What’s the best strategy to launch into a new product category?
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Expanding into a ‘new product category’ means that you plan to launch a new version of your product to increase your products’ stickiness (retention) or acquire new customers. Here are some of the steps that you need to take
1. Identify the user segments and problem space, e.g., What are the unmet (overlapping and non-overlapping) needs of existing and new customers?
2. Identify the solution, e.g., What new features do you need to build, update, or develop to solve these problems?
3. Identify how this new product can increase the value of your ecosystem or complement other product lines
4. Build and test to make sure you are addressing the core experience while allowing for expansion for new use cases after launch
Scaling for more use cases and segments should happen later after acquiring new users, collecting enough feedback, and having good data to support your next iteration. You can fast track your acquisition by optimizing your channels. When you have enough active users, then this proves that your product works.
Our startup started with one product (smart cameras) and identified adjacent product lines that existing and new customers would buy (new product category: sensors). We identified ways to deliver a compounding value (1+1 = 3) by adding features that can only be unlocked when they have both products. We targeted these existing customers first, then expanded to new ones. After we launched the first version, we did iteration and expanded to the next product category (the next product line: smart lighting).
There are many ways to do product expansion, and this is one (simplified) way to do it.