existing products, provide upgrades to existing products or add brand new products. But just because you think it is necessary to expand, doesn’t mean it is viable. Let’s first look at what benefits and drawbacks there are to product line expansion.
You could potentially attract a new market with unique needs that want to buy your expanded product line but only if your research is done effectively. A new market can easily increase profitability as a direct results of having a bigger segment of the market, which is a definite benefit.
Increasing customer loyalty can be another positive side-effect of expansion. You will be able to sell more products to existing customers whilst reducing the need to acquire new customers (which eats up resources). Doing this effectively means researching what your current customers need that neither you nor your competitors are supplying, and then seeing how you can provide for that need through potential product expansion.
Product expansion can also help you keep up with competitors. Are those in the same or similar field providing something that you are not but potentially can? Ask yourself, how can you improve on what your competitors are doing? Will your product expansion give value to your business and increase your market share?
If your business often suffers due to seasonal changes in sales, then adding new products can ease this. If your product usually sells better during warmer months, you can try to add products that are not seasonally bound or which can be sold during your off-season.
Product line expansion isn’t a solely positive opportunity. Adding new products can make established products obsolete. This is especially true if a new product is essentially the same as the established product, but better. New improved products can even take resources away from current products. This is why it is important to ensure that one has the capacity and the finances to accommodate new products as the further you expand the more resources you will need.
As mentioned above, research is key when wanting to expand your product catalogue as knowing what to add to your existing line of products can be tricky. Ineffective research can lead to poor choices and you could end up with products that are hard to sell and inventory you cannot get rid of. This can result in a very costly mistake. Remember, adding new products should be an improvement to your existing product line and complement or benefit what you currently have.
How can you implement product catalogue or product line expansion?
Now that you are familiar with the benefits and drawbacks of product expansion, there are a few things you need to look at before diving in:
* Get customer feedback
Adding the right product is essential otherwise it can be an expensive exercise for your company. Ask your sales reps to keep a list of products that your customers request or suggest. This can either be voluntary requests or from questions asked by the sales reps. Also, make a note of the dates that requests are made, why they want the product and what they intend to use it for. You can now expand your product line based on these requests to ensure you provide products that customers would actually buy. Remember that only the most avid customers are likely to participate so the sample might be skewed.
* Check in on competitors in your industry
There are many reasons to keep an eye on your competitors and identifying trending products is one of them. It can be helpful if you have competitors that use the same suppliers as you do. You can find out what products they are ordering for future sales to see what direction they are moving in. This can help you to get in on the action, and get strong sales from the get-go. Reinventing the wheel takes much longer than simply going with the flow. Seeing your competitors’ future plans can also help you to look even further and plan how you can take it to the next level or predict where the trend will go from there.
* Take baby steps
Are you scared to take a giant leap and risk potential financial problems? Then, start by making slight changes to your existing product lines. For example, you can add more colors to a line of t-shirts. Seeing as it doesn’t take much to add an extra color, there isn’t as much risk involved. Think about size as well. You can either go smaller by offering a travel size of a product, or bigger by adding something extra. A budget product can get a premium sister product that is upgraded in terms of quality through the use of more expensive materials and thus will cost more. The addition of a premium product can lead to a whole new market, which could pave the way for even further expansion.