Modifying the product mix, adding a product to the product portfolio.?

Question

how does this go???help!

Answer 1

What do you mean, "how does this go?" Do you mean how is it done? Very carefully, for starters.

I don't know what category of product you're working in, so let's take a random example: Popcorn.

Let's say your brand of popcorn is a nationally advertised, well known brand that offers three SKU's (or variants); plain, butter and white cheddar flavors. Adding a product to the mix would be, for example, introducing a new flavor variant: Movie Style Butter. All good, right? Sometimes.

Introducing a new SKU almost always results in a sales spike; consumers like new things and "trial", especially if supported by advertising and promotion (coupons) is fairly easy to get. "Repeat", however, is another story. Sure, if your new flavor rocks and people love it on the initial trial, they'll be back for more. But you have to ask yourself (and crunch the figures to find out) if the new Movie Style Butter is taking away from your competitors sales or just cannibalizing your Original Butter SKU.

If the Original Butter sales are flat (stable), that's good. It's means you've added to your product mix without hurting the overall portfolio. But here the trouble can often start.

Sooner or later the sales of the "new" SKU will even out to a flat line. No more sexy sales spikes to show off in divisional meetings. At this point many brand managers become addicted to launching new SKUs because only "news value" tends to drive new sales in packaged goods. So they'll introduce new Carmel Flavor Pop, new Hot n' Spicy Pop, new No Salt Added Pop...

The trouble, besides putting a ton of money into R&D and consumer testing, is that stores will only give even the most popular brand (of anything) so many facings. "Facings" are how many different variants of any given brand the stores will grant space to on their valuable shelves.

Another major issue is "brand correctness" in launching new variants. Let's say your brand of popcorn is well known and loved as being "the true Old Fashioned popcorn." That means introducing a new SKU that pops up into bright blue kernels and is called Space Pop would be off-brand and would do great damage to a brand image built up over many years to the tune of millions of dollars in ad spending. In fact any brand manager to even suggest such an outrageously off-brand idea should be offered not a new product but a new job. Somewhere else.

Another way to modify the product mix would be to add something or some things that are not merely flavor variants but do make "brand sense." The True Old Fashioned Popcorn, for instance, could put its brand name on a set of earthenware serving bowls or a line of flavorings/spices the consumer could add herself.

To drift to another category, a bar soap branded as a "facial cleanser" for zitty teen girls could, in addition to liquid, sensitive and unscented varieties, launch branded, disposable "facial towels" or even a line of "oil free" make up. To introduce a dish washing liquid, however, would be insanity (and wither over 20 years in marketing behind me, I've seen things every bit as insane in the real world, believe it or not).

Does that help?