They say when you hit rock bottom, the only way is up. But what if you are already on top? Where else can you go? – The solution of big businesses for customers they already had for years and are now starting to get bored with the same products over and over, is to create line extensions.
Product line extensions are part of a marketing strategy where a new product is created in one of its existing categories. It is basically just the original product but with a different variety or flavor. The objective is to keep your target customers excited and interested in your brand.
This strategy is used both by large and small businesses to use their existing product line to expand their audience reach and boost their revenue or introduce additional items in a product category. Since the existing product already has value, then it will be easier for them to market it to customers.
Product line extensions can be classified into two types: The Horizontal and the Vertical Extension. The Horizontal extensions are where the current price and quality of a product is maintained but it will have added modifications such as new color, ingredients, to put a twist on the products. Vertical extensions, on the other hand, happens when there is an increase or decrease in the quality and price of a product to create a lesser quality or luxury product. With an extension, products can have new flavors, colors, sizes, ingredients, and even packaging.
So, what are the advantages of line extensions?
It is a low-risk, brand perception improvement strategy
Compared to starting again with a new product category, line extension is a safer option because you already have an established brand. This means anything that you release will receive a warm welcome and acceptance from your customers
It was shown by the latest studies that high-quality line extensions boost overall brand perceptions way better than lower-quality extensions. In fact, lower-quality product extensions barely have any long-term effects on the perception of your brand because its perceived innovation and positive variety effects are more superior.
It creates additional and fresh options for customers
Having many choices is not always confusing. If a brand succeeds to find balance, it will be able to use it as an advantage. You are more likely to cause a good feeling because customers get to explore their preferences, making them enjoy their shopping experience.
However, having too many choices can result to harm as well. Research says that customers who are given limited options get to become more satisfied with their decisions compared to those given an expansive set of choices.
Our advice is for you to always consider audience research and trend when creating product extensions, it is an easier way to determine what people actually want.
It boosts profits
Many companies realized that by extending a product line, they will be able to boost sales, demand, and market share. Since they saw that people tend to become more interested when there are more products available in the market, they realized that this strategy is effective in helping their brands to prevent loss in customer base.
This has become a trend in which companies are required to participate for them to remain competitive in the market. So if it’s a steady flow of revenue you want, then product-line extensions are one of the strategies that you need to adapt and develop.