Companies typically consider augmenting their product line for one of two main reasons. Either to better serve the needs of their customers or to drive more revenue for the business.
Successful companies take the time to strategically analyze related product issues such as the overall product mix, life cycles, line stretching or line filling opportunities as well as product positioning and pricing. It can be a very complex decision.
From our experiences competing in the hardwood lumber industry, we have found it is also important to ensure that you’re not adding product offerings merely for the sake of change. It’s important to act deliberately before introducing a product line change or some other significant alteration in your business offerings. It has helped us to keep key concepts such as this in mind.
Ask the right questions. Any substantial venture should start by asking and answering certain basic questions:
- If we decide to launch a new product, who do we expect will purchase this product and at what price?
- Does our proposed product line change serve a genuine customer need?
- Is the potential market large enough to justify the R&D, production and marketing costs involved?
- What makes this proposed new product or service different from or better than what our competitors offer?
Nail down the customer value proposition at the outset, advises marketing strategist Max Clark. “If you’re confused about the exact benefits of your offer, or if you’re not sure what compelling ‘value’ your product or service will deliver … then maybe your idea isn’t as strong as you think.”
Study the existing market closely. It’s possible other businesses may already offer a variation of the proposed new product. “A market can be much harder to enter when there’s an entrenched competitor already offering a more mature product,” Marketing Land columnist Sonny Ganguly notes. He advises studying what’s out there and learning to “identify the gaps in their products which you could fill.”
Keep your internal audience in mind. In addition to pinpointing a viable customer market for your new product, don’t neglect the involvement of a key internal stakeholder—your employees. Look to involve them in the early planning stages, in order to build enthusiasm for the change and to keep them fully informed as the launch date nears, especially since some of them will be charged with explaining and promoting the new line to your customer base.
Make sure everything’s aligned. In their rush to design and produce a new offering, some businesses fail to fully develop all the ancillary support resources. Give the proper attention to the overall “go to market strategy” inclusive of sales training, advertising, the marketing materials requires and the online presence you will need to be successful.
Adding a new product line can be a momentous event in the lifecycle of a company. It has been for us when we started offering new items such as veneer hardwood logs, SLR2E hardwood rips and customer specific red oak width sorts. Careful planning, thorough market research and proper understanding of the buyers needs helped make these product line changes successful for us.
What other best practices have helped you when launching new products? Let us know!