Pricing: the elephant in your room?

In my relatively short time as a business consultant it has surprised me how often people look over all my other services and pick out this one as a ‘tell me more..’ conversation.

But maybe it shouldn’t do. More time than I’d care to admit has been spent trying to avoid, or dig people out of, pricing rabbitholes. Pricing and pricing strategy rarely get mentioned in Marketing – or even Business – plans. And, if they are not addressed, the effect can indeed be like an elephant let loose in your workplace: messy and dangerous!

People I have spoken to who run small businesses quickly concede that they don’t know how to price. Those in the service industries seem to have a particular problem with it. And it’s both ends of the spectrum. For everyone who is dissipated by having to fight on price, there is another who misses out on business because they are ‘too cheap’. It is a common ploy in the restaurant trade to position your most profitable wine second in the price list. Few people feel proud about buying the plonk option on their first date, and most are already contemplating how much the bottles are compared to their local Aldi.  At least someone is using pricing to direct customers and enhance profit, so why can’t you? If you know your costs, and what profit you want or need, it also helps.

People in bigger businesses do have pricing methodologies, but these are often approached from a silo mentality: some will operate ‘cost-plus’, and some will want to put the kitchen sink in alongside all other overheads so that no product in the world would hit the black and ‘contribute’. New products may not be in your overhead recovery plan, and what costs really should be in? Should there be a marketing allowance built in? So much to decide, and so many different views. As always, it’s good to agree across the business what the rules are. Conflict is so time-consuming and draining.

The lack of proper engagement with pricing is odd. Firstly, it is one of the 4P’s of Marketing, alongside Promotion, Product and Place. Far too many people and organisations only get as the first of these, yet it is absolutely conjoined with product and promotional and even place strategies. Secondly, it is said that ‘demand exists only at a price’. That is, it is an economics fundamental as the intersection between supply and demand. If you cannot keep up with demand, or if you have a warehouse full of slow moving stock, it is probably pricing that is out of sync.  Then there is the issue of ownership. Who ‘owns’ pricing within your business? Is it Finance, Sales, Marketing or the nice young fellow who prints the price lists? Each will have a different view of how to approach it, and if you allow it to become a free-for-all, or the domain of only one function, you have already unleashed the elephant, or – forgive me – put a match to the bonfire.

Does it matter? I don’t think I need answer that. Pricing can be a complex discipline and there are many sophisticated minds and tools devoted to it, but for many businesses, there are two simple places to start: firstly, by asking what control you have over your marketplace pricing – and whether you have a strategy or plan for it. Secondly, how well is that plan communicated and managed within your business? Is there rigour and process in dealing with price lists, price quotations, tenders, and sales activity (including promotional offers) or is it open season? Remember, ‘demand exists only at a price’. If you can’t see the wood for the trees, or the elephant coming towards you, contact me and I’ll see if I can help.

‘Ireland After Brexit’: A personal response to an evening at the Institute of Irish Studies: University of Liverpool

Brexit has thrown up a particular curve ball in terms of future relations between Ireland and the UK. And this is considered particularly unwelcome given Ireland’s resurgence over the last three years in becoming Europe’s fastest growing economy. Last night’s talk ‘Ireland after Brexit’ held in Liverpool University’s Victoria Gallery and Museum was part of the University’s Open House series and presented by the Institute of Irish Studies. In the Chair was the Institute’s Director, Professor Peter Shirlow, the speakers being HE Dan Mulhall – Irish Ambassador to Britain, Arnold Dillon – Brexit Lead for IBEC, the Irish business and employers association , and Professor Michael Dougan – Head of Law at the University.

Short and sweet, each speaker had fifteen minutes to present their views on the issue. Ambassador Mulhall lamented the fact it had happened at all and believed the current phase was primarily about ‘damage limitation’ with the sensitivities and peculiarities of the UK/Irish border thankfully recognised by Brussels. He highlighted four key areas of concern: the border, the future of Irish/English relations, trade, and the future of UK/EU relations.  His trade concerns centred on whether the recent resurgence of the Irish economy might be impeded by Brexit. He is also concerned that Ireland may struggle to have the same voice within the EU now that Britain is leaving the table, given that together they were a formidable force. He remains absolutely certain that smaller countries like Ireland do well in multilateral organisations like the EU, and hinted that there may be a small consolation in some international companies decamping to Ireland from the UK to retain a presence within Great Britain.

