Product expansion definition and more in this article.
When it comes to developing your company as a small business owner, it can often feel like there’s a dead-end no matter where you turn.
Large brands are well-known for adding new products to their portfolios. This is what keeps them relevant and growing bigger and bigger. There was only one Coca-Cola product when the company started. The company has expanded its line to more than 500 sub-brands worldwide – Sprite, Fanta, and Dasani.
Another popular execution strategy is the tech company Apple. The company’s main sellers are iPhones and MacBooks, but they have gone above and beyond. iPads, AirPods, Desktops, watches, and several other applications and hardware has been added to their lineup.
According to the product expansion definition, it is when a company creates a new product in the same product line of an existing brand. The strategy for an extension/expansion could be a different color or size, and it may have different ingredients or come in different flavors. The company is marketing the value and quality of the existing product line to introduce more choices to the consumer. Product expansion is a crucial move if you want to grow your revenues and market share. Expanding your product line can also help your company grow into becoming a market leader.
It is essential to have plans for product growth to identify new customer bases and develop new items that your customers would enjoy.
What Are Product Expansion Strategies?
According to Product expansion definition, it is a strategy that companies execute and adopt when they want to grow their businesses. In this, a company attempts to reach out to different markets after capturing the market’s interest they are targeting.
You will be putting your products into a product-market expansion grid. This is known as the Ansoff Matrix. This matrix is a 2×2 matrix representing four different growth strategies where a company enters a new or existing market with new or different products.
In this, the term market penetration, defined as an activity, is the process of going to the market with a product in an existing market in which a current or similar product is already present and taking market share from the other competing companies. This matrix also looks at new and existing markets. It analyses the risk of each relationship and is designed to formulate plans for growth using new markets or products.
The four quadrants of Ansoff’s matrix:
- Market Penetration: Launching the same product in the existing market.
- Market Development: Launching the same product in a new market.
- Product development: Launching a new product in an existing market. (line extension)
- Diversification: A new product in new market.
Why Should I Do Product Expansion?
The simple answer – a single product won’t sustain a company. The company won’t survive. Competitors will always be there to make a cheaper, faster, or even overall better product. For your company’s future, expansion of the product line is the best way to minimize risk.
Boost Your Market Share
Your chances of reaching a wider audience and purchasing market will significantly increase if you have more products. By successfully expanding your market, you can get a firmer hold of your current customer base, and a new audience is exposed to your business.
For example, if you have a store that sells birthday cards, you might want to expand to Christmas cards, get well soon cards, congratulatory cards, and cards for several other occasions so that more and more people come to your store. You might even consider selling stationary like colorful pens, a gift shop, or a flower stand so that people can pick something up for loved ones on birthdays or other occasions.
Give Customers A Reason To Stay Loyal
At some point throughout your business, your customers are going to have enough of your product. Expanding your product line gives your customers fresh opportunities to return and keep interacting with your company.
It has been established that selling more products increases your revenue. Not only this, but a new product can also decrease your overall expenditure as it is cheaper to retain existing customers than to acquire new customers. Your current customers are also suitable for surveys, and you can come up with more products that your customers may want to buy. Your new market is already there!
Explore New Marketing Opportunities
There are limited ways you can advertise and market your product to your potential market. You have more space to develop innovative marketing techniques with new products, and a whole new world of marketing options can open up for your business. This will also help you reach new audiences.
Reduce Your Risk
There are four main stages of a product’s life circle, according to product expansion definition – launch, growth, maturity, and decline. Generally, there is a surge in sales in the first two stages but fizzles out by the third stage. Eventually, the product wears out. This happens due to competition, changing trends, and obsolescence. Market death does not spare any product.
By expanding your product lines, you can maintain your relevance and traction in the marketplace. Another product begins its life cycle as one reaches the end of its life cycle. Moreover, the second product has a much greater growth potential thanks to your loyal customers. This way, you can continue to thrive in your industry.
