Product range optimization is a simple way for improving a company’s product range and outlining the primary features of those products — a strategy that can save a lot of money while also increasing sales.
What is the need for product range optimization?
Which product to develop next? This is one of the most difficult challenges that companies face. Should one build a product with a lot of features or just a few? Should it be a high-priced or low-priced one? Is this a new product or a new series? These are all critical concerns that each company must address.
Some businesses have more products in a given category than they require. They put a lot of time and money into creating, manufacturing, and marketing these additional items. Every SKU (Stock Keeping Unit) necessitates work, real estate, and logistics, which are all paid for by the company’s retailers. However, the main effect of over-range is a decrease in sales. When it’s tough to identify the distinctions between different product models, the customer’s purchasing process becomes more complicated and perplexing. As a result, shoppers are more likely to leave their purchase before reaching the cashier.
Other companies may have fewer products in a category. Their selection is too limited; they don’t provide adequate options to their clients. Consumers prefer to buy from a larger collection, where they have a better chance of finding what they need. Such businesses miss out on sales opportunities and lose customers who prefer to buy from a larger collection, where they have a better chance of finding what they need.
Although it may appear contradictory, many businesses suffer from both an over-and under-product range at the same time. This is where product range optimization help.
Steps involved in product range optimization
- Create and stick to a well-defined process.
Well-defined portfolio analysis will give you a comprehensive perspective of your complete product range, discover possible areas of weakness, and point out areas where you could invest or develop further. This range optimization technique, for example, advises mapping product offerings by price and customer segment to identify areas of overlap and new opportunities.
- Evaluate each product line independently.
Many product lines function as independent silos within larger corporations. As a result, it’s critical to assess each product line separately to discover its strengths and limits. For each product line, firms should have a thorough understanding of brand awareness, customer choice, and customer satisfaction.
- Use Conjoint Analysis.
There may be similarities between different products (in terms of client group and value) in a multi-product range. Businesses can assess the relative brand and product strength of overlapping items in these scenarios and should undertake conjoint analysis to see if two or more similar products are stealing market share and margins from one another.
Whether your company sells computers, coffee machines, or camping tents, using Product range optimization to plan and develop your products can save you a lot of money and time, as well as improve sales by simplifying the purchase process for your customers.