What is an extension strategy in business?

So you’ve put your product on the market, and it’s been selling well. What do you do when those sales start to slow down?

Do you let them fall, or do you act decisively to continue in its success? Well, that’s an extension strategy.

It’s a tactic you put into place to extend the product life cycle of something you sell. Without one, you’d start to see a decline in sales over time.

The life cycle of a product is how long you can sell it. You hope to see a spike in sales from your launch, but eventually, it levels off.

What is an extension strategy that you can use? This guide covers a few:

• Product differentiation
• Price reduction
• Rebranding
• Repositioning

Improving the life of your existing product can depend on what you sell. If what you offer can’t be bought anywhere else, the extension strategy highlights the reason.

Product differentiation means that you distinguish it from your competitors. If sales start to level off, it could be because other companies sell similar products.

To avoid that, you can use marketing to ensure customers of your USP (unique selling point).

When your product has a unique selling point, it means that there’s something about it that only you offer. For example, it could be a feature that it has or a material that it uses.

If you want to protect your unique selling point, you can guarantee no competitor can use it with a patent.

A patent means you file your specific design or function with the UK Patent Office. It means that you can take legal action against any competitors who copy your product. Still, it can take years and be expensive.

Another way to stay ahead of competitors and improve your sales is a price reduction. Higher initial prices may mean you take advantage of growth, but lowering them is a great way to extend the product’s life.

Reducing the product’s price could mean that existing customers will buy it more times. Additionally, lower pricing can entice customers away from competitors they already use.

Offer something similar to another business but are offering it cheaper. New customers will be more willing to try yours. 

To lower the price of your product without an immediate impact on your profits, you can cut your costs. The best way to do that is to have an overview and focus on which areas can you make more efficient.

Countingup is a current business account with built-in accounting software. It sorts your costs automatically with its expense categorisation feature, which means you can identify ways to cut them.

A reduction in your price may not necessarily mean fewer profits overall. Over time, it could mean that you have more sales, increasing them.

Even if you profit less per product, you can seek to move more of them to make up for it. In addition, customer loyalty can be beneficial to your business.

With a price reduction and the attraction of new customers, they can continue to buy from you over time. Their loyalty to your business will mean that they create a more reliable source of money for you.

Keep it fresh and exciting. Another extension strategy that you can use to continue to improve sales after they slow down is to rebrand your product or business.

A product rebrand can include changes to the packaging, for example. Over time customer tastes can change, and competitors might follow that.

That could mean that when customers view your product next to others on Amazon, for example, yours could be seen as outdated. 

It may depend on certain products over others. Older whisky may seem more valuable, but a technology product needs to be innovative.

Beyond the product, you can also decide to rebrand your business. In that sense, branding is the company’s identity you present to the public.

So a business rebrand can include changes to your:

• Name
• Logo
• Colours

While a rebrand may attract new people to your business and your product, as a result, it also can have a downside. 

As mentioned before, customer loyalty is essential to businesses. You can risk some of your current ones with a rebrand. 

They may no longer recognise the business or not welcome your changes. So it’s something to consider before you decide.

To improve your product’s life cycle, you can also reposition it. That can mean finding new markets that you haven’t tapped into before.

Your target market (or audience) is the groups of customers you aim to buy your product. You’ll often identify who those people are through market research.

The process to help you find new audiences will mean you have to carry out market research. That can include asking for responses to surveys or setting up interviews.

Another helpful method could be to test your product for other uses. If there’s one that you are yet to explore, you can find a new market for it.

A great example is Lucozade, which was originally for sick people. Eventually, it reached more success as a sports product. The brand didn’t need to change the product –– just reposition it.

An extension strategy is a great tactic if your sales start to level off, but you have to know when that happens.

Countingup, the business current account with built-in accounting software, is great for monitoring your finances. 

Through your phone, you can receive regular cash flow insights, so you know how much is coming into your business, as well as going out through costs.

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