Section 16 Product line potential

February 7th, 2013 Leave a comment Go to comments
WINNERS = Products for which an endless stream of accessories, new uses, and complementary products can be developed over a period of time.

For the individual, a one-product line can be difficult to raise funding for and even more difficult to market.  Many individual new product developers and investors have myopia.  All they see is people rushing to the stores to buy their product.  They fail to look at the “one product line” from a “rep’s”, wholesalers, retailers or mom and pop store owner’s point of view.

From a manufacturer’s representative’s (rep’s) point of view , it takes just as long to show a major account’s entire catalog as it does to show a one-item catalog sheet.  The rep is quick to point out that showing a full-line catalog can net instant sales of many items, with little or no actual work, while the single product catalog sheet presentation will result in only a one item sale at best, and usually requires the same or more work.  The rep will also be quick to point out that a store buyer may have enough confidence in a large manufacturer, with a large and diverse product line, to buy an item from the manufacturer’s catalog SIGHT-UNSEEN, while the same buyer may want to SEE, IN-PERSON, a new product offered by an unknown company, causing the rep to have to lug around samples of your product to all of his accounts.  If your product is heavy or bulky, LOOK OUT.  Most reps will quickly become less than jubilant about carrying it around.  The amount of displeasure is magnified by, and becomes geometrically proportional to, the weight and bulk of the product.   If the product is also inexpensive (read: less commissions), and is hard to explain or is a hard sell (read…requires more time and thought), you will have trouble finding a rep who will vigorously pursue selling it for a term longer than the time it takes to discover the difficulty of selling it (read…about two weeks).  A true understatement would be: a rep does not normally look favorably upon a one product line.   Note: A notable exception is the product which comes along once in a while (like the Pet Rock) which quickly gains so much free publicity that store owners begin asking the reps if they can get the product for them.  A line of eager reps will immediately form at your door and continue until the moment that interest wanes in the product.  At the first hint of waning interest, the line does an “about-face” and beats a path to the door of the next person with a product which they perceive to be “hot”.

From the wholesalers’ point of view they still have to make and carry computer data on the manufacturer, whether the manufacturer supplies one product or hundreds of products.  While this sounds simple, in some operations it is the same amount of computer space and data entry work to set up an account for a company with one product as it is to set up an account for a company with hundreds of products.  The wholesale distributor must justify the cost of carrying this data in computers, catalogs, etc.  Usually they have a set dollar amount minimum monthly sales figure which each account, regardless of size, must make or it isn’t worth the wholesalers’ carrying and tracking the inventory.

“Accounts” which have many products being sold by the wholesale distributor have no problem making monthly quotas.  Individual new products have a much harder time making the quotas, especially during the “introduction period”.  At each monthly review meeting, as accounts are reviewed for performance, the single-product company always looks the worst because their sales figures are much smaller than the company with multiple products.

From the store owner’s or “buyer’s” point of view, the larger the line of products, the better the service the store will expect to get from the reps or the wholesaler.  Many corporations with large product lines have their distributors or reps routinely stop in and “face the shelves”, arrange displays, dust the merchandise, etc.; the store knows it could never get that kind of service from a company with a one product line.  The storeowners also know that companies with many products in their line have larger budgets and provide heftier sales incentive programs that companies which have only a one-product line could not possibly provide.

The store owner knows when it comes time to return defectives it will be much easier to deal with a company which has other products on the shelves because those companies have a greater incentive for providing faster merchandise replacements, “credit backs”, or refunds.

Lastly, the store owner knows that a company with only a one product line will not be able to provide the store with large “slotting allowances”, “product introduction fees”, “promotional allowances”, “in-store demonstrations”, “free publicity campaigns” or “advertising allowances”.  In many cases large companies with multiple product lines will provide all of the above.

As you can see, a one product line, even though the product may have great potential, is not nearly as exciting to the evaluator, nor is it worth as much, as one which can have a line of accessories developed for it.  The ideal product will be capable of expansion in four areas:

  1. New and compatible products can be developed which complement but do not compete with the original product.  (a good example would be Maglite flashlights which first introduced their “Mini-Maglite” flashlight and then went on to build a whole line of personal and professional flashlights, none of which competed with the original product).  Many companies have underestimated the harmful consequences of simply mentioning a new upcoming line extension, which competed with the original product, only to find the sales of the original product collapsed overnight. (A good example is Osborne computer, which announced they were going to be coming out with a “new generation” of computer while they were still manufacturing only the first version.  The first version quickly became known by consumers as the “old-style”.  Sales of the first version became nonexistent, since consumers wanted to wait for the “new style”, and since the company was not ready to produce the “new style” it was forced to go into bankruptcy).
  1.  New and varied uses can be developed which cause users to want or need more than one. (A good example is Arm & Hammer baking soda offering the same product as a refrigerator deodorant and recently as a dental hygiene product).
  1. The product can be made in different styles and price ranges to appeal to many different market segments. (A good example is the Dymo labelmaker.  This great product has been produced in all different styles and price ranges, from the inexpensive plastic version to the expensive chrome plated office equipment version).
  1. New end-users may be targeted after the first group is satisfied. (A good example is cellular phone sales people originally targeting the business executive, and now targeting mothers and homemakers)


The potential for adding new products, new uses and new users has a direct bearing on the dollar value of a new product.  A product which has limited potential for product line extensions or expansion is probably not a worthwhile candidate for the development of a new stand-alone business venture, but it may well prove to be a profitable line extension for an existing operation.

Individuals who find themselves in the position of having a product which appears to have good potential for success, but lacks any possibilities for the development of a product line, may be limited to selling the product through mail order or direct sales.  In the long run, they may be better off selling or licensing their product to a company which has the ability to fit the product into their existing lines, especially if the product will require a nationwide network of reps to insure proper distribution.



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