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.”
“We can do that by ensuring that each product entry provides new and distinctive value to our customers,” Lucy replied. “For example, hurricane season often wreaks havoc on torches left on beaches, patios or front yards. A wind-proof torch that could stand tall in strong winds would be a valuable addition to our torch product line.”
“Some of our business clients have complained that our classic torches aren’t big enough to fully light their large offices,” Zoot related. “An extra-large, ‘superflame’ torch would allow these clients to work long after it got dark.”
“Now you’ve got it!” Lucy exclaimed.
“I know that product line extension isn’t the only strategy for expanding FEI’s product offerings,” Org said. “What if we identify a need for a new fire-related product that doesn’t fit closely with anything we currently offer?”
“Then we consider entering a new product category,” Lucy replied. “But that’s a discussion for next week.”
Today’s FIRE! Point
To achieve sustainable, profitable growth, printing businesses should focus on intelligent product line extension. This means bringing new, improved and, most importantly, value-added products to your customers.
Fire in Action
2K sports Discovers Simple Equation: Unique Product Experience Equals Sales Success
The video game company’s NBA 2K series offers an interactive gaming experience that includes online contests, exclusive clubs for top players and ultra-realistic graphics. This compelling product sold more than two million units in 2008, besting the stalwart “NBA Live” series and breaking its own sales record by 40 percent.
Next week: The FEI tribe discusses entering a new product category.