Arnold Dillon agreed that neither did the 7500 members of Ireland’s largest employer organisation want Brexit nor saw it coming. He is further dismayed by the Hard Brexit rhetoric coming from Westminster, although he senses that this has been heightened by pre-election posturing. IBEC is already seeing a hit in cross border trade currently valued at £1bn a week, and interestingly, suggests that the importance of UK trade to some Irish processors might result in them eyeing bases within the UK. Otherwise he hopes for an orderly transition and a benign trade arrangement for the future, although it was stressed that this is not for Ireland for negotiate – if the EU wishes to punish the UK then there could be a different outcome which might suit Brussels more than Dublin.

Professor Dougan went on to develop the theme of who is actually driving the terms of the UK’s exit. In a short but fascinating overview, he bluntly put it that even now, UK pro-Brexit politicians simply do not recognise the legal framework they are in. The view that the High Court would come to the rescue on all legal complications being cited as naïve in the extreme. He also unravelled the concept of ‘the border’, putting it that it was not a single entity but a whole host of different controls and checks that could be treated in any number of different ways. It may be simple to negotiate, or it may be an endless morass. But for this very reason, he believes that despite the best will in the world, the border will harden. Borders are not just about customs and customs revenue!

So, there is concern amongst all we heard from that the current excellent relations and economic performance between the two states could suffer. This is compounded by a complex interrelationship between the Irish state, the UK and the EU – and in the case of trade you can also include WTO.  And furthermore, the issue goes far beyond trade and people movement: complex as these are there are many other potential disconnects buried in the detail. And the final straw? There are too many media operators and politicians who are wilfully misleading the UK and Irish public on the true issues behind Brexit. One speaker’s view was that Scotland is making a far better fist of understanding and articulating the true issues around Brexit than is the UK. So, Pandora’s Box is open. And it will be a long road to restoring any sense of ‘business as usual’.

My thanks to all concerned for an excellent distillation of some important issues. On the basis of this offering, the Institute seems to be very well resourced and placed to offer an important perspective on Brexit. And spare a thought too for HE Dan Mulhall. He leaves his post shortly to take up another in Washington DC.

 

Anyone wanting further detail and insight from this is welcome to contact me at mark@bonfiremarketer.com.

Projects: International Marketing

The advent of e-commerce, or simply the desire to expand territories and markets are both strong drivers in broadening a business’s horizons.

Your business should have a marketing strategy anyway, and if you have international pretensions, these should be in it. Otherwise, it is more likely to become a Friday afternoon or Cinderella aspect. Trading overseas is complex and that is not a good place to be!

Ignoring all the associated aspects such as currency, export documentation, and so on, there are still plenty of core Marketing issues you need to be considering. Taking each of the traditional 4P’s of Marketing as a structure, you may need to consider:

Product

  • Is the product saleable in your territory of choice? Does its composition or ingredients comply with local regulations?
  • Is the packaging suitable? Both for the task of getting it to market undamaged, but also so that the pack copy is compliant and appropriate to local regulations? And is the pack size appropriate? In the ‘States, people have garages. In Hong Kong, space is absolutely at a premium.
  • Do you have the rights to sell your brand in your chosen territory (see below)? Does the brand travel well? We all laugh at ‘Krapp!’ toilet tissue or other faux pas, but brands need to be distinctive for the right reasons.

Place

  • Why is the territory you have chosen right for you? How do you know the people there want or need your product? Is it easy to get it there? Is the political regime stable? Do you know the exact route to market (see below)?
  • Is the territory best serviced ‘on the ground’ or via e-commerce?
  • Are you going to test market? If so, where? What’s your plan?
  • What are the implications of BREXIT for you?

Price

  • What control will you have over pricing? How long is the distribution chain and who is taking a cut of the profits?
  • How do you insulate retail or final pricing against currency movements?

Promotion

  • Remember, no matter how well known you are in your home market, you are starting all over again.
  • Who is your salesforce and local spokesperson? No one knows your products and business as well as you – but then you can’t be in two places at once.
  • Be clear on your objectives: is the proposition relevant? Are you going after the right targets or just replicating what you’ve always done?
  • Are you going to hard or soft launch? Have you set a budget? Do you have local expertise and contacts?
  • Are there any cultural issues (alcohol, religion, politics etc) that might need special attention?

