There are many reasons to add new products-or line extensions-to your company's product mix. The main reason is simple: no company can survive on a single product.

You don't have to own a large business to benefit from this kind of expansion. Having multiple product lines may allow a growing business to diversify risk and capitalize on its established reputation. And the number of product items (or line extensions) in a product line can attract buyers with different preferences, and increase profitability thanks to market segmentation. For some businesses, If your business often suffers due to seasonal changes in sales, for example, your product sells better during warmer months, then adding new products can ease this burden. you can try to add products that are not seasonally bound or which can be sold during your off-season to even out seasonal sales patterns. Adding new products to your existing product line can also help you compete more broadly in your industry. There will always be competitors who can make that product cheaper, faster or better. Expanding the product line is one of the strongest ways to minimize this risk. In fact, line extensions may be the answer to building sales and moving your company in a whole new direction.

How can you expand your product line?

There are three main types of product line expansion: adding new versions of existing products; providing upgrades to existing products; adding new products to your portfolio.

You can add a new product to expand your business or merely to replace an older product or group that's in decline. Just be sure to take these four steps before moving forward: 

1. Research is key. 

As mentioned above, research is key when planning to expand your product catalogue as knowing what to add to your existing line of products can be tricky. Ineffective research can lead to poor choices and you could end up with products that are hard to sell and inventory you cannot get rid of. This can result in a very costly mistake. Remember, adding new products should be an improvement to your existing product line and complement or benefit what you currently have. So you need a thorough and deep research to determine the specific needs of your customers in each high-priority market segment and identify the product/service bundles that would be most attractive to them.

2. Position the product in the market segments

Create a unique value proposition for the proposed line extensions and decide how you'll position the product in the market segments you've identified. A budget product can get a premium product that is upgraded in terms of quality through the use of more expensive materials and thus will cost more. The addition of a premium product can lead to a whole new market, which could pave the way for even further expansion. If you are scared to take a giant leap and risk potential financial problems, you can start by making slight changes to your existing product lines, for example, you can add more colors or models to a line of refrigerators. There isn’t as much risk involved in making such little changes.

3. Determine the sales and distribution channels

A distribution channel is not where you put products on sale, but a chain of steps necessary for a product or service to reach its final consumer which will decide whether you can achieve the highest penetration of your target market segments.

It’s not a matter of whether one is better or worse than the other: it just depends on the company's goals and the type of audience and product.

A distribution channel strategy evaluates ways to improve the positioning of products to boost demand around them. Your main goal is to find the right customers and locations of demand, to speed up the process of connection between products and customers and make it profitable.

4. Get customer feedback

In all, you'll need to use market research and speak with customers and marketing partners or distributors and evaluate competitive products. This will help you to validate the present level of demand for the product and the best channels for the sales distribution, plus shape the product messaging. If you do your homework and proceed with an analytical eye, your line extension will increase sales, help you reach new markets and build market share overall for your growing business.

At last, allow me to clarify why you are suggested to extend your line but your brands. An established brand has a customer base who is already familiar with it. By choosing to offer additional offerings in the same category, you’ll give customers more opportunities to purchase your products as opposed to buying from one of your competitors. Let's use Smad as an example. The brand encompasses a number of product lines, including refrigerators, microwave ovens, freezers, dishwashers etc. Choose from its product mix and over time this will increase your customer’s brand loyalty and keep them coming back to try new products and continue purchasing their family’s favorites.