Often times, the most memorable (and successful) innovations are disruptive. They break into an existing market, shattering current paradigms and restructuring them into something fresh and vibrant. The launch of iTunes completely disrupted and reshaped the modern music industry — a point we noted in our previous post about Steve Jobs' approach to innovation. Within two years of its launch, millions of consumers had migrated from buying complete albums at full retail price and were now paying a fraction of that price for single tracks. Now, it's impossible to conceive of the music industry without iTunes.
But not all innovations are disruptive, market-altering products, and an innovation doesn’t have to be a blockbuster hit to be successful. Markets can't be redefined by every new product or service. Often times, a smart variation of an existing product can often be just as successful as a disruptive innovation. As Albert Einstein noted,
“A new idea comes suddenly and in a rather intuitive way, but intuition is nothing but the outcome of earlier intellectual activity.”
Just as great ideas are often the result of previous thoughts, great new products are often the result of slight alterations or improvements upon existing ones. Consider the junk food industry, which keeps consumers hooked with a new flavor of Doritos, or the tech industry, which keeps us buying the newest iteration of laptop or cell phone every few years. These innovations — known as line extensions — are slight variations of a brand’s previous products.
Line Extensions – Innovation Within the Lines
In his most recent book, Dealing With Darwin, Geoffrey A. Moore explains line extensions by saying,
“Line-extensions introduce new sub-categories within existing offering groups. Much of the infrastructure stays the same, but user-facing features or packaging changes sufficiently to create novel products and services.”
We're not reinventing the wheel when we introduces a line extension. We are building on our current brand and product successes while simultaneously introducing new sub-features or solutions for our customers. Take Rust-Oleum's line extension product: NeverWet.
Rust-Oleum has been battling rust and wear-and-tear for almost 100 years. Beginning in the 1920s, when founder Robert Ferguson noticed that spilled whale oil kept his ship's decks from eroding, the company has spent almost a century helping consumers around the world protect against rust and decay. Its newest line extension, NeverWet, has been a massive success. An improvement upon Rust-Oleum's previous products, NeverWet has unrivaled repellent qualities. The company's website describes it as,
“… [a] revolutionary new class of treatments causes liquids to form nearly perfect spheres, which shoot off the surface keeping items clean and dry. It also guards virtually any surface against corrosion and wear caused by exposure to moisture.”
But why are line extensions so successful? And what are the innovation secrets behind product like NeverWet?
Successful business are constantly striving to make their products better and more useful to consumers. Changing technology or science helps us evolve to meet the changing needs of the market. For years, Rust-Oleum's product lines had provided customers the ability to patch leaks, clean rust, and repair water damage — and they were successful in doing so.
But Rust-Oleum wanted more. They wanted to eliminate after-the-fact repairs or temporary repellents. Through countless hours of research and development, they hit on a new formula that would pair well with their current product line and improve its functionality. The result was NeverWet. Moore writes,
“Here [in line extensions], existing products are improved through functionality and usability for existing markets. Success is achieved through time to market and patent protection.”
Rust-Oleum improved the customer impact and functionality of their current products by launching this new line. By taking a leap forward with the functionality of their products and make them more usable and effective in our customers' hands, the product will grow.
Line extensions should fit right into a company's existing brand image, so they will be immediately recognizable and desirable. Rust-Oleum has been producing high-quality, well respected products for nearly a century, so their claims about NeverWet's effectiveness weren't met with skepticism or doubt. People wanted to try this product because they trusted it would perform as advertised. As John Parham explains in Fast Company,
“Successful brand extensions hinge on consumers already knowing your brand’s name. Your neighborhood coffee shop has no equity to extend into K-Cups; Starbucks, however, does.”
Without confidence in their existing product lines, Rust-Oleum's NeverWet would have had a much longer road to success.
The “Fit” Test
Line extensions must make sense. Every company has a mission, a brand, and a directive. When considering line extensions, we must ask ourselves: Does this product fit in a believable way? For Rust-Oleum, NeverWet was an obvious fit. It didn't alter their brand image or extend their brand perception too far. For a company that had built its reputation of products created to improve and prevent all forms of wear-and-tear, NeverWet made perfect sense.
Parhman's article in Fast Company includes an perfect example of a line extension that didn't fit:
“Something that is concrete or easily communicated can be extended to the new category and there must be a strong reason why a consumer will prefer it over their current brand. Bic’s extendable equity is disposability. They had leverage when it came to disposable razors. Bic perfume, not so much.”
Line extensions are fantastic ways to incrementally diversify your current brand and increase sales without incurring the risks that disruptive innovations often encounter. The market is already defined, and your business likely has a reputation in that market. A product extension is often the next logical step. If you are considering introducing a line extension for one of your new products or service, the strategies exemplified by Rust-Oleum's NeverWet will help you innovate successfully.
What's your favorite successful line extension product? Share by tweeting @EidsonPartners!