With a business idea in mind, an entrepreneur begins to develop their product range or portfolio. A product portfolio generates higher turnover and revenue.
Instead of narrowly focusing on a few key products or services, one should keep a broad focus and develop the total product range. With more products on the shelves, a range of products attracts new customers and increases sales to current customers.
There are four categories of products that can be offered to customers:
1) Introductory products
A sample, a free trial period, a consultation, or a basic software package with limited functionality gives the customer a taste of what the company offers. Introductory products are smaller versions of a core product and appeal to first time customers.
Price is what signals the value to the customer. The first sale initiates the relationship between the customer and company. After the first sale, it is easier to extend the sale or sell more products in the future. It is better to sell introductory products rather than give them away.
2) Core products
Core products refer to the assortment of product and service variations. The entrepreneur must decide if one-size-fits-all or if the products should be tailored to specific target groups. Products may vary in terms of color, size, or material. Services may vary in duration, level of quality, or extent of project scope.
It is essential to determine the amount of customization and pricing. Different products have different price points. When crafting the core product, focus on the customer’s needs and wants.
3) Add-on products
Add-on products supplement the basic product or service to improve the overall quality or functionality. Add-ons are one way to meet the special needs of specific target groups.
Good salesmanship means always having additional products on the shelf to sell to a satisfied customer to generate more revenue. A part of the core product could be removed and sold as an add-on. Not only does it generate more revenue, but it also makes the product cheaper and potentially appealing to other target groups. Alternatively, new product offerings can serve as add-ons.
4) Flagship products
Flagship products, also known as high-end products, are the most luxurious or advanced products. A package solution is appropriate when customers are interested in the introductory product, the core product, and add-ons.
Even though high-end products may not generate the highest sales volume, flagship products appeal to your best customers. These products can generate other benefits in terms of enhanced brand image and greater sales of other products in the product portfolio. Package solutions often include complementary products from business partners that improve the original product.
When developing the product portfolio, there is a balance. It is not necessarily good for business to develop a product for every customer. Sometimes it is best to specialize and focus on one product. Too few products, rather than too many products, are often a barrier to developing the business concept. Therefore, it is important to develop a product portfolio.
For guidance on developing your product portfolio, work with a GrowthWheel consultant. Our business coaches are GrowthWheel Certified.