Product Line Extensions for software
Some marketers see product line extensions as the path to success for small companies, and the salvation of marginal companies. Other marketers see the introduction of extensions as the worst decision that a company can make.
Marketers have been arguing for decades about the value of extending product lines and extending brands. They typically use confusing terminology to make it sound important. It all boils down to a single question - How do I create a new variation of my software and increase my profits, without messing up my brand in the minds of software-buying consumers?
We see product extensions every week, in every industry. Coke has introduced Diet Coke, Lemon Coke, Vanilla Coke, and Caffeine-free Coke. There are dozens of different bottle and can sizes, as well as 6-packs, 8-packs, and other assorted combinations. Throughout the consumer world, we see new formulations and improved flavors. We've seen tiny Cadillacs and giant Fords. Some of these product line extensions have been successful, and others have failed miserably.
Here are some practical things that a software developer can do to get into the product line extension game:
If you have a successful application, create one in a related field
Tom Guthery IV of Flix Productions - http://www.flixprod.com/ - the Austin-based developer of educational software applications, has been successful with this approach. Starting more than a decade ago with Animated Alphabet, Tom has created a family of products that include Animated Math, Animated Arithmetic, and more than a dozen others.
"Naming a software series with the letter 'A' turned out to be a lucky move," Tom explains. "Our software was listed first on BBS's, and on many shareware sites now."
Turn an existing application into a family of products
Create light, standard, and professional versions of your software.
Create add-ons for other companies' applications
Matt Porter of American Systems - http://www.americansys.com/ - offers Spam Crusher and Spam Crusher Enterprise. And now he's launching a line of add-ons to keep spam out of popular Windows clients' inboxes. Spam Crusher for The Bat! is available now, and we'll see an entire line of software evolve in the coming months.
Create specialized versions of your software for vertical markets
In addition to your standard software, create a student edition. Or create specialized versions of your application for the medical or legal professions.
Split a complex application into pieces that solve specific problems
For example, if you have a moderately-priced utility that performs a dozen related functions, see if there's a market for low-cost software that performs one or two of them. Sure, you might lose a sale of your larger program to somebody who needs only a function or two. But chances are you'll sell a lot more product to people who didn't want to spend money for software that does a lot more than they need.
Create a family of similar software products, and sell them as a suite
For example, Lincoln Beach Software - http://www.lincolnbeach.com/ - offers a family of programs that lets webmasters build sites quickly and easily. Just Screenshots lets you turn screen captures into stunning images. Just Navbars makes it simple to create navigation bars with slick mouse-over effects. As complementing programs, Just Buttons, Just Tabs, and Just Banners add value to the mix, and there is a promising future for new products.
Localize your software for different languages
This type of product line extension involves a lot more than simply translating your menus and help files into different languages. A lot of developers take a casual approach to localization. They contract with non-professional writers to create the text.
The biggest problem, however, revolves around support issues. Be prepared to offer support in Hindustani if you offer a Hindustani version of your program (Hindustani, the spoken form of Hindi and Urdu, is the third most spoken language on the planet, behind Chinese and English, and followed by Russian, Spanish, Japanese, German, Indonesian, Portuguese, French, Arabic, Bengali, Malay, and Italian. These numbers do not, however, reflect the popularity of tongues spoken by serious software buyers.)
Create versions for different software platforms
Think desktop - Macintosh, UNIX/Linux, and Windows. Think big - midrange and mainframe. Think small - Palm OS and PDAs.
Your specifications and analysis time is completely reusable. Don't underestimate the amount of time that it will take to learn the tips and tricks of your new platform. And make sure you don't introduce an application into a new market that will shock the culture of existing users. Macintosh users, for example, are very sensitive about applications which have been ported to their platform from Windows, and which don't have the proper Macintosh look and feel.
Create a web version of your desktop software
For more than 15 years, Ben Weintraub of Merit Software - http://www.meritsoftware.com/ - has been offering a full line of education software. He's put some of his software online - http://www.paragraphpunch.com/ - where it is available for free to people who want to get a taste of the desktop and network versions. By adding a web version of their popular software titles, Merit Software attracts new customers, and drives traffic to their main web site.
Some advice from Ben: "Choose a domain name that describes the benefits of your product. It doesn't have to be the same name as your product. That's one element behind the success of http://www.readingcomprehensionconnection.com/."
