Eventually, most organizations need to expand their product or service lines since a single product usually doesn’t cut it. While a successful core product establishes a brand, competitors will inevitably find a way to produce something similar. As more related and substitute products and services enter the market, it becomes more difficult for yours to stand out. Expanding core product and service lines is a way to get revenue and market share moving again. However in saturated markets, introducing new business lines can present growth challenges if your strategy runs off course.
Arming decision-makers with data from the correct sources will reveal where demand and potential are the greatest. Using the four methods below, you can still expand your business lines in adverse market conditions.
1. Analyze and Understand Market Needs
The development and launch of your core products or services didn’t happen without analyzing and understanding the market. More than likely, the development process began with gathering data from multiple sources, including surveys and focus groups. You identified unmet or underserved needs in defined population groups, designing products or services that filled those gaps.
Business line expansions in highly competitive markets often follow the same blueprint. For example, telehealth company Nurx successfully branched out from providing birth control prescriptions to broader health products and services. The company did this by listening to patients’ needs and understanding their behaviors.
Organizations that are already serving defined markets have the advantage of immediate access to first-party data. Satisfaction surveys, direct interactions, and purchase histories can identify behavioral trends and unmet needs.
Analyzing this information against current market share, competitor activity, and environmental forces can reveal the most viable expansion opportunities. An opportunity may be a service line with above-average performance that has room to move into the exceptional category.
2. Establish an Ongoing Connection
Individuals who have purchased or used your products and services in the past can be a source of future business. But this future business is not just limited to the products and services you offer now. By establishing ongoing communication with current and past clients, your brand will remain relevant.
Some companies effectively use reward programs or CRM data to continuously send targeted communications and create interaction opportunities. These often digital interactions help convert prior customers who may not be ready to buy something today. They might be ready tomorrow or sometime in the future. They may not necessarily in the same way they made purchases from you in the past, though.
For instance, Starbucks has expanded its product lines in the saturated specialty coffee market using targeted mobile app communications. Personalized opportunities for earning rewards are tied to classic, new, and seasonal products. Customers see ways to accumulate rewards through product lines sold in grocery stores and coffee house locations. Email and mobile apps are ways to stay in touch with customers, but you can also leverage events, PR, and interactive contests.
3. Make Improvements to Existing Products and Services
In saturated markets, new customer acquisition isn’t as straightforward as when there’s less competition. Your products and services often have to appeal to a unique selling proposition or niche to achieve growth. However, some companies have been able to expand using a combination of exceptional branding and constant improvements to existing products.
One example is Apple. The company maintains a higher market share in the U.S. and Japan for its mobile OS. Apple does this by promoting a sense of exclusivity around its brand in markets with higher disposable incomes. The company also makes constant improvements and upgrades to its products, capitalizing on consumers’ desire to have the latest technology.
Businesses that are first-to-market with product or service line improvements can encounter increased risks. Those risks are usually tied to higher development and marketing costs. Plus, there is the chance that actual adoption rates will fall short of projections. However, being a leader with improvements and advancements comes with advantages. Your products and services will be more likely to be perceived as being innovative and of higher quality.
4. Go Into Nearby, Underserved Markets
You may be able to expand your products and services into adjacent, underserved markets. If growth is tapping out in existing service areas, see whether there are locations where competition is less fierce. Regional wireless carriers are examples of organizations that tend to carry out this strategy well. These companies invest in building infrastructure in underserved markets, such as rural communities.
Instead of trying to match the service areas of major wireless carriers, regional providers partner with them. Major carriers end up relying on smaller providers’ networks to offer seamless coverage in rural areas. These are locations where it doesn’t make fiscal sense for large service providers to build. Regional carriers also rely on larger providers’ networks to offer subscribers national coverage.
But by focusing on and expanding into narrowly defined service areas, regional wireless carriers can capture more local market share. Some of this is accomplished through branding that emphasizes personalized, accessible service. Branded messaging reinforces that this service comes from employees who understand the community’s way of life. Service expansions also capture local market share by harnessing existing infrastructure and offering bundled packages.
Growing your company’s business lines in markets where there’s a lot of competition is similar to navigating an obstacle course. Just when you think you’ve overcome one potential hurdle, there are five more lined up to challenge your tenacity.
Despite demanding market forces, expansion is possible when you align current insights and resources with effective strategies. By working around existing barriers, you can choose the battles you’re most likely to win.