Discuss whether having a large product portfolio is an advantage for a car manufacturer

How does the Boston Matrix work? The four categories can be described as follows:

Table of Contents Show

The benefits of expanding your product range
Improving customer loyalty
Increasing Average Order Values (AOV)
Increasing profit margins with long-tail products
Reducing costs by dropshipping digital products
Increasing your customer base
What’s holding you back?
Manual product updates
Infrastructure support
SEO content demand
Managing multiple sales channels
How does PIM help with product line expansion strategies?
Growing revenues with new products on marketplaces

Stars are high growth products competing in markets where they are strong compared with the competition. Often Stars need heavy investment to sustain growth. Eventually growth will slow and, assuming they keep their market share, Stars will become Cash Cows

Cash cows are low-growth products with a high market share. These are mature, successful products with relatively little need for investment. They need to be managed for continued profit - so that they continue to generate the strong cash flows that the company needs for its Stars

Question marks are products with low market share operating in high growth markets. This suggests that they have potential, but may need substantial investment to grow market share at the expense of larger competitors. Management have to think hard about "Question Marks" - which ones should they invest in? Which ones should they allow to fail or shrink?

Unsurprisingly, the term "dogs" refers to products that have a low market share in unattractive, low-growth markets. Dogs may generate enough cash to break-even, but they are rarely, if ever, worth investing in. Dogs are usually sold or closed.

Ideally a business would prefer products in all categories (apart from Dogs!) to give it a balanced portfolio of products.

Large brands are well-known for adding new products to their portfolios. The Coca-Cola Company started with one product and expanded its line to more than 500 brands worldwide, including Sprite, Fanta and Dasani. There are many reasons to expand a product line, most notably to grow your revenues and market share.

There are several types of product line expansion:

Adding new versions of existing products, such as when Coca Cola introduced Diet Coke and Cherry Coke
Providing upgrades to existing products, which is what Apple does with each new version of the iPhone
Adding new products to your portfolio. This could be as simple as adding red shirts to your current line of green shirts, or you could follow Apple’s example and sell accessories for the main product – in Apple’s case, a range of adapters, chargers and software applications for the iPhone

According to customer experience optimization company AB Tasty, the reason for product expansion is simple: No company can survive on a single product. There will always be competitors who can make that product cheaper, faster or better. Expanding the product line is one of the strongest ways to minimize this risk.

The more products you have, the greater your chances of reaching a wider audience and purchasing market. Market expansion can help you get a firmer hold of your current market and open your business to a new audience.

For example, suppose you sell a line of swimwear on your e-commerce store. You have loyal customers who return to your store each summer, but they only buy one or two swimsuits a year. By expanding your offer with a line of summer clothing, sunglasses and sun hats, you not only sell more to your current customers, but you also attract new customers who want to buy summer clothes.

Unless you are selling products with a short shelf life, such as food, then at some point, your loyal customers are going to have enough of your product. Expanding your product line gives them fresh opportunities to engage with your brand.

This works on two levels. Selling more products obviously increases your revenue. More significantly, adding a new product line also decreases your overall costs because it’s much cheaper to retain existing customers than acquire new ones. Expanding your product line specifically for your current customers means you can survey them and develop precisely the kind of products your customers want to buy, so you have a ready-made market.

Virtually all products have a life cycle comprising four phases: launch, growth, maturity and decline. The launch and growth phases are represented by a surge of sales, but eventually, the product wears out. This happens for all sorts of reasons – changing trends, competition and obsolescence. No product is immune from market death.

Expanding your product lines means you can maintain traction in the marketplace. As one product reaches the end of its life cycle, another one is at the beginning with massive growth potential, so your business never becomes obsolete.

Expanding your product line means your business is seen by a much larger audience, or it is seen by existing customers in a different way. The value of this should not be underestimated, reports Forbes. Including more and better quality products as part of your product-development strategy should make your company more visible and more credible as a reputable brand. As you build your credibility, you also build brand recognition and loyalty. It’s a snowball effect that leads to repeat purchases and rave reviews across the entire product line.

The benefits of expanding your product range are vast and you can massively expand total market demand.

