How to Know When to Expand your Product Line and Which Products to Offer


Product line expansion is a natural step in the growth process for many businesses. Unless you’re a small mom-and-pop sandwich shop offering the same meats, breads, and sides for years, you’ll likely decide to expand at some time.

But how do you know when to expand? And better yet, which products should you offer when you do expand?

The answer lies in the following points.

Market Research

Consistent research within your target market will tell you beforehand when product lines need expansion. This is called demand forecasting.

You likely already do a bit of demand forecasting, but intensive market research will take that to the next level. Good research, paired with your knowledge of your customer base and possible future demand of a product you don’t yet have, will help you decide when to expand and what to offer.

The trick is to improve your current demand forecasting, and there are a few ways to do that.

  • Use the right data: Your treasure trove of big data is useless unless you know how to segment it correctly. When looking through data to research spikes in demand for a certain product, or spikes in customer activity, or even spikes in search volume for related keywords, you have to narrow the amount of data through which you’re sifting. As Peter Daisyme wrote for Entrepreneur, “It’s important that you hone-in on the numbers that give you the information you need to make decisions.”
  • Look to the past: Back in 1988, William Barnett wrote a piece for the Harvard Business Review that’s still surprisingly relevant. In it, he gives the following example:

“In 1974, U.S. electric utilities made plans to double generating capacity by the mid-1980s based on forecasts of a 7% annual growth in demand.”

Back in ’74, utility companies saw the growth in demand for electricity, forecast it’d raise by 7% annually, and then adjusted accordingly. They didn’t offer a new product, but they did expand what they offered by offering more of it. Without taking the time to look back on empirical data, the forecast of 7% annual growth may not have been made.

  • Go with your gut: After you’ve been in business for an extended period of time, you’ll know your audience better than any analytics report can. Use this knowledge to inform your decisions about where you should go with your product line.


Two aspects of sales affect your ability to accurately know when to expand your product line – current sales data and your executive sales strategy.

Current sales data gives you the real-time insight to let you know if sales are growing, stagnating, or shrinking.

If your sales are stale or smaller, the first place you should look is your sales strategy. If the strategy doesn’t align with updated marketing strategies, adjust accordingly. If your sales strategy checks out, then it’s time to use this information to guide a new sales method.

In the case of your sales data showing stale or shrinking numbers and your strategy not affecting that decline, you know it’s time to expand your product line.

Product Development

Now that you’ve determined the need to expand, you have to figure out which products to offer. This is where product development comes into play.

A good example of expansion is Cariloha. The company started out offering island-leisure products like watches, purses, and sunglasses. Once they saw their sales not growing at the rate they wanted, however, they did appropriate market research and launched a line of T-shirts.

The shirts sold out in two weeks, and now Cariloha carries everything from bedding to undergarments. They haven’t strayed from their roots in island-leisure, though they’ve gone down different avenues within that niche.

Another company that’s been successful with expansion is Coke. For years, their only product was plain old Coca-Cola. Then, in 1963, the company introduced Tab to present consumers with a diet soda option. It wasn’t until 1982, though, that the company debuted another drink bearing the Coke logo – Diet Coke.

Now we have Coke Zero, Vanilla Coke, Cherry Coke, and what feels like dozens of variations on the popular soft drink. Coke hasn’t left the soft drink industry, but they appeal to more customers now thanks to slapping their logo on products that extend their line to new segments of existing markets.

What both Coke and Cariloha have in common with their product line expansion is their use of the right sales data, demand forecasting, and market research. This allowed them to see new product trends coming well in advance, develop niche-specific products that addressed those trends, and appealed to customer wants.

That’s where success in product line expansion lies – in knowing your customer so thoroughly you can predict future demands. It’s a tall task, but that level of knowledge is directly responsible for the success of every product line expansion for a modern business.

Boris Dzhingarov is a business writer who investigates issues to craft great stories that readers love.