Example One: Cracking the US

This company had had several attempts in the past to ‘crack’ the USA. Each had ended in dismal failure until a different approach was taken. We formed a Joint Venture with a large domestic player. Our products dovetailed perfectly with theirs and by adding to their range we immediately had a sales force, a customer base and established distribution. They had their own skilled marketing team and recommended test marketing in a defined area they knew well. We had not previously done this. They had some firm views on how to get decent publicity for a modest outlay. However, we were keen to retain control of the trade selling as we knew the product best, and we wanted to understand the relationship dynamic for ourselves. My role was to act as the interface between the two parties and also oversee the Marketing we were doing. The launch succeeded and for the first time we were trading in the ‘States. The insight gained from our own studies and the local partner was invaluable in truly understanding the market. We also quickly came to understand why previous attempts had failed. At last we could move forward on firm foundations.

Example Two: Why brand protection matters

We had been selling into this distant ex-colonial territory for many years. After a strategic review, we decided that the territory was ripe for further development – particularly in the retail channel. We planned a new range tailored to local requirements and were on the point of going live when we discovered by chance that we couldn’t trade using our brand. This one territory was unique in us having long ago signed over the territory brand rights to what had been a former subsidiary. We had to abandon the entire launch. The story ended happily as we instead decided to fulfil demand by going down the private label route and volumes rose very rapidly due to the overall success of the retailer concerned, but it proved that brand protection matters, plus it is good to have considered contingency plans in case something goes wrong.

Example Three: Never assume!

I have covered this example in another sheet (Pricing, Sales Promotion and Category Management), but suffice to say, when launching through a channel you know extremely well in your own market – in this case multiple grocery retailing – do not assume that it works the same way in other territories. And leave NOTHING to chance in ensuring that your product actually makes it onto the shelf. As they say, ‘Retail is Detail’. I’m sure the same is true elsewhere.

International trading by nature can be complex. Consider teaming up with a trade association, The DTI, your local Chamber or other networks that understand the issues and can offer advice.

Mark Bosworth

Bonfire Consultancy Services            bonfiremarketer.com              07742 110018

Projects: Digital Marketing and E-Commerce

Maybe you are absolutely convinced that ‘Digital’ is the future and have built your entire business operation around it. Or maybe you want to be ‘omnichannel’ and cover all the options. Maybe you are still working out how to successfully integrate digital marketing with your current methods – or how to best trade online. In reverse order then:

  • If you are working out how to create or integrate digital marketing into your current methods, remember that the plan must be right for your Don’t do it digitally unless you have a compelling reason. Marketing a local window-cleaning business is very different to exporting air-conditioning equipment. Business owners like the idea of going digital because it’s ‘cheap’. They also like it because it’s measurable. But Digital Marketing is still marketing. It should be planned, and it should have an ultimate motive in mind: either making sales or building a hot lead database. Anything else is, frankly, a waste of time and effort. I can help you understand if it’s the right thing to do, and to put the basics in place to give you purpose and lead you to some kind of equity. And all without the techie jargon – because I don’t know any.

 

  • An Omnichannel business model basically means doing a bit of everything: you may be a traditional retailer looking to follow the crowd away from the High Street, or looking for new routes to market. This is the best and worst of both worlds. The best, because it can combine all the best aspects of retailing, and it is increasingly where the established retailers are heading. The worst, because you may end up doing twice as much work. As a seasoned observer and trading partner working with retailers huge and tiny, I have some practical advice on how to keep it real.

 

 

  • If you are a ‘pureplay’ digitally-focussed business, you will be either fighting with or collaborating with the mammoths of pureplay like Ebay, Amazon, Wiggle and many others. You might be a techie first and a digital marketer second Even when you are pureplay, your customers often aren’t. They like to get out occasionally. Have you noticed how many pureplay businesses do print advertising for example? I can act as a counterweight to the digitally-focused business and help you see the customer experience in the round.

