Customers buy satisfaction or solutions, not the individual parts. Therefore, it is important that you have the right selection of products to ensure that you deliver value to your customers.
Providing the right product, when and where and how the customer wants it, is a challenge (but critical to boosting the performance of your business). A lot of time and money is wasted when you do not understand the different strategies and processes required for developing products over their life cycle. Businesses who take time to review their product mix and new-product planning, will enable them to stand out rather than sell “me-too” products.
We know that there is a high failure rate of new products, but this rate can be reduced when businesses recognise where their products are in the life cycle and then put proactive sales strategies in place.
What makes up a product?
Offering great products is essential to being both competitive and profitable. This requires that you take time to review and understand what exactly makes up your product.
Firstly, I want you to think of what your “whole”product is and understand all of the elements that go together to make the “whole”. Most leaders think about a product as a physical good. However, we want you to start defining your products more broadly.
I want you to think about your products as more than just the goods and services you deliver. It may not even be a physical good at all – it may be a service you provide; or a combination of both.
But that is not all. When thinking about your product, you should also be thinking about branding, packaging and warranties to maximise chances of success.
- Branding can mean the use of a name, term, symbol or design to identify the product. It is a simple way for customers to recall . It can be used as well to protect your product innovations through using “trademarks”. It also allows you to guarantee the quality of the product which leads to repeat purchasing. (We all know that repeat sales means lower promotion costs and higher sales).
- Packaging involves promoting and protecting the product. Good packaging makes products easier to identify and promotes the brand at the point of purchase. When the product is branded and packaged well it will generate further sales and promote cross selling opportunities. Another benefit of packaging is that it can be used to make your product more attractive to a different target market or customer group.
- Warranties explain what the seller promises about the product. To be effective, you need to make sure you can afford what the warranty will cover and how it will be communicated clearly to customers. We have seen how a warranty can make the difference between success and failure, especially when your product is quite innovative and new to your industry.
Matching Products to Customers Needs
The next most important thing is to ensure that you match your products to the needs, wants, desires and concerns of your customer. Sometimes, only providing one product is not enough to meet the needs of your target customers. You need to start thinking about whether you have the right product mix?
There are two ways to look at your products. The first is the combination of products that you may offer. For example, if you take our typical clients, most have built a business around a product mix that includes installations, accessories, raw materials (e.g. farm or natural products), components (e.g. parts or materials), professional services and supplies (e.g maintenance, repair or operating). You can build and integrate these products as new offerings to existing customers in order to maximise revenue sales.
The second is to look at your product mix. How do your customers adopt your products and what can you do to either increase sales through up-selling or look at better ways of attracting new customers. Take some time to map out your product mix and ensure that you have the right number of products. As an example, you may choose to do a “loss-lead” introduction product, such as a free review or report, to build a relationship and make recommendations on how your products can help solve the problems of your potential new customer.
Understanding The Product Life cycle
Now that you have defined your products and have the right mix, the next step to a great product sales strategy is understanding your product life cycle. This concept is important to developing successful sales and marketing strategies.
The product life cycle enables you to understand the different sales strategies required as a product moves through each stage. This is important because profitability changes during the life cycle. While most of the profits go to the innovators or early imitators, it is important to note that whilst the figure below has a typical product path, this may be slowed or accelerated by either the market you operate in or the number of competitors you have.
The above diagram shows the typical changes in sales revenue over the product life cycle. The stage at which a product is in its life cycle and the speed at which it is moving towards the next stage should affect your sales and marketing strategy. What worked at the beginning when you launched your product, may not work through the following stages. You may need a different strategy as you go through each of the stages.
Putting It Into Practice
Most business owners will do this intuitively but it can become very costly – especially when your business grows. Think about assigning someone in your business the responsibility of Product Manager, or develop a Product Innovation/Investment Committee to manage individual products and ensure that you access all the ideas and capability within your business. The more organised your process is, the less likely you will be leaving profit on the table.
By now, you should start to realise that there is a lot of strategy and planning that goes into boosting your business performance through sales. To be competitive in the current marketplace, business leaders need to think about their products in more depth .
Related Article Links
- Boosting Business Performance Part 1: The Strategy
- Boosting Business Performance Part 2: The Sales Goals
- Boosting Business Performance Part 3: The Pipeline
- Are Your Customers Getting The Message?
About The Author
Tim has vast experience in the strategic and financial management of businesses with a particular focus on cash flow and profit improvement, strategic thinking and performance reporting. He has extensive knowledge of business start-ups and acquisitions as well as exit and succession planning. Tim is an adviser with Supertrac, a corporate advisory firm specialising in business divestments, mergers and acquisitions.
Tim is a Fellow of the Institute of Chartered Accountants (FCA), Graduate of the Australian Institute of Company Directors (GAICD) and a Certified Exit Planning Advisor (CEPA) with the Exit Planning Institute (EPI).
If you have any specific questions or would like to suggest future blog topics, please do not hesitate to contact Tim on firstname.lastname@example.org.
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