This is more of a go-to-marketing issue rather than juts marketing per say. This issue
is mainly suffered not by startups but mainly those who probably has a product which
is selling and doing good and now thinking what is the next product I should do or
even those say who are in services successful in one area and want to enter another
or say those who are successful in services and now want to enter products. Basically
those who are successful in what they are doing and now want to enter another area
under the same brand name. This is one of hotly debated topics in the marketing
world which is the “line extension strategy” and “line extension trap”. In fact this is
the problem plaguing most big MNCs and enterprises (and even small and medium
sized companies looking for expansion) and that confusion is something our SMEs
should take advantage of (when dealing with the Big boys of the industry).
Most so called enterprises need to keep growing at a constant pace else they will be
looked down in the stock market and they have to keep looking out on expansion.
Here comes the trouble – where do you expand? There are many ways and I broadly
classify them into two as “the market line extension” and “the technology line
extension”. In technology line extension you base the technology as the common
factor, have multiple products which have similar technology base and then try to
serve probably different markets. Then there is market line extension where in you
extend to other products which are in line with your other products in the market
but may be very different in technology and implementation. In the former, easy for
engineers very tough for marketing and sales and in the latter, easy for market and
sales but very tough to engineering and also lot tougher time to market too. What
decision you take on this “line extension” many a times depends on the pedigree of
the decision maker (say CEO) and this is where the Line Extension can fall into “Line
extension Trap” and push the company spiraling down the hole. Most of the decision
makers from technology background take the former route where as those from the
business and marketing or even sales background take the latter approach.
My opinion after seeing many companies faltering is that, it is better to err on the
marketing side because that is closest to the customer and you don’t have to rebrand
or change the perception in the mind of the customer (what is called positioning)
when you do a natural line extension (in the minds of the customer) compared to
when you do a technological line extension where in your brand suddenly stands for
two totally different things and you lose ground in both places and I call this “Line
Extension trap” and I have seen many companies make the same mistake of taking
the technologically route rather than the Marketing route and you lose your existing
dominance as you are seen going away to the other markets and you get killed or
fiercely defended in the other markets because there is already a leader who will
defend his territory to the hilt. Ofcourse you will suffer in your own market because
the competitions (like SMEs who have laser focus) will start describing the big guy no
longer belongs to this market and solidify their position as the expert in that area. This
is where the SMEs need to keep a close eye on their big brother competitor and as
soon as they fall for this “line-extension-trap”, time to attack the market and make it
your own
There are lot more strategies and learning’s in this topic and I will keep them for
ensuing articles but in the meantime if you have any questions, concerns or if you
disagree with me, please do drop me an email to Manju.m@i7networks.in
