Deciding what new products to develop and what of your current products to keep, change, or cancel from a product line or collection is one of the most critical strategic decision for any business. To make informed choices, you should follow a structured and rational approach that involves analyzing data, considering market dynamics, and aligning with your overall business goals. Here’s a step-by-step guide to help you make these decisions:
1. Data Collection and Analysis:
• Gather data on the performance of each product in your line. This should include sales figures, profit margins, customer feedback, and any relevant market information.
• Use quantitative metrics such as sales revenue, volume, and margin, as well as qualitative metrics like customer satisfaction and feedback.
2. Segmentation and Categorization:
• Segment your product line into categories or groups, creating a Collection Structure, to identify oversupply of products that generates internal cannibalization or potential voids in the collection
• Categorize your products based on factors like profitability, growth potential, market demand, and strategic importance to your brand.
3. Market Analysis:
• Analyze market trends, competitive landscape, and consumer preferences. Are there emerging trends that your products can tap into, or are your products falling behind in terms of features or pricing?
4. SWOT Analysis:
• Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) for each product or product category. This will help you identify their current and potential future positions in the market.
5. Profitability Assessment:
• Evaluate the profitability of each product, considering factors like price, production cost, shipping cost, eventually import tax & duties, sales & communication expenses. Are there products that are consistently unprofitable or have low margins?
6. Customer Feedback and Satisfaction:
• Pay very much attention to customer feedback, reviews, and complaints. Are there products that consistently receive negative feedback or have a high return rate? What products do your customers value most and for what features?
7. Strategic Fit:
• Assess how each product aligns with your overall business strategy and brand image. Do they complement your core offerings and brand value proposition?
8. Lifecycle Stage:
• Consider where each product is in its lifecycle (introduction, growth, maturity, decline)
9. Scenario Planning:
• Develop scenarios for each product, considering what might happen if you keep, change, or cancel it. Estimate the potential impact on revenue, margin, customer loyalty, and market position.
10. Decision-Making Framework:
• Create a decision-making framework or matrix that takes into account all the above factors. You can use a scoring system or a qualitative assessment to prioritize products.
11. Test and Pilot:
• If you are uncertain about the impact of discontinuing a product, consider piloting or testing the change in a specific market or with a limited group of customers before making a final decision.
12. Execute:
• Implement your decisions based on the prioritization and analysis you have done.
13. Monitor and Evaluate:
• Continuously monitor the impact of your decisions and be prepared to iterate. The market is dynamic, and your product lineup should adapt accordingly. After implementing changes, regularly evaluate the outcomes against your expectations. Adjust your strategy as needed.
Remember that these decisions should be made in the context of your long-term business objectives and brand strategy. Start from the sales and market analysis but be careful: numbers if read superficially can easily lead to wrong conclusions. And do not forget that qualitative feedbacks from key-stakeholders are also crucial for the constant improvement of your product line.
