How To Scale With Product Line Diversification and Innovation

How do you expand and grow a business?


Product line diversification is how you turn a business into a brand.


You’ve had one product that’s seen success on the market. But one-trick ponies don’t last. A business is not a product. A business is a mission behind a portfolio of products and innovations.


If you want to scale your business, you need more than a single product. You need a brand voice, an innovative marketing strategy, and a diverse product line.


There are five key ways to diversify your portfolio: extension, usage, user, lifestyle, and upgrade.


Below, we’ll take a look at how you can utilize these diversification strategies to scale up your business quickly and effectively.


How To Scale With Product Line Diversification and Innovation businessman thinking of business plan


How Not To Diversify

Before we get into the right ways to diversify, we need to first look at how not to diversify. There are two mistakes you don’t want to make when scaling up, especially as a small business or Amazon seller.


1. Don’t change your business.

You don’t want to reinvent the wheel as a small business. Don’t start changing your offerings entirely. Don’t start expanding into new areas that you haven’t operated in before.


You want to tap into the same market or a similar market if possible. This helps prove your brand in a given industry and niche. If you jump around too much, you won’t be able to create a cohesive brand image.


(This is true at first. Once a large brand is well established, horizontal expansion can be useful to grow offerings.)


2. Don’t assume.

Don’t assume you know what your clientele wants. Having one successful product doesn’t mean you have a hold on the market. Assuming your customer’s wants is the biggest mistake companies make, which can quickly lead to financial disaster.


You can think about your customer’s wants as a starting point, but it’s not enough. You need to talk to your audience directly. Ask your customers what they want in surveys, one-on-one conversations, and feedback. Get a focus group together before launching a new product.


You need to know their specific pain point before determining how to address it.


"A business is not a product. A business is a mission  behind a portfolio of products and innovations."   Click to Tweet


How To Diversify

There are a number of benefits to diversification.


You offer an array of options, which is more appealing to your current and prospective clients. This makes you more attractive to the customer and also helps better position yourself in the competitive market.


Diversification also adds supplemental revenue streams while mitigating risk of product or industry downturn. If your first product starts losing steam, you’re not frantically trying to find your next product. You start implementing multiple plans at once, so you never have to look for a “backup” plan.


Ultimately, diversification can boost your brand image and profitability if done correctly.


There are three questions you need to ask in the process of diversification:

  1. What do our customers consistently ask for that we don’t provide?
  2. Would this new product/service complement our offerings? Would we be able to upsell easily?
  3. Is this product/service aligned with our brand?


You’ve considered those three questions, but how do you begin diversifying? There are five means of product diversification to consider for ultimate scaling. We’ll go through each below to see what kind of innovation might work for your business.


1. Extensions

The easiest method of diversifying is by altering your current product’s look slightly. This is usually by adding another color, size, flavor, or style.


This is one of the easiest and fastest ways to add another product because your factory already knows how to build that product. You are only making one small change, which usually doesn’t impact production too much.


It also offers the greatest opportunity for repeat purchases and upsells. If someone loves your product in green, they might come back to buy it in red too.


This can also encourage more prospective buyers. Consumers are more likely to purchase from you if you have multiple color or style options. If a consumer wanted a red vacuum but you only offered black, they might go elsewhere to buy a red vacuum.


The more style options you have, the greater the opportunity for purchase.

The same is true of size. You want to not only stock up on the sizes that sell out the fastest, but you also want to offer a variety of size options. This is true for bundle sets as well, like offering a three-pack, six-pack, and nine-pack.


You can also offer a variety based on quality. For example, you can create a luxury version of your product with better quality materials or a budget version with lower quality materials. This allows you to tap into a number of markets at once without significantly changing your production line.


This can also help upsell your customers. They might see the price difference between normal and luxury, and they’ll upgrade to the luxury because “it’s only $20 more.”


In most cases, these types of extensions are listed as product variations in your storefront. Learn more about product variations here.


How To Scale With Product Line Diversification and Innovation business concept don't put all your eggs in one basket


2. Usage

You can diversify by creating a related product for a different concept. In this case, you create a similar product for a related reason.


This can also include new feature additions as well. For example, you sell a vacuum cleaner with two attachable heads. You may add a third attachable head for vertical cleaning or an expandable handle. This allows the vacuum to now be used also for furniture and ceiling cleaning. This gives the same product a new and related use.


3. User

You can change your target audience for the same product. For example, you sell men’s T-shirts with a design on it. You can move into female T-shirts with the same design.


Another example could be that you currently market your iPhone cases to Millennials. But you might alter your cases to have younger themes that attract the Gen Z consumer as well.


This could also include creating a smaller version for kids, a waterproof version for use outside, or a smaller version for travel.


Altering the audience of your product should not be simply making a pink version for women. In fact, you have to be careful of how you target a new audience. Learn your market without assumption.


For example, Ellen DeGeneres had a social response to Bic pens creating a pink and purple pen for women:



This kind of publicity can absolutely kill a brand. Be mindful that you want to ensure you aren’t assuming a new target audience will want a product. You should do the appropriate research in the new market before launch.


4. Lifestyle

You can also create similar products that fit in with the lifestyle that your brand is trying to create. For example, Under Armour acquired MyFitnessPal. They’re adding this technology to their portfolio because it’s in keeping with their health and fitness brand lifestyle.


Choosing products that fit within a lifestyle is a great way to gain a loyal following of a specific audience.


For example, Jessica Alba’s The Honest Co. has a line of a variety of eco-friendly home products. The products are all related to the home with the underlying theme of health and environmental consciousness. This creates an image of The Honest Co. that ensures people know exactly the kind of the lifestyle and product they’re buying when they purchase from this brand. 


5. Upgrade

Your product has seen success for some time, but now sales have started to slow down. It’s important to consider why the sales have slowed down.


Have you maxed out your target market? Have other products come in to take your place?


In either instance, an upgrade of your product may be able to help you re-enter the market. As your audience uses your product, they start to have more relevant needs. This evolution of your audience calls for an evolution of your product.


Plus, customers love to see 2.0 or “new” on their products. They want the best and hottest items, and these buzzwords help inspire that exclusivity and urgency.


This allows you to re-target previous customers who purchased your product by offering a greater version of the product they already love. It also attracts new customers who may be using an older version of a competitor’s product.


Once your new product becomes the star, you can slowly start to scale back the original. This helps keep your inventory fresh while optimizing warehouse and production costs.



Don’t let your business die with your product. Product line diversification and innovation is the key to ensuring you are constantly scaling and growing. Your audience and market want “new and improved” products on a consistent basis.


A diverse portfolio builds a brand with a loyal following.


e-commerce tech stack ebook



Gain access to our exclusive list of top rated events for e-commerce sellers


Get E-Commerce News Right To Your FB Inbox!