New Products = More Credibility, Visibility
Expanding your product line means your business is seen by a much larger audience when you expand your product line. Either that or it is seen by the customers you already have differently. Your company could become more and more visible and credible as a reputable brand if your product-development strategy includes better quality products of different varieties.
With credibility and visibility comes better brand recognition and customer loyalty. Strategically increasing products creates a snowball effect.
More products = more customers = more revenue
How to Develop a Product Expansion Strategy
If you want your business to not only survive but thrive, you must keep moving forward. The Ansoff Matrix can help you build and formulate expansion strategies and keep your business in tiptop shape.
Ensure that you have the following things when you are developing a product expansion strategy:
- Long-term vision: Have an idea of where you want your company to be in the next three to five years. If you have this, you can stay on track and know which direction your new products should take your company.
- A proper strategy for product development: What you plan to do in the next few years to achieve your long term goals.
- You should have product and technology roadmaps. Have a project priority list and fixed budget.
Introduce New Products
For the health of your business, you must keep expanding your product line. Plan your new product, its uses, popularity, and feasibility carefully before announcing it to your potential consumers.
There is a considerable amount of research required in the planning phase. But take your time and know everything there is to know about your product and the market. This will help you determine the probable success of your potential product. The research will help you understand what your customers want from your company, and you will be able to see how much they will shell out for your product. Research is essential if you wish your new product to be a success.
Penetrate Market Deeply
When your focus product is already in an existing market, you can try to execute market penetration. If you notice that consumers are aware of the product but don’t seem interested in buying or using it, you could try several market penetration strategies to boost sales.
One popular strategy that works well is to produce an ad campaign to raise awareness about your product, its uses, and why customers should buy it. Creating videos to explain all the different ways to use the product can also help with market penetration.
Try To Boost Sales Of Already Existing Products On The Market
Try to boost the sales of products you already sell if product expansion isn’t on the cards at the moment. Attempt to focus on one consumer group. Market to them and work towards making them your most loyal customers. Many people also feel strongly about brand consciousness, so when you have a new product, they can also be your potential customer base. These consumers are most likely to buy from you.
Market Development
When an existing product is new to the market, you must look at Quadrant 2 of Ansoff’s Matrix – the market development strategy. This strategy is ideal if you’re trying to enter a new market while reaching consumers outside your consumer base.
If you decide to reach more consumers outside of your consumer base and try to enter a new market, this strategy is ideal. However, remember that the reception of your new product could go either of two ways. It could either be a hit or a flop. If you’re confident in your product, your strategy, and your team, take the risk. The greater the risk, the greater the reward.
Marketing towards a new consumer group can get them to buy your products. You can try advertising to them through print or digital means. Make sure you’re clear about your target audience and where your advertisements will reach them quickly and efficiently.
Your Competition Can Teach You A Lot
Keep your friends close but keep your enemies closer, says the product expansion definition. The best way to formulate strategies so that your company grows and becomes a market leader is to keep an eye on your competition. Take note of where they’re succeeding and where they’re failing. Ensure that you’re correctly executing your market blueprint and don’t make the same mistakes your competitors make.
Look for marketing and expansion techniques that have done well and give it a spin of your own. You can also look at products and services that your completion is selling and see if it is working well or not.
Develop A Great Product
Sometimes it’s best to go back to the simplest concept – If my product is good, people will buy it. A product development strategy works best when a product has yet to be introduced to the market. Put in your all into developing a product after thorough market research
This strategy can be used to revamp old products to help them sell better. It can even be used to see where old products fail. By studying the shortcomings of your older products, you can create a much better experience for your customers so that they can become loyal customers. If your old products are selling, but you want to take a new approach to your inventory, then product development can help you achieve this goal and expand your company.
Conclusion
Product expansion definition is a reliable strategy to enhance the reach of your product and expand your business operations. To expand your product successfully, it is necessary to adopt the right strategies and understand your target market well.
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You might also enjoy these popular International Expansion related articles Steps To Successfully Expand And Scale Your Business, What Is Market Penetration Growth Strategy? and 11 External Growth Strategies For Businesses on the same topic.
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