Line extensions: Assets or liabilities?
Sept. 26, 2012
This appears to be a dumb question. Of course line extensions are intended to be an asset — not a liability. In the quest to increase sales, market share and to satisfy consumer demand for that “something new and different” a line extension should be created to complement an existing line.
But there’s another potentially huge problem that line extensions can present in addition to possibly cannibalizing sales—they can harm the reputation of an existing, successful line if the new products are not as good as or better than products already in the line.
In recent years, there has been much line-extension activity in a wide variety of food categories ranging from candy bars to cereal. In recently trying line extensions of some traditional products both at retail and on foodservice menus, I’ve been greatly disappointed more than once. Advertising/marketing programs enticed me to try the new offerings, but some of the products didn’t meet my expectations in some way or fashion.
If the advertising, label or menu declares something to be spicy, such as a jalapeño burger or spicy chili, and the product doesn’t have a kick — I won’t buy it again. Or if a new pepper bacon has little to no pepper, that’s a major disappointment. Or how about buying a barbecue beef sandwich only to find the beef devoid of barbecue sauce?
One of the first questions I ask the vice president of operations or plant manager when visiting plants is how many SKUs the facility produces. Many times they jokingly answer “too many,” but some of them were dead serious. In recent years, plant executives at a number of companies I visited said they make a special effort to control their SKU numbers, which often results in reducing their product line-up.
Unless a company is purposely attempting to diversify its product offerings, it needs to take care not to stray too far away from the products that made it successful. When asked if it’s possible to extend products too far, Mintel’s new product guru Lynn Dornblaser replied, “You bet. [Some companies] are getting too far away from what they are supposed to be all about.”
If not being done already, review your product line-up on at least an annual basis and trim those offerings no longer in demand. Most important, take great care to ensure your new line extension benefits the great reputation your existing line has already earned with consumers — and make sure you deliver what is promised in advertising/marketing programs. For many consumers, the first impression they get when trying a new line extension is a lasting one — and will mean the difference between them remaining loyal fans of your products or result in them taking another look at competing brands.