Boosting your brand sales with line extensions is a time tested, successful strategy. And it is a relatively low risk approach if you do your proper due diligence. Here are some thoughts on how to grow your brand offerings to increase revenues, satisfy your heaviest users, expand your shelf presence and visibility, and keep your brand interesting.
Let’s begin with a definition of a line extension
A line extension is a new variant of your existing brand. A new flavor, color, size, ingredient(s), formulation, shape, or form. The new item(s) tend to be close “cousins” of the current line-up, so they are easier to develop, manufacture, and sell compared to a totally new product. Line extensions work particularly well for food, beverage, beauty care, fashion, and technology markets.
The introduction of new features in technology markets drives the need for a constant flow of line extensions or product enhancements. Think of the annual release of new mobile phones where the leading brands always try to outmaneuver competitors with new cameras, longer battery life, better screen resolution, and thinner devices. The prior products then command a lower price but remain in the line as a value offering.
In the food and beverage markets, changing consumer trends often stimulates the addition of line extensions. Think of things like gluten-free, or non-GMO, or organic, or the like. New flavors that tap into consumer preferences for variety, particularly in frequent use categories like yogurt, cereal, soft drinks, and snacks help keep your brand vital.
Tips for success
First, check in with your consumers to validate that the new line extension does what needs to be done. A targeted survey is a useful tool to get feedback.
Is it the right new flavor among a group of possibilities?
Will it attract a new group of consumers, and thus generate more incremental sales?
Or will it simply be a replacement for an existing flavor that may be declining in sales? Even if it sells at a higher rate, the new line extension will boost revenues.
Does it add an important new benefit or feature, which can provide some competitive advantage, attract new users, or enhance consumer satisfaction?
Or are you responding to a new offering from a competing brand so that you can keep pace? Variety, as they say, is the spice of life!
Second, do an internal review of your entire business to be sure that you have the resources and capacity to launch your line extension(s).
Do you have the funds available to get distribution, generate trial and repeat purchases, and keep momentum going?
If the line extension takes off, do you have the operations capacity to keep up with demand? Out-of-stock conditions or incomplete shipments can derail a new line extension’s success.
Is the profit margin of your brand higher than those of other brands in your company’s portfolio? If so, growing the business with a line extension may improve the entire bottom line.
Line extension vs. Brand extension
Unlike a line extension where you are in familiar territory, a brand extension is riskier. In that case, you are taking your existing brand and entering a new market segment to leverage the brand equity and reputation to drive incremental growth. If the brand extension is into an adjacent market, the risk is lower—particularly if the consumers of your existing brand already buy products in that category. But a brand extension must make sense for all stakeholders to improve the odds of success.
Is it a logical and thus expected move, or are you reaching for a bridge too far?
Does your consumer research support the proposed brand extension with strong purchase intent and preference versus competitive offerings?
A brand extension tends to follow if you have a “branded house” go-to market strategy, which differs from a “house of brands” approach. Good examples of a branded house include Kraft, Coke, Google, or Microsoft. Examples of a house of brands include Frito Lay, Proctor & Gamble, and Unilever. Both are successful business models. If you are a mid-sized player, a line extension strategy may be the way to go.
Want some help with those important decisions about line extensions?
At Damen Jackson, we have been there and done that. We thrive on helping clients get the biggest bang for their buck while staying keenly focused on being smart and nimble. We are here to be your partner, your conscience, your devil’s advocate—an extension of your team. And we will always bring the conversation back to strategy. How do we maximize the market opportunity for your brand, your business?
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