Most of the companies did not regularly
check their product mix, look at the sales of the product is too much, nor
identify weak product, loss of product. In fact, the enterprise through
cancellation loss, is not conducive to the development of the enterprise
products, will greatly improve the profits and create new growth opportunities.
This part, we introduce the three steps to optimize your product portfolio,
Most of the companies did not regularly
check their product mix, look at the sales of the product is too much, nor
identify weak product, loss of product. In fact, the enterprise through
cancellation loss, is not conducive to the development of the enterprise
products, will greatly improve the profits and create new growth opportunities.
This part, we introduce the three steps to optimize your product portfolio, to
lay a solid foundation for the enterprise growth.
A common problem, integration of product
line is beer industry
In beer industry, product integration and
management has always been a problem in many enterprises. Across the industry,
competitors in reducing, the product quantity increase - merger integration for
players to less, but the player more products; More products make it harder to
attack the rivals; Opponents less, from the brand competition evolution for
niche products. At the same time, product innovation has become the enterprise
the most enthusiastic, and led to the product life cycle is shortened,
consumers are greatly impress the difficulty increase - introduction of low
cost, make products "arms race" upgrade; Blindly pursue
differentiation, leading to the extremely segmentation of market; To impress
consumers, and constantly launch new products/upgrade products. In fact, merger
and acquisition and the target market and growth opportunities of incontinence
products breeding is the main cause of product diversification. But too many
products, bring a lot of problems. Specific problem is mainly manifested in the
following aspects:
1, lack of differentiation
Product performance, features and price
often overlap, not only undermines the variation characteristics, and often
caused the consequences of killing each other. A particular category of
products, the enterprise to each product unique location and the stronger the
challenge, only advantages and properties of unique combination can attract
considerable consumer. Enterprise
2, low efficiency,
Portfolio of products always means more
individual products sales is low, because the total market needs in their
division. In fact, according to the tracking study of beer enterprise for many
years, we found that almost all of the profits from the few products, its
proportion and even less than 80/20 of the rule of thumb. In product
development, supply chain and marketing if there is no scale economy,
enterprises will not be able to support each product in a competitive
environment. Excessive breakdown products, at the same time of market
segmentation, more divided into the market resources, after all, the enterprise
must guarantee a minimum fee every year for each product marketing to attract
the attention of consumers, the lowest cost showed a trend of rapid rise in
recent years. This will lead to "five fingers as a fist" more
powerful results.
3, distribution costs increase
Increasingly high into the shop, shelves,
when many products, increase the profit of the terminal, but has greatly
increased the cost of distribution. Today, the bargaining power of terminal has
been increasing, forcing enterprises must carefully evaluate product portfolio.
Rivals, raised the cost of into the store, also let terminal boss is becoming
more and more intelligent. They are no longer to charge as a brand, but in a
item to allocate their shelves. Enterprises make shelves to competitors, or
have to pay a huge price to put all the products.
4, management is complicated
Finally, too much product portfolio, not only
to manage inventory, also worries about the budget allocation between the
product continuously, to consider the trend of competition. Too much product is
forcing management coordination is more complex and larger products, packaging
design, research and development projects, the combination of the marketing
plan and distributor relationship. The edge, not from due to the product
strategy of product, in the end will only consume too much time and resources.
In the annual meeting of the marketing strategy, and budget every year, the top
management found her focus is the internal resources allocation problem between
different brands, and unable to compete with rivals and meet the demand of
consumers such as external competition issues.
These problems bring confusion was
palpable, but whenever proposed cut products, integrated product line, will
meet obstacles from all aspects and influence, especially a lot of people would
cut off products will inevitably lead to the loss of market share. In fact, the
enterprise can greatly improve the profits by revocation of loss of products.
While in the process of product to cancel the total sales income may fall, but
it actually for enterprise infuse a boost. That is because many companies don't
realize is that in the same price level to set up multiple products can produce
recessive cost, many products will cause the scale economy. These hidden costs
will naturally smaller decline in the number of products. Even more exciting,
usually cuts eventually not only reduce product sales, it will have the effect
of enhancement to the market, profits and sales growth
