A product line extension strategy is an approach to developing new products for your existing customers or for prospects who do not currently buy from you. Extending a product line involves adding new features to existing products, rather than developing completely new products. This can reduce the cost of product development as well as increase opportunities to grow your revenue.

Compete More Effectively

To identify opportunities for product line extension, analyze your existing products and compare them with competitive offerings. Your competitors may include different features, a wider range of sizes or product variations aimed at different sectors of the market, such as luxury or budget versions. Adding features that your competitors offer may enable you to deal with prospects that you cannot currently supply with existing products. You may also be able to increase your market share by matching competitors’ product specifications but selling at a lower price.

Meet Changing Needs

A product line extension strategy ensures you can meet your customers’ changing needs. They may require products in smaller or larger package sizes. They may need different levels of product quality or performance to meet their own operational needs. You may be able to take advantage of technological developments to offer the same type of product with superior performance. Ask your sales representatives or contact customers directly to find out if your current product range meets their needs and to identify opportunities to extend your product line.

Segment Your Market

Extending your product line can help your company enter new market sectors. An engineering company, for example, may extend its range by adding features that are specific to sectors such as the automotive or aerospace industries. In addition to offering products that meet sector needs more closely, a product line extension strategy also helps to position a company as a specialist supplier to each market sector.

Maintain Customer Loyalty

Maintaining sales to existing customers is important to long-term revenue growth and profitability. By extending your product line, you may be able to sell products that your customers are currently sourcing from competitors. This helps to increase customer loyalty and grow revenue per customer.

Reduce Marketing Costs

Adding new products or services to your existing line can help to strengthen your brand and reduce your marketing costs. By using the same packaging designs, logos and advertising themes that feature on your existing products, you can ensure that customers and prospects recognize the brand values of the new products without having to run major advertising or marketing campaigns.