Managing the product range

Above all, the approach of "eclectic assortment inflation" is misleading. One should not respond to the chaos in the market with even more chaos in one's own business model. On the contrary: self-confident product range management is needed that creates orientation both internally and externally. It should be normative, in the sense of positioning. And it should be dynamic, in the sense of substantial innovation steps that deserve their name and open up new potential fields.

In this "normative-dynamic" product range management, the company's resources are consciously invested and divided between:

• the reproduction of strengths in the current business

• the agilisation of the organisation and collaboration with its sales and business partners, and

• the innovation of the Next Business Generation with new services.

Today, conscious activities are needed in all three areas in order to grow profitably in the long term. The art lies in allocating a company's limited resources to reproducing, agilising and innovating in the right proportion, depending on the business situation, strategy and ambition, and to make them maximally effective. The following nine leverage points and their key questions help to realise this in practice.

REPRODUCING STRENGTHS

1. Free ride for the mainstays of the business

Make sure that the products that are strong in terms of volume and margin enjoy a free ride; in all areas of the business, from production to marketing to distribution - and also with your sales partners. In doing so, keep a close eye on the development of average price, distribution level and sales ratio.

Key questions:

• With which products do you generate 80% of your sales and earnings today?

• What is the respective distribution level and how has it developed over the years?

• To what extent are your sales partners committed to your strong products? Do they know and tell "your story"?

• What is the growth potential if you push your strong products in all channels, at all POS, in best placement and sufficient quantity together with committed partners?

2. Substantially develop core products

Substantially develop the top-selling products; close to the needs and in close exchange with the customers, in small optimisations and in larger generation steps. Look for improvements with which you can also successfully argue price increases in the trade and with your customers. And guard against "declaring your own products dead" yourself - don't make it so easy for your competitors.

Key questions:

• How has the average revenue of your strong products developed over the years?

• When was the last time you pushed through a price increase in the market? What were the success factors?

• What products and projects are your people currently working on? How big is the "allocation" for the core products?

• How can you bring your resources in development with more focus behind your strengths?

3. Targeted promotion of high-potential products

Identify and promote the few real high-potential products in the range selectively and consistently - sometimes you only recognise them when they are deprived of promotional and sales support, and yet they continue to develop positively in the market.

Key questions:

• Which of your newer products really have what it takes to become a real mainstay in the assortment?

• Which ones specifically have something going for them: a high volume or a high margin or a speciality that you simply have to make something of?

MAKING THE ORGANISATION MORE AGILE

4. Eliminate the internal complexity costs

Radically reduce your internal complexity costs. To achieve this, consistently separate yourself from all products that cannot be implemented across the board in the market, that cannot develop an appropriate speed and that are not convincing either in quantity or in margin – every time this is a liberation, mobilising forces in your organisation for better things. Go for focus instead of fireworks. Go for assertion instead of a clumsy range of products.

Key questions:

• Which of your products are not convincing, either in quantity or in margin?

• Does your "long tail" really have to be so long?

• Which products can you part with tomorrow without having to reckon with major negative consequences?

5. Improve value chain collaboration.

Take responsibility for the entire value chain of your brand - including the value chain levels covered by partners. Set the "programme" on how to work and at what level. In doing so, significantly improve and accelerate in particular the overarching cooperation and ability to change. Only in this way will you be able to flexibly keep up with the increasingly severe market changes and turn them into growth opportunities.

Key questions:

• Do all your value creation partners meet the requirements of your brand?

• Where do your people still work in silos today, only when called upon, and in the sleepwalking state brought on by the rut of the usual processes?

• How can open and agile collaboration across all departmental and organisational boundaries become your "new normal"?

6. Use new technologies and data

Make full use of the opportunities offered by new technologies and a better data base to know more precisely, decide more confidently and collaborate more effectively.

Key questions:

• What kind of data do you have? Does it make you smarter and can you manage your business with more intelligence than before?

• Which data pilots can you start immediately to gather concrete learning experiences in a timely manner?

• How can you use data and programmes to create more emotional experiences/moments for your customers?

• Which marketing processes do you already run digitally? Which ones should and could you automate?

INNOVATION OF THE NEXT GENERATION BUSINESS

7. Innovate radically from the future

Work ambitiously and courageously on a completely new product range pillar; think radically "from the future", boldly step out of your organisation's comfort zone and use this step to advance yourself, your employees' skills and your brand. Strive to find a new product that will meet a major customer need in the future - where you can build and sustain clear differentiators.

Key questions:

• What would be the absolute "nightmare product" for your business from an existing or new competitor?

• Why don't you do it yourself?

• How can you make an impressive impact in new ways with your original strengths in the new field of activity?

8. Implement the new in the company and the market.

Introduce the new product to the market with focus and perseverance. Ensure that the new product is held in the highest esteem within the company and is appreciated and promoted by everyone, despite the lack of sales significance, any initial setbacks, and possible cannibalisation effects.

Key questions:

• How do you awaken in your people the desire for and belief in a better brand future?

• What "convincing evidence" do you have that your brand still has its best days ahead of it - and not already behind it?

9. All or nothing

Never launch a new product that you don't wholeheartedly believe in or that doesn't have a foothold potential from the start - no matter how much you may have invested in product development.

Key questions:

• Which of your "darlings" do you need to kill off today to be successful in the future?

• What have you learned that you will do better next time?

Start your Next Generation Business in product range policy

A profitable assortment consists of strong individual products:

1. Strong in the sense of their "fit" with the positioning.
2. Strong in the sense of their uniqueness and relevance for the people who buy them.
3. And strong in the sense of their thorough assertion in the market.

The nine leverage points of normative-dynamic product range management described here help to make the assortment economically "weatherproof" and to systematically orient the business towards permanently profitable growth.

The economic power of a business lies in its consolidation

The economic power of any value creation system lies in normative consolidation. When it succeeds in taming the "centrifugal forces" of the market and asserting its own business in a focused and self-determined manner, based on its own strengths. Especially in today's demanding market environment, less is more - as long as the little is the maximum brand.

Author: Bastian Schneider