Are you planning to introduce a new product or service to your customers to give you a competitive advantage? Then, there are some factors that you should consider so your new venture won’t fail.
Check out the nine factors to ponder before offering a new product or service.
1. Is It for The Right Reasons?
Consider if you want to expand for the right reasons. Your competitor may offer something new, and you want to match that.
But if you rush your expansion due to pressure and without a proper plan, it may cause your company to fail.
This BlackCurve podcast explains that some products may be too complex to create an exact match. For example, there are numerous variables to consider when matching a clothing product, including the material, style, size, and color.
So, plan carefully if it will be beneficial for your business and for your customers as well.
2. Does It Match Your SWOT Analysis?
A SWOT analysis will determine several elements of your business.
You’ll know if your business can carry out your proposed expansion by determining its strengths and weaknesses. For example, if one of your business’ weaknesses is a lack of sales of a particular product type, you shouldn’t expand that product area.
3. Are You Solving a Problem with Your Diversification Strategy?
Customers will purchase a product or service if it solves their pain points.
If it cannot solve a problem, you might have difficulty finding a market for it. So, think about this carefully and ask your customer base.
For example, if existing products can’t address a particular pain point, create a new product line that focuses on it.
4. Does It Complement Your Business?
Try to find other pain points that your clients have. If a specific pain point relates to what your business offers, then your previous and current clients may find value in it.
According to research from the Content Marketing Insititute, 62% want marketing content from businesses to focus on their pain points.
Of course, loyal customers will prefer to work with you rather than find someone new. Because of this, you also won’t have to stress yourself finding new clients or customers.
5. Does It Increase Your Sales? 💸
When we mention increasing your sales, we don’t mean a year of increased profits is enough. Before offering something new, you must ensure that your sales have stability and growth for a few years. Growing your business over time is one of the best ways to ensure success.
In this way, you can save money to pay for the additional expenses and ensure that the one-year sales increase isn’t an anomaly.
6. Can a Partnership or Merger Be Helpful? 🤝
Sometimes, you can partner up with another company or merge with them. You can help them with something they are not good at, and they can also help your business.
Their products and services can complement what you’re already offering. Therefore, you and your partner can have new clients and grow together.
Here are some other benefits that partnering with another company can bring to your business.
7. Does Market Research Support Product Diversification?
We mentioned pain points before because it’s a better idea than asking customers what they want.
It’s similar to asking someone what they want for Christmas. It’s unlikely that someone will ask for the same thing twice.
Therefore, when you want to check what people want from a new product, focus on what they are missing from current products instead of what they want as a new one.
8. Do You Need More Resources to Diversify Your Product Line? 🧑🤝🧑
Rolling out a new product or service line isn’t as simple as you think. You need to commit several resources to a new product line. Because of this, it’s essential to check if the business is capable of widespread expansion.
Here are some critical resources you may need before expanding your product offering.
- Extra staff to manage the creation and production of new products. You may also need marketers and salespeople to make the new product launch successful.
- New technology to develop the product line. You may also need upgraded inventory management software because of the massive inventory increase that a new product line will cause.
- More financial resources for producing and marketing the new products. You also need significant capital to research and develop a new product.
- You may need more human and financial resources for customer support if the new product line will bring in more customers.
Ensure you calculate the cost of all the extra resources required for a new product line. The total resource cost mustn’t exceed your projections for product sales.
9. Will There Be Risks When You Diversify Products?
There are multiple risks to consider when you launch new products.
One of the main risks is your consumer base not accepting a change in the product line. Therefore, you need to allocate a sufficient amount to the marketing budget to link the new products to the customers’ needs.
You also need to be wary of the effect of new lines on your current products. For example, you shouldn’t introduce the new product as a complete overhaul because you may cannibalize existing product sales.
Instead, the new line should include a more expensive product with more features or a cheaper and more affordable line.
Also, research and development of the product line must align with your brand identity. If it isn’t, it will dilute your brand, making it less impactful and memorable.
Finally, you mustn’t risk neglecting your current products by allocating too many resources to new lines. If you don’t keep innovating with existing products, they will become stale, and sales will decrease.
Final Thoughts On Considerations Before Product Diversification
Releasing something new doesn’t guarantee that it will be a success.
That’s why you must take note of the factors mentioned so you won’t set yourself up for failure. Planning carefully will help you achieve your goals and ensure consistent success for the future.
Did you find our considerations regarding market diversification helpful? If so, we have many more tips on creating a marketing strategy on our blog on Tommy!
- 1. Is It for The Right Reasons?
- 2. Does It Match Your SWOT Analysis?
- 3. Are You Solving a Problem with Your Diversification Strategy?
- 4. Does It Complement Your Business?
- 5. Does It Increase Your Sales?
- 6. Can a Partnership or Merger Be Helpful?
- 7. Does Market Research Support Product Diversification?
- 8. Do You Need More Resources to Diversify Your Product Line?
- 9. Will There Be Risks When You Diversify Products?
- Final Thoughts On Considerations Before Product Diversification
USA 
AU 
UK 
ES 
FR 
BR 
TH 
IN