"Any webable software site MUST include a 'Resources' section," Ben added. "The 'Resources' section should have various solutions, or recommendations, for end users of the software."
Form a strategic partnership with another developer, and jointly-market software.
Sharon Housley of NotePage, Inc. - http://www.notepage.com - and Andrew Ross of Kiwi Enterprises - http://www.kiwisyslog.com - have integrated their products, and expect to reach new markets that they couldn't reach individually.
NotePage's NotePager Pro, a text messaging application, integrates with Kiwi Enterprises' Kiwi Syslog Daemon, a network management program. Kiwi Syslog with NotePager Pro easily informs network administrators and engineers in the event of syslog errors, sending alerts to their cell phones and pagers.
Should you try software product extensions?
How effective will product line extensions be for your company? That depends upon:
- Which segment of the software industry you're in;
- Whether it's a mature niche, a rapidly expanding niche, or something in between;
- Whether you're the acknowledged market leader in your corner of the market, an also-ran, or a newcomer with virtually no name recognition;
- How much time, effort, and money you're willing to spend to promote your new product family; and
- Dozens of other market factors, including the direction of the economy, and what your direct and indirect competitors are doing.
With all of these variables in mind, here are the advantages and disadvantages of extending your product line:
Advantages of software brand extensions
(a) It costs a lot less to create a brand extension than to create an entirely new application. Splitting an application into several flavors, trimming it down to create a light version, beefing it up for a professional version, or tailoring it to a specific industry is a lot easier than creating and promoting an entirely new brand of software.
(b) A product line extension can pump new life into your brand. If your software is getting a little tired, then you can generate new interest by publicizing your new app. The excitement of your new program will drive traffic to your web site, and possibly increase sales of all of your programs.
(c) A brand extension is a symbol of stability and quality. If your customers like one of your programs, they're apt to like the others in your family of products. It's much easier to sell additional applications to existing customers than to find new customers.
(d) An extension lets you determine quickly if a new software trend is just a fad. Without starting from scratch, developing a new application, creating a new web site, and developing a new marketing plan, you can determine if you should have a pop-up stopper or an anti-spam utility. If these new applications catch fire, then you have a player in the marketplace. If they fizzle out after a few months, then you've invested a fraction of the time and expense of creating a whole new brand.
(e) A brand extension gives you credibility. In short order, you evolve from a single-product company to a firm that offers a family of related applications.
(f) An extension can increase your sales in new industries. Add a medical or legal dictionary and spell checker, change your menu items and documentation to the lingo of your target audience, and you have a brand extension that you can begin marketing in days instead of months. Doctors and lawyers who are thinking about buying a NotePad replacement or an HTML editor will pay special attention to an application that is specifically tailored to their industry.
(g) Brand extensions can send a strong message to your competitors. They may be reluctant to compete with either your flagship application or your brand extensions if they see that you have a well-rounded family of programs that is making a splash in the marketplace.
Disadvantages of brand extensions for your software
(a) Brand extensions blur your brand. People should be able to describe your company and its product line with a simple phrase. As you add product after product to your software family, your target audience will lose sight of what you stand for. When they visit your web site, they should see a theme that runs through all of your offerings. Product line extensions blur this theme.
(b) Product line extensions don't necessarily increase sales. They may divide your sales into smaller categories, adding to processing costs and maintenance expenses. If you turn your app into three programs (light, standard, and professional), do you increase total sales, or simply divide total sales into smaller pieces? If you're like most developers, expanding your product line by adding a Pro version will increase profits. More customers than you'd expect will pay for the additional features, even if they don't have an immediate need for many of them.
(c) If not managed properly, brand extensions can create a development and maintenance nightmare. If you're creating different text strings for different industries or different geographic regions, then you need to plan ahead. If you're creating light, standard, and professional versions of your app, you need to think through the application development techniques needed to adequately manage the complexity that you're creating.
(d) Extensions can lose you customers. If you introduce a lower-quality program into the product mix, and a new customer buys it, they're not going to buy your other programs.
The bottom line
If you do it right, you'll reach more prospects with software that's tailored to their needs. And if you spend the time to think through the development issues, you dramatically decrease development costs, time-to-market, and your ability to respond to a changing marketplace.
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