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