 

 

 

Example One: The transformation from offline to online communications

This company operated primarily in B2B selling to the trade. Historically, this had meant printing plentiful supplies of price lists, product lists and trade brochures. We were regularly told this was the ONLY way customers would receive information. And yet we had a warehouse full of obsolete brochures. Very quickly, we set out the benefits of transferring as much of this as possible online. We were also able to prove that those same ‘luddite’ customers were already ordering a lot of their supplies off their smartphone! We were fortunate in having a product perfect for inspiring and engaging. What we needed were three things: a plentiful supply of content, internal agreement that a combination of hard copy and digital ‘literature’ would be more flexible, current and manageable, and the buy-in of both customers and our traditionally-minded sales team. As we progressed we realised: a) we were fast becoming digital broadcasters and needed to think in terms of programming and editorial policy. B) we needed the resources and skills to do this job as content was no longer a ‘Friday afternoon’ task. C) We were able to use the data we were collecting to gather a degree of insight and intelligence we could never have afforded through traditional market research, along with a plentiful supply of qualified leads.

Example Two: The world-wide web!

A key benefit of digital for export companies is its worldwide reach. Very quickly, huge strides have been made in being able to offer instant translation widgets to all and sundry. Job done! Or is it? When we decided to launch our range of food products into the US, our website was going to be the only marketing communications tool we needed. Right? Wrong! Our product lent itself to demonstration and inspiration. The trouble was that there was a specialised vocabulary to this pursuit and we and our American audience didn’t speak the same language. As it turned out, everything, from product descriptions, product specifications and the terminology we were using to explain our products needed to be adapted. After all, we had decided we were just ‘foreigners’ taking a speculative punt: we were serious about presenting our brand and products as specifically tailored to the US market. So, one technology, one website but a complicated marketing task if we were to succeed. We succeeded and the process has since been repeated elsewhere. And it proves that the technical solution is often completely different to the marketing solution. I can show you how.

Example Three: E-commerce

When you are selling B2C (i.e. to the general public), you have to have a strong retail focus. Enough said. Selling B2B (to trade), is a different but equal challenge. Selling to both can be complicated! In two (B2B) companies I have implemented an e-commerce route to market. They had very different objectives and fulfilment was also different: one in-house and one using a specialist fulfilment house. And businesses that are predominantly B2B sometimes benefit by creating their own route to market. Of course it needs to be done carefully to avoid a trade backlash, but if you want to offer your whole range or even want to ‘trial market’ new products, this can be a useful tool for both generating incremental business and improving your new product launch strike rate.

It’s worth remembering though that the ‘moment of truth’ is always when the customer has their goods turn up on time and intact. But this is often outside the expertise and control of you as a seller. How do you manage this? And do you want to create any e-commerce infrastructure or simply sell it via an Amazon or Ebay store? It all depends what you want to achieve. If you want an impartial view to understand the options, or understand what you really need to focus on, I can get you started.

Whether you are looking to make your marketing communications more engaging, more measurable or more integrated, I can help. And if you are looking to trade and need a retail-eye view of how to do it, again, just ask.

Projects: Leadership, Mentoring and Coaching

  • Effective implementation of these three components allow business leaders to mould company climate and culture, helping to develop resilient, effective and self-sufficient people so that delegation and trust become the norm. Leaving you the time you need to think ahead.

 

  • Three perspectives on Leadership:
    • ‘Great leaders are born, not made.’
    • You manage things…you LEAD people.’
    • ‘Leadership occurs when one person induces others to work towards some predetermined objectives.’

 

  • Each of these present specific dimensions to leadership. The first is an incorrect perception which, unfortunately too many people have. They talk themselves out of being a leader, and they also sometimes look for the wrong qualities in what makes a leader. Secondly, because you are a manager, you may also need to lead. But leading and managing are not the same thing. Finally, it is also assumed that you can only have one leader and they are at the top of the organisation. Not so. Anyone, anywhere can lead, and instilling the basics in people while they are still relatively junior will augur well for when they need to lead well. Does your business define and nuture leadership?

 

  • Coaching informally gives people the skills they need – hard and soft – as they build their career. Core skills tend to be learned through formal, structured training. But there are many other skills needed in the professional’s toolkit that need communicating somehow. How do you identify the people who can coach, and those that need it? How do you deliver it so that it develops – rather than destroys – confidence?

 

  • Mentoring, goes one stage further. Although it can encompass both of the above, it completes the personal development plan by filling in the gaps and looking at the complete individual. I find, it is unevenly treated in the working world. Some businesses insist on it. They’ll pair you with a mentor or mentee and your relationship is formally assessed. Some individuals realise a benefit and seek out a mentor. Few businesses sit anywhere between these two extremes. Mentoring is not managing, and it requires special skills. They aren’t magical, but they are different. Get it right and you have a very robust support network for your people as they navigate fresh challenges and deal with the 360 degree world we call ‘life’.