Expanding your product range can be done in a variety of ways. For instance, you could add more colors, more sizes, and more styles to your current range. If you’re selling across multiple geographies, you may also want to tailor your product offering depending on the country.

It’s also an easy way of maximizing the potential of your existing audience and capturing the attention of new customers.

Convenience and ease are dominating the shopping behavior of modern customers. So, product mix expansion means you can provide customers with the most and best options, increasing the chance of satisfying these demands.

In this blog, we’re going to talk about:

The benefits of expanding your product range
What’s holding you back?
How does PIM help with product line expansion strategies?

The benefits of expanding your product range

Firstly, let’s look at a few reasons why top online customers are adding new products to their offerings. Here’s a handy video that demonstrates how easy it is to expand your product range with PIM:

Improving customer loyalty

Developing loyal customers is a key strategy for sales growth as it’s usually more cost-effective than new customer acquisition.

Product line expansion means you can give your customers more options. If they can find everything they need on your sales channels, they won’t have to go to your competitor’s sites.
It also comes back to convenience and ease. Customers appreciate having everything in one place, so you’ll be improving the overall customer experience. Cater to these demands to sell more products, ensure repeat business and build stronger, long-lasting relationships with your existing customers.

Increasing Average Order Values (AOV)

Higher AOV (Average Order Value) is a common KPI in the world of eCommerce. When a customer is browsing your products, you want to maximize the value of that visit. Looking to increase your AOV is a cheap and easy way of doing that
Product bundles and kits are key here. You can display relevant and associated products to the one your customer is looking at by creating product relationships. The more products you have on offer, the more scope you have to create kits and bundles.
By creating more kits and bundles, you increase the range of products that are already selling well. Providing this extra layer of choice to your customers will likely encourage them to add more to their baskets. You can take an informative approach when displaying product relationships. Consider your wording to make sure they feel like they’re being advised of the other complementary products on offer.

Increasing profit margins with long-tail products

With the gaining popularity of processes like dropshipping, it’s becoming easier to make the most of long tailing. This is where you sell a low volume of hard-to-find products and realize larger profit margins.

Including these niche products in your catalog will give you a competitive edge and will strengthen your online positioning. Your customers will appreciate being able to find products that are hard to come by. In offering these niche products, you can position yourself as a cut above the rest. You’ll likely see improved customer loyalty, not to mention increased sales.

Long tailing is a great opportunity to make huge financial gains, especially if you go down the route of drop shipping. It means you can increase your sales by creating upselling opportunities for the minimum amount of investment.

Reducing costs by dropshipping digital products

Dropshipping takes away many of the risks and challenges of conventional eCommerce and distribution. You’ve invested in your brand and have a growing and loyal customer base. Amplify the experience you offer your customers and maximize your revenues by dropshipping from your trusted supply chain.

Dropshipping allows you to sell your suppliers’ products and they ship them directly to your customers. This means it doesn’t go through your warehouse, which creates huge savings in terms of expensive real estate and logistics costs. You choose which of your suppliers’ products to list on your sales channels. You can then enhance the assets to suit your brand style and tone of voice with your PIM.

When a customer orders the product online, only then will it be added to your ERP via your PIM. This means your integrated systems won’t be encumbered until necessary.

Increasing your customer base

Expanding your product line means you can widen your target audience and open up your customer base. This is where you might want to consider selling multiple variants of a particular product with varied price ranges. This eliminates the risk of losing customers through pricing decisions.

In doing this, you can target a variety of demographics and cater to the unique needs of your customers. Offering products that cover a range of price points will extend your brand reach and provide a more inclusive shopping experience.

Maximize upselling opportunities by easily offering high-quality products. Retailers who create plus size or budget ranges, for example, are also catering to a larger target customer.

A great example of this is our customer Gill Marine. Fishing is extremely popular in the US, and Gill Marine was keen to tap into this opportunity. With Pimberly, it was able to build a dedicated eCommerce site in-house which saved the company huge amounts of money. Within a month of starting the project, Gill Fishing was processing its first order!

What’s holding you back?

When you look at the benefits of expanding your product range, it’s clear why businesses are making this a priority. But there are advantages and disadvantages of product mix expansion. Expanding your product range means taking on and managing a huge amount of extra product data. This alone creates problems if you don’t have streamlined and efficient data management processes.

