Friday, January 3, 2014

Core Business Processes - Manage Product Portfolio

Description


This process manages the portfolio of products offered by the entity and develops new products or improves existing products as markets and customers needs change.

Sub Process Components

Portfolio / Brand Management

Process Objectives

  1. Focused product portfolio
  2. Growth opportunities
  3. Increased share of market
  4. Product differentiation (brands)
  5. Increased sales (volume and value)

Critical Success Factors (CSF’s)

  1. Development of product/brand recognition  (1,2,3,4,5)
  2. Maintenance of retail customer support (3,4,5)
  3. Promotion/deal effectiveness (3,4,5)
  4. Awareness of products with the most potential for increasing sales (1,2,3,5)

Key Performance Indicators (KPI’s) Linked to CSF’s

  • Promotional spending, market share (A)
  • Trade spending/customer paid promotions (B,C)
  • Incremental net revenue; incremental market share; promotional redemption vs category norms (A,C,D)

Inputs

  • Strategic plan
  • Operational constraints
  • Consumer / customer research
  • Market research
  • Competitor research
  • Self-assessment of strengths / weaknesses
  • Current and past sales and market share

Activities

Outputs
  • Product pricing
  • Projected market share

  • Advertising and promotion plans
  • Timing plan for evolution of portfolio

  • Budgeted sales and profit

    • Systems

    • Customer / marketing database
    • Materials, packaging specifications and costs

  • Budgeting and forecasting systems

  • Executive information systems

    • Classes of Transactions

    Routine
    • Advertising (brands)
    • Promotional / direct marketing costs
    Non-Routine
    • Barter transactions
    Accounting Estimates
    • Accruals (coupons, mailers, displays)
    • Deferred promotions
    • Intangible assets (brands)

    Risks Which Threaten Objectives

    1. Noncompetitive pricing (3,5)
    2. Low brand awareness (brands) (2,3,5)
    3. Ineffective promotion (brands) (2,3,5)
    4. Lack of vision/description when assembling portfolio (1)
    5. Lack of creative product development team that understands market (4)

    Management Responses Linked to Risks

    • Monitor sales gains, losses and competitor activity (A,D)
    • Regular consumer research and dialogue (A,B,C,D,E)
    • Tracking of promotion/advertising results (A,B,C,D)

    Other Symptoms of Poor Performance

    • Long trail of low volume, low profits

  • Low redemption of consumer promotions

  • Overlap of product positioning

    • Performance Improvement Observations

    • Promotional effectiveness analysis
    • Promotional modeling

  • Database marketing
  • Accounting method review

  • Executive information systems
  • Strategic review of brands (positioning, pricing)

    • New Product Development

    Process Objectives

    1. Improve sales and profit
    2. Deliver customer satisfaction
    3. Refresh product mix
    4. Expand existing market

    Critical Success Factors (CSF’s)

    1. Effective use of market research (1,2,3,4)
    2. Ability to respond quickly to market opportunities or   competitive threats (1,3)
    3. Meeting consumer/customer requirements on price and performance of new products (1,2,3,4)
    4. Effective use of all resources dedicated to introducing new products (1,3)

    Key Performance Indicators (KPI’s) Linked to CSF’s

    • Internal failure rate; impact of internal failures (A,D)
    • Product development cycle time (B)
    • Percentage of revenue from new products; market share of new products (B,C,D)
    • Introduction return on investment (D)

    Inputs

    • Market research
    • Packaging / production research
    • Strategic plan
    • Timeplan of evolution of portfolio
    • Consumer research
    • Competitor information
    • Supply chain
    • Customer research
    • ·   Production facilities

    Activities

    Outputs
    • New products
    • Budgeted sales, costs, profit

  • Advertising / promotion / public relations
  • Product designs / specifications

  • Projected market share
  • Material, facilities and resource requirements

    • Systems

    • Customer database

  • Market research database
    • Product / research and development databases

    Classes of Transactions

    Routine
    • Costs for designing and developing prototypes, including wage costs and capital additions
    Non-Routine
    • Third-party alliances / royalty arrangements
    • Research and development funding arrangements
    Accounting Estimates
    • Reserve for obsolete products

    Risks Which Threaten Objectives

    1. Too slow to market with new products (1,3,4)
    2. Failure to get trial of new products (1,3)
    3. Failure to get sustained sales of new products (1,2,3,4)

    Management Responses Linked to Risks

    • Use of cross-functional teams to ensure accurate product costing, manufacturability and customer/consumer acceptance (A,B,C)
    • Obtain feedback from customers/consumers to advertising and promotional concepts (B,C)
    • Approval of market research, product development and product introduction plans by senior management (A,C)

    Other Symptoms of Poor Performance

    • Low production efficiencies
    • New products only cannibalise own business

  • New products are copies of other products

  • Inability to service marketplace

    • Performance Improvement Observations

    • Competitive market and product analysis
    • Research and experimentation credit analysis

  • Product development design process
  • Capitalisation review

  • Cost re-structuring, re-allocation

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