Choosing an extension strategy

The best extension strategy for a product is not the same in every case. You need to match it to the product itself, its target customers, the reason sales are falling, the likely cost and the expected effect on sales and profit. A strategy can look clever but still fail: customers may not notice it, may not like it, or the cost may be higher than any extra profit. No extension strategy guarantees success.

What shapes the choice

Start with why sales are falling. If customers are switching because a rival offers a useful feature, a price cut may only reduce profit per sale. If the product is still good but customers have stopped noticing it, advertising may fit better. The target customers matter too: a campaign or design aimed at the wrong group wastes money. Brand recognition and reach count as well — a product that few people have heard of needs a different approach from one that is already well known, and a strategy only works if it reaches the customers it aims at. Always compare the cost with the likely gain.

Making a recommendation

For a named product, compare at least two options and give an advantage and a disadvantage of each before you judge which is best. For example, PulsePop sells refillable water bottles to secondary school students. Sales are falling because rival bottles now have built-in straws. New packaging might make the bottles look fresher on the shelf, but new designs and printing could cost £3,000 and would not solve the feature problem. Adding a leak-proof straw lid would cost about £1.50 per bottle and directly answers the reason customers are leaving. It may raise unit costs, but the improved specification is more likely to protect sales and could support a slightly higher price. On balance, adding value is the better choice for PulsePop, although its success still depends on students liking the new lid and the business being able to produce it reliably.