The other day, I held a seminar for a network of small businesses to help them define their strategies for market growth. Even though the businesses were very different, this approach was not only relevant to most of them, it also inspired them to re-write their marketing strategies. What does the product table do? I got each owner or director of a small business to walk through five steps in creating their product table: - 1. Draw four boxes in a x 2 table.
- 2. At the bottom, label the columns 'low' and 'high' and write 'market share' to show the amount you sell.
- 3. At the left side, abel the rows 'low' and 'high' and write 'growth potential' to show the scope for growth.
- 4. Mark the low/low box 'X Exit', low share/ high growth box '? Problem child', low growth/high share box ' Good earners' and the high/high box '* Star'.
- 5. Write each of your product names in the appropriate box.
I was interested how many insights my audience got just from tabulating their products in this way. Suddenly they could see which products are good earners and which create problems. Of course the stars tend to be well known but it can be hard to own up to exit a product to which you have an emotional attachment. How do you market profitably? Talking though the ideas that these small business people had, we came up with four approaches that they wanted to pursue: - With the 'problem child', your sales are low and there they will stay unless you boost them actively. So you need advertising, promotions and sales push. You might also look at re-sourcing your suppliers and re-designing your product to renovate it.
- Conversely for the 'good earners', you can continue to collect the revenue and you should avoid wasting marketing effort on them.
- The 'star' is your exciting line that you should continue to push hard. Nothing should prevent you from delivering this product to your key customers.
- The 'exit' products are only useful if they support products that are more exciting. Be brave and chop these products ruthlessly then you can re-use their shelf space and re-focus your sales effort.
How do you maximise contribution? In the short term, you can use cash from the 'good earners' to boost a 'problem' product into a 'star'. I would also advise chopping your 'exit' products to focus better on what your customers want. If you follow these simple steps, every product will turn a profit, and your small business will flourish. Of course, markets change continuously so you should review these product strategies at least annually. My small business clients find that coaching encourages them to face the hard decisions that they know they need to take now. When will you review your product table next? |
