- 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!
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 Others sold so infrequently the stock was out of date by the time the order came in.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?
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.
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.