Thursday, September 21, 2023

3 common mistakes companies make when expanding their product offerings

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Shreya Christina
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By Akshar Bonu, Co-Founder and CEO of The custom movea marketplace for custom sneakers, clothing and more from independent artists.

So you’ve taken the first (and often most difficult) step: you’ve built a product that will make a group of people extremely happy. But now you are thinking about launching a new product offering to grow your business further. It’s a tough challenge, though, because your new offering may get a lukewarm response from existing users. Worse, they can frustrate your existing users to the point of abandoning your product altogether.

With this in mind, it’s important to be thoughtful when coming up with new product offerings and determining their positioning. After all, it would be a shame to undo all the hard work that went into building your current business. To help you out, here are three common mistakes to be aware of that companies make when expanding their product offerings.

They do not solve the problems of their existing users.

Ideally, new product offerings will complement existing offerings and increase the value of your product to your current customers. If they don’t, it’s almost like building a new business from scratch without the benefit of your hard-earned user base. To know whether a proposed offer does indeed solve the problems of current customers, you need to have a good understanding of your users. Which of their pain points is currently not being met by the existing product offering? What is their intent when they use your products?

For example, imagine you have an ecommerce site that sells keto protein bars. An obvious new product offering that probably won’t work is fried potato chips, as existing users are likely to be health conscious. But even health-focused products aren’t a guaranteed slam dunk. Imagine launching a line of fitness equipment: While this would appeal to health-conscious consumers, how many of your existing users actually need fitness equipment? Without talking to your users and understanding their pain points, this new product offering could very well fail. The pain point you know for sure is that existing users are looking for healthy keto food products and launching new product offerings in that vein is likely to yield the best results.

They confuse the value proposition of their current product.

Another mistake companies make when launching new products is confusing the value proposition of their current product with current users. While the new offering may not be directly at odds with the current value proposition, it could still be harmful because it appears to be unrelated to existing consumers. While it may not be obvious at first why an unrelated offering can be negative, it has the insidious effect of diluting what made the product special, making the product less resonating with existing customers.

Take, for example, a marketplace that sells exclusively handmade goods. It’s true that you can find handmade goods on other e-commerce sites and marketplaces, but by imposing the restriction that the market only allows the sale of handmade goods, you create mindshare in a consumer’s head as the place for handmade goods. . By opening a new category, such as the resale of second-hand goods, you can invariably get rid of this powerful brand that you have developed. While you could say that resale of second-hand goods supports sustainability in the same way that handmade goods do and is compatible with the handmade ethos, your customers may disagree and feel that your market has lost its handmade magic.

They de-prioritize what works.

Launching a new product range requires a lot of effort. Not only does it take quite some time to develop a new offering, but it will take even more time to iterate on the offering until it works properly. That, of course, assumes the new offering has legs to begin with. All in all, launching a new product offering can come with a high cost of human capital and money. All the while you have an existing product that works and needs to be supported and improved.

This loss of focus and wasting resources can be deadly for a company with limited bandwidth to start with. As such, it is paramount that companies make judicious decisions about whether they have the resources to successfully launch a new product offering without neglecting their existing business. One way to mitigate this risk is to break down the new product offering into smaller tests and experiments. For example, start with a waiting list to validate demand, rather than launching a brand new line of protein bars. Then release it in small batches to get feedback and iterate before scaling up the supply chain. This allows a new offering to be launched in a minimally feasible way without running the risk of lowering the priority of what is already working.

Almost all major companies have expanded their product offerings, so it’s no surprise that almost all business owners are thinking about it. However, this drive carries real risks that could lead to a waste of resources or, worse, irreversible damage to a successfully existing product. So it’s no surprise that business owners need to be careful when launching new product offerings. By considering the three common mistakes described here, you can learn from the mistakes of those before you.

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