Sales and Marketing Advice for Florida business
Keep it fresh: Add products or services like a Hollywood sequel
Hollywood has been rolling out movies like crazy. Sequels -- and even sequels to sequels -- juice up box-office receipts. Film industry executives produce these follow-on acts because of one simple reason -- these movies make money and create billion dollar franchises.
It really doesn’t matter if one movie in the series doesn’t do so well as the others. The odds are extremely favorable that even the worst preforming movie sequel will turn a profit. More importantly, movie industry big shots know that the aggregate revenue of all the films from theater showings, product tie-ins, and DVD sales provide studios tidy profits.
It’s as close to a sure bet as you can get. Maybe you should produce a sequel or two as well. Or, maybe not!
Adding products or services that are worthy additions to your existing lineup is something every business needs to consider. Just like Hollywood, it can be a great way to upsell to current customers and reach new markets too.
In many cases product line extensions will pull in less revenue than the original offering. That’s not necessarily a bad thing if the sequel significantly complements the original and represents incremental revenue.
For instance, a movie that was a crowd-pleaser two years ago will undoubtedly have a built-in audience for a next installment. It’s the same for businesses, except the results are not always as positive.
Usually, the new film is at least minimally profitable. But, you’re not a Hollywood mogul. A company that adds to an existing offering has the odds stacked against it. Yet, when it’s thought through and done for the right reasons it will bring value and revenue to your company.
Here’s an example. Stonyfield Farm produces multiple varieties of yogurt that have slightly different packaging, all with the company’s logo prominently displayed in large letters. Recently they introduced yet another type of yogurt, however this time you can hardly find their logo or name.
Why? Stonyfield Farm is struggling to get a solid foothold in the Greek yogurt segment of the market, but they do very well in the organic yogurt market. So, they’ve decided to launch a new product that has little connection to existing lines or the parent brand. The packaging conveys a totally different message to attract people that find Greek yogurt too thick or bitter.
Branching out may generate new revenue or hurt your brand. So, how do you know when it makes sense to introduce a new product extension and ensure success when you do?
Your branding strategy is key. When companies introduce new product variants or improvements, they either leverage the brand equity of their business or the brand equity of a particular existing product or service. Some try to both and that can confuse the market and dilute the equity of the identity you’ve gone to great lengths to develop and promote. And, there’s always the danger of eating into the sales of an existing offering. The challenge is to decide if you should create and maintain identities for each product or service and their extensions. And if so, should they stay connected to the company’s brand. There is no right or wrong here. It just depends on what you want to accomplish.
Line extensions approaches. You can extend a product or service to attract new buyers in a different but related market segment that has distinctive requirements. Or, to begin replacement of an older offering that's in decline. Perhaps you see it as a way to out-flank your competition by venturing into a related category that will refresh your company’s brand and broaden your appeal. Whatever your reason, the earlier you build the market’s mindset into your thinking, the more success you’ll have.
Sequel-ize your products and services. As you plan new offerings, develop your road map with multiple versions of what your market wants. When you do this up front it prevents you from trying to create an impossible “perfect” product and biting off more than your time and resources allow. Plus, it gives your business a way to preplan the rollout of the next compelling edition of the original offering that adds value for your customers. That way you’re not scrambling to catch up with the market -- and your competitors will never know what hit them!
You can’t fake an innovation. There are only three reasons to introduce a sequel -- it significantly complements and enhances the original, and is not a substitute; it’s a true improvement to the original and provides a market need; it serves a new market and offers compelling value. Getting something new out the door with these criteria being met will only make your company feel good, not prospective customers.
Product or service sequels can be a wise investment or a big flop.
Many things impact the success of line extensions. Gauge the market by speaking with customers and channel partners. Understand what your competitors are doing and how they’re positioning themselves. Carefully weigh the current level of demand for your offering and where it’s headed.
If you proceed with optimistic caution, your line extension will increase sales and help you reach new markets.
Ron Stein is President of FastPath Marketing (www.marketing-strategies-guide.com) and the author of the Rapid Impact Marketing & Selling Playbook. As a speaker, coach, and consultant he works with small business owners helping them to accelerate the path between their vision and the actions needed to reach, win, and keep customers. Ron is the creator of the FastPath to More Customers Now! 7-step marketing system based on more than twenty years as a successful business owner, corporate CEO, business development executive, and salesman. He is also a mentor at two nationally recognized business accelerators. Ron offers one-on-one and small group mentoring, conducts seminars, and consults. He can be reached at 727-398-1855 or Ron@FastPathMarketing.com.