There are four reasons why you add new products or services to your offering:

   to sell more to existing customers (complementary) 
   to sell into new markets (additive) 
   to facilitate sales of core products (enabling) 
   to generate new revenue streams with little overhead (adjacent)

The first three should have you doing some research to determine what your customers (both current and prospects) are looking for. Adjacent products and services are usually very easy for you to add –in the case of services you may already be providing these without charging separately for them. While adjacent products may be easy, the pitfall is in having expectations that they will do what the first three new product types will do, and not just add business opportunistically.

Enabling products are the least frequent – they are often door openers, or seem to provide flexibility to customers – but may not be sold often enough to justify their existence. Except when you factor in complementary sales enabled from the same customers. I have a client who has some eco-friendly alternatives, rarely sold, but which grab attention and get sales people in the door.

There can be a significant amount of work in launching a new complementary or additive product, so before doing this it’s worth nailing down:

   what your target markets want (feature set)
   what they are willing to pay (price point)
   potential market value
   any barriers to entry erased
   competitive differentiation & positioning

Only when you have a sense of all these, can you determine if the cost and effort required justify the addition.

Determining feature set is where many companies go wrong. A sales-driven organization will want everything that competitors have. A development-driven organization will want to do things they know they can do. In both of these cases, it is the role of marketing to determine if keeping-up-with-the-Jonses efforts are truly required, or if new features will differentiate and drive demand.

It has been suggested that RIM wanted the Blackberry to offer the same features as Apple’s iPhone, and sacrificed making advances of their own while playing catch-up. Likewise, I’ve seen engineers design features that nobody uses or asks for. A guiding hand is required both ways.

And that guidance needs to take the form of realistic quantification. Focus on addressable markets, not aspirational ones. Opening those can be part of longer-term plans, but if you can’t impact customers in the short term, your initiatives may not survive to penetrate new markets.

One final caution is that selling into new markets may require significant different sales and business development tactics. Your sales team may be great at communicating with brand managers in the household goods market, but when they want to sell to ad agencies serving this same sector, may need a radically different approach. Even selling complementary or adjacent products requires some sales training to help identify opportunities and key messaging.Don’t ever take for granted that your new products will “sell themselves”.