Entering New Product Categories Can Help Grow Your Business
Last week, Marka and the FEI tribe discussed the importance of developing strategic product line extensions that benefit your customers and prospects. This week, they discuss the why, when and how of entering a new product. Remember, fire = print.
Zoot was late for FEI’s morning marketing meeting. He strolled sheepishly into the conference room, a container of soup in his hand.
“Is that from Pompei Bakery?” Lucy asked.
“You bet,” Zoot said. “Sorry I’m late, but I just had to stop off. Pompeii’s Bakery is offering a new sundried tomato soup, and it’s selling out fast.”
“We’ll excuse your tardiness, Zoot,” Lucy said, “because you’ve inadvertently made a good point about product strategy that pertains to our discussion today. Pompeii’s used to only sell bread, until it discovered that consumers also wanted soup, salad and other food items. Similarly, FEI would also do well to enter new product categories based on what our customers and prospects desire.”
“Unlike product line extensions, a product entered into a new category contains features not available in any existing product we offer, right?” Zoot asked.
“That’s right,” Lucy replied. “And product line extensions and categories should both be entered according to perceived market need.”
“Our market research indicated that demand for matches greatly outstripped the available solutions, so we entered that product category,” Marka added. “Lo and behold, Lucy’s new matches are selling like grog-cakes.”
“But ample demand is not the sole condition for new product category entry,” Lucy pointed out. “With rare exceptions, we should only enter product categories that properly align with our core competencies.
“For example, before entering the matches category, we evaluated our production and distribution capabilities and determined that they would enable us to efficiently provide matches in great quantities at a competitive price point. Similar evaluations, undertaken before any new product category entry, will help ensure we don’t commit substantial resources into entering a new product category that we simply can’t compete in.”