If you're a small business owner, sometimes it can seem like a dead-end when it comes to expanding your business. We are here to tell you that product expansion strategies can help your business move forward.
Product expansion strategies help you to find new consumer bases and create new products your consumers will love. For more information on product expansion, keep reading below.
What Are Product Expansion Strategies?
Product expansion is when companies grow their businesses by adopting a market expansion strategy. This is when a company will attempt to reach out to other markets after capturing the interest of their target market.
When utilizing product expansion you will be putting your products into the product market expansion grid also known as the Ansoff Matrix. This grid is a tool used for developing business growth and strategies by looking at the relationships between new and existing products.
This grid will also look at new and existing markets as well as the risk of each relationship. This matrix is designed to help with plans for growth through new or existing products and/or markets.
How to Develop a Product Expansion Strategy
For the health of your business, it's important to keep moving forward. Using the matrix can help you to build expansion strategies and keep your business healthy.
Introduce New Products
Expanding your product line is important for the growth of your business. This may seem straightforward, but you will want to plan your new product carefully before announcing it to consumers.
The planning phase may involve some research, which will help to determine the success of your potential product. You can find out what consumers what from your business and see what they are willing to pay to make the launch a success.
Market penetration is planned when the focus product is already in an existing market. When referring to the matrix above, this will fall into quadrant 1.
Consumers will be aware of the product but they don't seem to be buying or using it. There could be many reasons for this, but penetrating the market will boost sales and show how to use the product.
Examples of this can be paying for an ad campaign to raise awareness. Even filming videos on different ways to use the product can help with market penetration.
Increase Sales of Products Already on the Market
If expanding isn't in the cards for your business, try to boost the sales of products you already sell. The best way to go about this strategy is to focus on one consumer group and then market to them. This group should be the consumers that are most likely to buy from you.
Quadrant 2 of the matrix is the market development strategy. This is used when an existing product is new to the market.
If you decide to reach more consumers outside of your consumer base and try to enter a new market, this strategy is ideal. Keep in mind that your products may be well received by the new consumer base or it could flop. It's a chance you have to be willing to take.
You can reach new consumer groups by marketing towards them. This can be done via print or digital depending on who you would like to appeal to.
Learn from the Competition
One of the best ways to grow your company and to ensure it succeeds is to observe where other companies are failing. This will help you to plan strategies that will not repeat the mistakes of your competitors.
The best way to utilize this strategy is to look for ad and marketing campaigns that flopped. Also, look into their products and services and see what isn't selling.
The 3rd quadrant of the product market expansion grid is known as the product development strategy quadrant. This strategy works best when a product has yet to be introduced to the market.
You may use this strategy to help revamp old products to help them sell or even see where the old products are failing to create new products that don't have the same faults. If your old products are selling but you want to take a new approach to your inventory, then product development can help you achieve this goal and expand your company.
Invest In Your Workers
Investing in those that work for you is a great way to help grow your business. By investing in workers is a great way to expand human relations and customer service. This will also show your workers that you value their time and help to motivate them.
The diversification strategy is the final and 4th quadrant to the matrix. This is used when a business successfully enters a new market with new products or services.
The demands of this new market may differ from the old and current markets. This may complicate things due to having to create products to satisfy all markets. Diversification is good because it means your company is growing, but you will have to utilize other strategies such as market research and product development to cater to each market.
Go and Expand Your Business
We have given you an overview of what product expansion strategies are and examples of these strategies. With these examples, you now have the tools to grow your business by reaching new markets or even creating new products.