 

  • In all three cases, the perspective I offer is NOT one of the psycho-analytical expert. However, I have been the recipient and deliverer of all three in a long and varied working life. I have seen and experienced the benefits from both sides of the relationship. I have successfully implemented techniques across all three aspects and have seen the powerful effect good practice can have.

 

  • And so my service is less about ‘everything you need to know’, but more about understanding how these aspects can be incorporated into your organisation in an appropriate way. To understand how some simple assessment, reflection, planning, experimentation and review stages can transform your people from ‘doers’ to empowered and activated colleagues who can eventually be left to run your business while you find the time you need to plan ahead.

 

Example One: Leadership

This company realised that there were too many managers who were task-oriented and were not developing the people below them. It created a succession-planning problem. The solution was to embark on a major leadership training programme. The second most important aspect was that all managers received the same training. It set a benchmark, it transformed so many aspects of personal behaviour, and the effects on some individuals genuinely amounted to something of a revelation.  However, the most important aspect was the attitude each individual was encouraged to develop within the sessions. If you engage, loosen up and talk honestly and openly, it is surprising what happens. I was a recipient of this experience, I went on to practice it with great success within my business function and I can also put you in touch with the organisers who can deliver the ‘full fat’ version of what I experienced. You have to start somewhere and I can help leaders at all levels in your business to understand what leadership REALLY is and how to unlock people’s true potential.

Example Two: Coaching

Amongst my peers I’ve noticed I’ve been unusual in routinely making time to coach. Without ever becoming the Company Agony Aunt or Shoulder To Cry On, I reached out to people who were in danger of sinking, and was also approached to help or simply listen. And we all ended up learning something. If you have the right culture it is easy to do, and the benefit comes when you find that your colleagues are stepping up to the plate to take something off yours because they feel empowered, confident and trusted.

Example Three: Mentoring

Another outcome of the Leadership programme mentioned above, was the decision to implement a mentoring programme. After appropriate training I then mentored two colleagues in distant functions (generally, it works better that may). I have also been a Business Mentor for the Prince’s Trust. This put me in contact with people who were often in ‘last chance saloon’ in terms of career options and they were not always natural entrepreneurs. I have also had a mentor of my own and his own advice and pithy aphorisms have stayed with me as much as anything else I have learned. As a result, I can present the case for having a Mentor programme and provide ideas on how to encourage and implement a programme to nurture the individual in any aspect of their life such as they require – as and when they need it.

Projects: Pricing, Sales Promotion and Category Management

  • I group these together as there is a natural link between them when it comes to moving your product off the shelf and into the basket. The process is the same whether it’s goods or services.

 

  • Correct pricing is crucial, but too often it is used as the only marketing tool; a blunt instrument to shift product. And if you get it wrong, it’s hard to get back on track. Or maybe your sales force are opening new accounts rather than profitable business? Do you know how much your products REALLY cost? If not, you are not in control of your profit stream. And if you are selling along a convoluted route to market, how do you work to keep your fair share? I can help.

 

  • Sales promotion is directly connected to pricing. If you aren’t in control of the above, you are probably not in control of your promotions. Do you promote on percentage or cash margin? Does it matter? Do you check in advance whether you are going to actually financially gain from it? Surprisingly few people bother. Point-of-purchase promotions are a fascinating exercise in understanding consumer behaviour. Often, price has nothing to do with the promotion mechanism. And when you do promote, is the product actually on shelf to be bought? Discover how to avoid giving your products away.
  • Category management is a more specialised discipline but it introduces fresh challenges: obtaining and using market data, conducting commercial analysis of what it suits you to sell, and what it suits the consumer to buy. In retail nowadays, suppliers are often effectively renting shelf space off the retailers, in which case you don’t want to have goods on the shelf gathering dust!

