One of many primary questions for anybody accountable for an organization’s advertising technique is learn how to handle a number of merchandise (or providers) for the longer term in addition to maximize product alternatives within the current.
It seems there are numerous approaches to fixing that downside, which makes it a not-so-easy strategic choice. I’ll briefly focus on every of these on this article and spotlight a number of points with every method.
The primary, which can also be probably the most simple, is to regularly monitor market traits. That’s, hold monitor of and report market traits and buyer suggestions to make sure that your portfolio’s merchandise align with the newest traits and buyer calls for.
That sounds simple, however it takes a whole lot of time and sources to remain up on market traits, particularly if they’re at all times in flux. Additionally, acquiring and analyzing dependable knowledge from varied sources might be difficult.
A second method depends on segmenting the market by advantages. While you take that method, it turns into simple to distinguish your merchandise by market phase (or descriptors of who’s in every phase). That method, you’ll achieve readability on how the complete portfolio of merchandise suits collectively. This method can even will let you assess the scale and progress of every phase, supplying you with a longer-term view of managing your completely different merchandise.
Sadly, nonetheless, most B2B corporations as an alternative depend on vertical advertising, the thought of which is to supply services and products specialised for purchasers in a specific trade or vertical—which isn’t actually segmenting a market. Thus, such vertical or class approaches to segmentation will not provide the perspective crucial for an easy method to managing a portfolio of merchandise.
A 3rd method depends on product life cycle administration. In a earlier article, I talked about basic product life cycles. That’s, you commonly study your product portfolio and handle the product life cycle of every product to see whether or not they want updates, adjustments, or new releases.
So, think about every of your merchandise on a whiteboard with its personal product life cycle depicted. A few of your merchandise will likely be on the introduction stage, others at a extra mature stage. You’ll be able to readily see how these completely different merchandise have to be managed otherwise.
Among the many few issues with this method is that not all merchandise observe the identical life cycle: Though the product life cycle mannequin helps measure the efficiency of particular person merchandise, it could not precisely seize the life cycle of each product an organization sells. Some merchandise might have longer or shorter life cycles or might expertise sudden spikes in demand that don’t match neatly throughout the life cycle levels.
Additionally, focusing solely on the product life cycle can result in a misalignment with broader enterprise technique, resembling diversifying product traces or coming into new markets. Firms needs to be contemplating the function of every product throughout the broader context of their enterprise targets and technique.
A fourth method is to classify the completely different merchandise by precedence: Prioritize the merchandise primarily based on enterprise targets and income potential and perceive which merchandise will considerably influence the market.
The issue with this methodology is that by focusing solely on the precedence degree assigned to a specific product, it’s possible you’ll overlook different essential components, resembling buyer preferences and market traits. Additionally, this methodology might not permit for adjustments in precedence ranges primarily based on shifts available in the market, client preferences, or different exterior components. Lastly, by focusing solely on high-priority merchandise, an organization might miss out on potential income from lower-priority objects that also have market demand.
A fifth perspective, and an method I favor, manages a gaggle of merchandise/providers collectively as a part of a portfolio. The emphasis right here is on enterprise synergies: An organization is considered a group of associated companies.
This method explicitly acknowledges differential useful resource necessities: Some merchandise want sources, whereas others present sources. On this view, you may develop a product street map to make sure that the product improvement course of is streamlined and aligned with enterprise targets.
The methodology of this attitude is to concurrently analyze all merchandise when it comes to market attractiveness and aggressive place. A visible illustration of this method is offered beneath.
Basically, you place all of your services and products right into a 2 x 2 matrix primarily based on attractiveness (or market progress potential) and aggressive place (or relative market share). Make the scale of every product (the circle) bigger or smaller to signify the relative income contribution of that product to your organization.
When you create this portfolio method, you may readily see learn how to evolve merchandise (from low market share in high-growth markets to excessive market share) and useful resource deployment (shifting money from low-growth however excessive market-share merchandise). This method mirrors the basic Boston Consulting Group matrix, the place merchandise with excessive market share however low progress signify the basic “money cow.”
After all, the issue with this method is learn how to decide with precision the dividing line between excessive progress and low progress, and precisely the place market share shifts from excessive to low.
Nonetheless, by making a product portfolio administration system, you make it simpler to successfully handle a number of merchandise concurrently whereas making certain that every product contributes to your online business progress.
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In sum: all approaches to managing a number of merchandise have downsides, however it’s essential to decide on one and actually perceive the advantages and dangers of that method. That method you can successfully handle not solely your varied merchandise but additionally the dangers that inevitably come up.