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

Product line expansion is a natural step in the growth process for many businesses. Unless it’s a small mom-and-pop sandwich shop offering the same meats, breads, and sides for years, expansion is on the cards.

But how to know when to expand? And better yet, which products to offer when expanding?

The answer lies in the following points.

Market Research

Consistent research within the target market shows when product lines need expansion. This is called demand forecasting.

The business may already do some demand forecasting, but intensive market research takes that to the next level. Good research, paired with knowledge of the customer base and possible future demand of a new product, will help decide when to expand and what to offer.

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

  • Use the right data: The treasure trove of big data is useless unless it is segmented 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, narrow the amount of data that needs 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 being in business for an extended period of time, owners know their audience better than any analytics report can. Use this knowledge to inform decisions about where to go with the product line.


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

Current sales data gives the real-time insight toknow if sales are growing, stagnating, or shrinking.

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

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

Product Development

Now the need to expand has been determined, figure out which products to offer. This is where product development comes into play.

A 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 Coke and other smart companies 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 customers so thoroughly future demands are predictable. 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.