 

Example One: Pricing

This company operated across three distinct distribution channels and also exported. The sales force was generally well resourced and managed, but the sales managers themselves were individually given a long leash in how they negotiated prices. I was concerned by the complexity of the price structures and whenever prices files changed, it was a very complex admin task – even with very comprehensive systems. Each customer’s pricing was effectively bespoke. It didn’t always take account of their size and when you tried to compare product prices across customers or channels, there was no consistency. I was working with an external consultant and we proposed developing a standard price list which managers could then apply an approved discount against where it was justified. The issues were getting senior level approval and sales manager buy-in, along with having to unravel and re-present some extremely complicated customer price lists. Fortunately the Commercial Director supported the plan and attempts to undermine the idea failed. This immediately provided an ‘anchor’ so that anyone could see where to start, and clear boundaries were also implemented to ensure that any major deviations were approved in advance. Even the sceptics came to realise that it just made life easier – including negotiations where the go/no-go line was much better defined. We walked away from unprofitable business rather than succumb to the temptation to point to the ‘success’ of opening another problem account.

Example Two: Sales Promotion

This company sold a highly seasonal product which was an essential Christmas purchase. It was asked to price promote the product in the run up to Christmas but it declined. It didn’t go down well with the retailer concerned but we explained our logic. If you are in a highly competitive category then there is some sense in incentivising people to put your brand in the basket. However, the company had already ensured that it had a high share of supply. It provided both branded and private label products to the retailer in question so provided the customer was in that store, they would probably be buying the product in some form. Retailers like promotions to enhance their price credentials, but it doesn’t always work for suppliers. Why cut your prices when people are buying anyway? Of course there are exceptions, but you sometimes need an experienced head to decide what suits you best. And sometimes, if you are unsure of a payback,  it’s best to do nothing.

The second example concerns international markets. It is tempting to think that globalised industries work the same the world over. But they don’t. I have worked on a number of launch projects in the US. Early on, we assumed that the supply chain worked the same as in the UK, such that we shipped the order, the US distributor would deliver it to a depot and voila! It would appear on shelf.  Some weeks later we went to visit some stores to see the products in all their glory. Except they were nowhere to be seen. Had they reached the store, we asked? Yes they had. Why hadn’t the store people taken the products from the warehouse to the shelf then? Because, in the US, store workers don’t do that. The suppliers do, via an army of contracted ‘merchandisers’ who roam the store network and put the product on the shelf. No-one told us! But then, we didn’t ask and the distributor thought we knew. Some parts of the world love British goods and brands. But don’t assume they distribute them the same way. There is plenty of help around, but it’s good to know the right questions to ask in the first place. I’ve learned the hard way!

Example Three: Category Management

This business was a major supplier to a particular food category and regularly had to present insight to the retailers’ commercial teams. The deal nowadays is that as a responsible and valued supplier, you provide a significant amount of the market insight to the retailer both to justify why your products should be on their shelves, but also to advise them on how to maximise the profitability of the whole fixture – not just your own portion of it. There is an established suite of market information that both retailers and suppliers use and it is robust and detailed, but expensive. Retailers sometimes nominate one supplier to be their ‘Category Captain’ and this is a mixed blessing: it brings you into regular and close contact with your retailer Buying team, but the cost of the insight you need in order to perform the role satisfactorily is beyond the reach of most.

We addressed this by being creative about the information we were presenting. We were fortunate in selling not only to retailers, but also to wholesalers and manufacturers. So we had a complete picture of the vertical market. We also used our social media activity to harvest insight that was both rich and unique. Only we had this information and within it was all manners of clues as to what customers were using, why, when… and what was still lacking. We didn’t have the grunt of the big boys, but we were nimble, imaginative and intelligent. For the price of managing a genuinely interactive social media programme, we kept a seat at the top table when it came to listing decisions AND we could innovate with purpose and confidence. If you don’t have unique insight, find it. If you have it, use it!

Projects: Innovation and Product Management

  • Maybe you’ve always made what you make or provide. Maybe you invented it and then converted the world to use it? Either way, you need to actively manage your products because the one constant in life is change. Be prepared for them to be a novelty, then a staple and, eventually, a white elephant.

 

  • Most products go through each of these phases. You may have one product going through each of these phases, or you may have a wide range with every product at a different phase in its life. Are you in control, or just hoping your luck will last?

 

  • You may have widely differing margins, selling some products at a loss – or profiting hugely on the latest flavour of the month. Or worse still, you may not even know how profitable each product really is. Every product you sell at a loss is impeding you: possibly killing you. Selling a few units at high margin may be easier and less stressful than selling many at low margins. Hitting the ‘sweet spot’ can seem like doing a Rubik’s Cube. But with a bit of order, analysis and hard-headedness, you can take back control and sell what it profits you to sell.

