In the previous article, we talked about the brand extension, the marketing technique that allows you to exploit the reputation of a brand to sell in other product categories.
Today we are talking about the product line extension, which is the technique of using a well-known brand to launch new products in the same product category.
To clarify:
· PRODUCT EXTENSION: same brand, new products in the same product category.
· BRAND EXTENSION: same brand, new products of a new product category.
Let’s see it with an illustrated example.
Brand Extension: Canon has used the Canon brand to sell printers, very different products than cameras (other product categories).
PRODUCT LINE EXTENSION
The product line extension is used by almost all companies.
The main advantage of introducing new products is to intercept new consumers.
Introducing new products can be a long and time-consuming process, or, in some cases, changing the color of a product is enough to intercept new consumers.
Let’s see some examples:
In 2005 Coca-Cola launched Coca-Cola Zero, a low-calorie product, targeted to a male audience.
Moreover, different versions of Coca-Cola are offered in some markets to satisfy the tastes of local consumers.
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How to make a successful product line extension?
It is not always a good idea to do product extensions, even if they cheap to implement (such as a color change).
The reasons are different: first of all, introducing new products means complicate business processes from production to logistics. Secondly, it is not certain that you will obtain space on the shelf, but even on online stores for your entire product range.
Moreover, an excessive product range confuses consumers. An example comes from the smartphone sector in which Apple’s logic (few products, but well-defined) seems to be more appreciated by customers than other manufacturers’ logic sell too many (similar) products.
Finally, the biggest risk of a product extension is the cannibalization of the products you already sell. The risk is higher with the launch of low-cost versions.
To make a successful product line extension you should:
· Studying consumers to understand if there are any needs not met by current products. To do this, focus groups and qualitative interviews can be useful.
· Usually new products target market niches, it is necessary to estimate whether the market niche is large enough to justify the creation of the new product. To make such forecasts, it is advisable to carry out quantitative analyzes, in particular, the factor and cluster analysis and the conjoint analysis are the most suitable.
When particularly innovative products are launched, it is often necessary to show consumers prototypes or drawings, otherwise, they are not able to give e reliable feedback.
In this phase, you should also try to understand the possible selling price.
· Evaluate with the other actors the possibility of selling the new products. For example, if the product is being sold in supermarkets, you need to figure out if you have the option to increase your shelf space. If you work with international distributors, check with them if they are willing to import and sell the new product.
For example, there may be a risk that your new product will compete with other products that your distributor already has in its portfolio.
If you haven’t already read it, we recommend that you also read the article on the brand extension to get the full picture of this marketing topic (link to the article).
Globartis Research
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