Strategic Product Line Extensions Create More Value for Customers
Last week, Marka and the FEI tribe discussed best practices for A/B testing. This week, their focus is on the importance of developing strategic product line extensions that benefit current customers and prospects. Remember, fire = print.
FEI’s fourth-quarter torch sales figures had arrived: they were excellent. An excited Org ordered feta pizza for the entire FEI management team.
“I’m proud of the efforts we’ve made to help FEI stand out from the clutter and win more business,” Org said as he chomped down on a slice. “Now we can just coast from here on out.”
“Seriously?” asked Lucy, FEI’s product strategy and development guru.
“Hades, no!” Org cried.
“Good,” Lucy remarked. “To achieve sustainable, profitable growth, FEI must focus on intelligent product line extension. This means bringing new, improved and, most importantly, value-added products to our customers.”
“Define a product line extension,” Zoot said.
“Extending our product line simply means using our established brand to enter a new product into a category that we already occupy,” Lucy explained.
“Right now, our torches are available in green and blue,” Zoot noted. “So if we introduced a yellow torch, that would be a product line extension, right?”
Lucy hesitated. “Yes. But our product line extensions should be developed in response to real market need, not our whims. And each extension should create value for our customers that’s not offered by any existing FEI product.”
“Hastily entering new product lines without considering the value they offer is inefficient from a production and distribution standpoint,” Numo pointed out. “Each new product line we enter greatly increases the number of stock-keeping units (SKUs) in our inventory. As a company’s SKUs rise, its organizational, distribution and handling costs rise as well. Therefore, we should enter new product lines with caution and with confidence that this new product will be successful.”