 

  • Are you a production-led company? Maybe sales-led, or even market-led? Why does it matter? I can tell you the difference and why one – and only one – is the better way. Here’s a clue: if your customer doesn’t want or need it, they won’t buy it. End of!

 

  • Do you have a product pipeline? If so, what’s next? What will insulate you from becoming obsolete? What do you expect to be selling in 3 years’ time? Five years? How do you know what your market will want then? How long will it take you to respond if people stop buying from you? What even IS ‘innovation’??

 

Some examples of work I’ve done – but no names to protect the innocent!

Example One

This company had over 600 products on its books. A proportion of these sold at a loss. Others sold so infrequently the stock was out of date by the time the order came in. The value of stocks was increasing. Previous attempts to cull the range had failed due to the influence exerted by salespeople and their mantra that ‘the customer gets what they want and they expect (insert name of loss-making product here) as a service’. We had plenty of data and information. Great systems. But that wasn’t the issue.

In the end, someone had to grasp the nettle. It was me. I was responsible for product management but most people expected that to mean I just added new products to the list. It couldn’t go on. So, I teamed up with the head of supply chain who had all the information we could wish for. He was no mug: he’d previously project managed the building of nuclear submarines. He was also as fed up as I was with our efficiency and service levels. That was why I chose him as my key project ally.

We quickly established that half our range – 300 products – were turkeys. So, we matched the cull list with alternatives to offer where we could. Then we told the sales force what was going and when we’d like it to happen. We also prepared for the expected backlash, and ensured the board knew what we were doing, why and that they supported us. For the first time in living memory it happened. We lost no customers, we reduced stock and the factory ran more efficiently. And for me as a product manager, I had half as many products to manage, so I managed them twice as well as before. The moral of the tale here is that to do nothing is not an option! Everyone has information in hatfuls nowadays, but where’s the action plan?

 

Example Two

This company had a problem with ‘Innovation’. It hadn’t defined what it meant by the word. For every person who thought it meant blue sky, ground breaking revolution, there was another who thought it meant one spoon of sugar rather than two, or the same product in a new jar with a new label on it. No wonder we were confused and mired in inaction while our competitors caught up!

There were other problems. A long list of new products was under development. We had more forms than you could shake a stick at. Meetings were shambolic. Except for the development team, everyone else in the business regarded innovation as something that got in the way of the real job. And the products would fail anyway: they always did.

My first response was tactical: we had agreed to launch a range and we were going to deliver it come hell or high water. We made what we were good at and sub-contracted the ones we weren’t good at. We revised our processes to make them more proportionate: enabling us to be swift and nimble at trying out ideas with minimal risk rather than betting our shirt on The Big One that needed a hundred signatures to sign it off.

Strategically, I asked us to be clearer on what we defined as Innovation. And I also helped the business to better understand that Existing Product Development (EPD) is actually less risky than New Product Development (NPD), and can deliver a quicker result to the bottom line.

Example Three

This company made both its own products and products badged for other people. Private label as it is known. Unfortunately, when you are a small producer and your trade customer is a multi-billion-pound household name, it can be a problem to hang on to your crown jewels: the products that your customers know you for. How do you protect them?

There is a temptation to roll over and hand them over, for sure. And there is also nothing wrong with taking the opportunity to do private label. Indeed, there are real advantages. But if you do want to develop and sustain your own brand long term, you must stand firm. But don’t be obstinate. One company I worked for took this to the logical extreme and insisted that it was their brand that went on shelf, or nothing. Successfully digging us out of that hole is why I have the medal to prove that I can square the circle. It requires you to be innovative to ensure there are enough products to go around, but you must also understand your own customer and the end consumer thoroughly so that you can work out why one size rarely fits all, and that flexibility and astute product management can create a genuine win-win. That’s what we did in this case. We identified a key difference in the proposition and it all fell into place. In one business we ensured the private label offering lagged behind the brand. In another we actually proposed the most innovative products for private label first. Both can work well IF you know why you are doing it.

It is said that eight out of ten new products fail. I can help you radically improve on this and help you avoid betting your shirt on a 100-to-one shot. Innovation has many facets. I can help you find the one that suits you best and then excel at it.