Let’s take a further look at some of the challenges…

Manual product updates

Expanding your product range will mean you’ll have more product data to deal with. There’ll be a huge surge in manual processing if the product data management process isn’t streamlined. If this is the case, extending your offering might not be realistic unless you increase your headcount.

If just a couple of attributes across a large product range need updating, this “simple” task can take up valuable time. This eats up valuable resources and will slow your time to market. If increasing your product range means slowing down your time to market, product expansion might not be a viable option.

Infrastructure support

Expanding your product range requires more reliance on the processes you have in place to manage the increase in product types. From importing and creating the product descriptions to optimizing, and publishing everything across your sales channels. If this process is disjointed and clunky to manage, it might not be possible to accommodate an increase in product offerings.
If product data is managed in disparate systems, like spreadsheets, your ERP, or eCommerce platforms, it can be hard to collate. These systems can’t manage the complexity and volume of information customers want in the current eCommerce climate.

As a result, product data may be inconsistent, inaccurate, or incomplete. This will lead to it being unresponsive to market and customer demands. In order to cope, a platform must be rapidly scalable and enable you to grow and expand. Having flexibility when expanding your product range into new sectors is crucial.

The larger your product range, the bigger demand there is for creating optimized product content. If you’re branching out to a completely new sector, this can be even more demanding on existing SEO teams.

Keeping on top of optimization for relevant keywords means working closely with your product data. This can be increasingly difficult if you don’t have efficient product information management processes. This also goes hand-in-hand with site searchability. It’s vital to have structured and enriched data with the right attributes to ensure your customers can find your products.
There’s no point expanding your product range if customers can’t find all your lovely new products!

Managing multiple sales channels

Different sales channels will have different requirements in terms of product data and digital assets. Because of this, you’ll need to tailor your product data for each sales channel to ensure you meet the specific requirements.

Your marketing description for your main eCommerce site may be different from your other sales channels, for example – your Amazon listing. It can often be a challenge to keep on top of these different requirements for your existing product range. Before expanding your product range, make sure you have a process in place that will accommodate these data variants.

How does PIM help with product line expansion strategies?

A Product Information Management (PIM) platform is a central hub where you can store all product data and digital assets. It provides a single source of truth for all your products, across all departments. Managing products within a PIM ensures consistent, enriched, and accurate product information is distributed across all sales channels.

We’ve had a look at the problems businesses usually face when expanding their product range. Most of them come down to a slow, inefficient way of managing large and increasing volumes of products. And this is exactly where a PIM comes in.

You can reduce manual processes around product data management by up to 80%, saving you huge amounts of time. Because much of the product data management process is automated, you can get your products to market in a flash.

PIM makes handling large volumes of product data easy. It also provides the framework for teams to take back control of their products. By creating workflows around data enrichment and publication, there is clear communication between teams. There’s visibility throughout every stage of onboarding, enrichment, and publication so you’ll never launch a product with missing information.

You can control your products through customizable taxonomies and schemas, personalized for each specific route to market. This means you have strong foundations to expand your current product offerings across multiple channels.

Growing revenues with new products on marketplaces

When you’ve got lots of lovely new products, you want to make sure you can sell as many as possible to as many customers as possible. A great way of doing that is to sell them on marketplaces.

One of the advantages of businesses selling online is being able to get products in front of customers any time, anywhere. 67% of global online sales took place on marketplaces in 2021. Clearly, this represents a great opportunity for any business selling goods online to tap into an ever-growing sales funnel.

That said, you need to ensure you meet the specific requirements of each marketplace to ensure your products are surfaced in searches. With a powerful PIM like Pimberly, you can store multiple variations of product descriptions and digital assets.

Scoping capabilities enable you to determine what data is then published to your different sales channels. As such, you can achieve maximum exposure all whilst giving customers the best possible product experience

Ultimately, PIM software is a vital component in maximizing your success and enabling you to remain agile and scale your eCommerce operations.

*We always want to make sure we deliver the highest quality content, which is why we updated this blog in March 2022. This blog was originally published in June 2019.