Do I increase my company’s product range?
6 things you need to know.
Currently, my business is facing a dilemma. It’s a dilemma that faces many businesses today and at various points in their lifetime. We have a very successful existing product range, the question is do we concentrate our money and time gaining deeper penetration and going after new markets with the existing range or do we look to expand the range further?
So when do you know if it’s time to expand your range? Here at Aerostrat we’ve come up with a few key things you should be considering if you are facing the same question.
1. What is your current market penetration?
You should go through the process at least twice a year (more frequently for large businesses) of understanding what your market penetration with your current range is. This means defining your market for each of your ranges and understanding how big that market is. Then you can compare your business to the size of the market to understand what portion you have. Have you got the majority of the market cornered or is there still a lot of business to be had?
For further help on understanding your market penetration drop us an email or check out our earlier article!
2. How straightforward is it to grow sales in your current market
This can be based on a number of things. For example, are your customers in your market loyal? Are there any barriers to stopping them switching their business to you (or away from you)? Is the sales cycle long or short? These should all be questions you can answer from your own knowledge to determine how difficult it would be for you to increase your sales/market penetration in your current market.
3. What other markets are available to your with your current range?
Have your explored parallel or complementary markets and understood what opportunity exists there with your current range and whether or not it would be easy for you to access? If you don’t know the answer to this, you should make it a priority to understand this, an opportunity could be right under your nose!
4. How long is your product development cycle?
Will the data you are making a decision based on be out of date by the time your new products come to fruition? If your product development cycle is particularly long, you may want to consider always running some level in the background instead of looking at it on a periodic basis. If the information you have is out of date by the time you launch a product it may be worthless.
5. What resources will it take to expand your range?
A huge consideration should be the level of resource needed to develop a new product range, not just money but man-power and time. Based on what you know about your market and the opportunities that exist with your current product range, is it a smart use of manpower, money and time? If product development is comparatively straightforward for your company it may seem like it is a clear decision, but also remember to consider the time and resources it will take to effectively launch a new product. Will you need to create a new brand or speak to new audiences and how long will it take to establish these new products?
6. Will your range access new or existing markets?
As mentioned in point number 5, if your potential new products are going to be servicing new markets you will have to put some serious time and thought into understanding these new markets, how to serve them and what the opportunity really is. It may be that if the market opportunity is small and the resources that will be needed to access it are large, even if you have a quick and cheap product development cycle it still is not worth it and you should continue to spend your time and resources pushing your current product range. Likewise, if your new products will serve the same market that you are currently operating in or the new market opportunity is large and/or easy to access then you should almost certainly pursue product development.
With the answers to the above questions clear in your mind you should now be able to determine the correct direction for your own company. Whilst it can often be easy and exciting to become swept up in developing new products, we must always undertake the more laborious task of collecting data in order to make an informed decision. In that way, you can be sure that regardless of the outcome of your analysis that you have made the correct decision for your company and potentially saved a huge amount of precious resource that could otherwise have been used in an inefficient way.
Rebecca Shaw, firstname.lastname@example.org
Rebecca Shaw is an up and coming on-line entrepreneur and product development specialist, brand owner of “Kingsman” and “Radiant Life” brands. SME sales and marketing business consultant, strongly invested in “Made in the UK” products. Property Developer, focused on single BTL market Travel enthusiast and blogger on “Travelling with Freedom”