A.G. Lafley’s recent bold announcement that P&G will dramatically reduce its number of brands came as big news to many in the business world and particularly in the consumer marketing space. However, we believe the B2B marketing and product management space should take heed as well.
Often, B2B marketers and product managers are so focused on day to day execution that they don’t take enough time to review their portfolio at a high level and answer some key questions:
To what extent does my product portfolio follow the 80/20 rule for revenue and profit?
If it does, how do the lagging 80% differ from the leading 20%?
- Are they on trend or off? Are they necessary even today and how will that change 2-3 years from now?
- Are they more or less profitable than the rest of the portfolio?
- How could we restructure these products to improve sales or profitability (better cost position, better marketing/sales execution, improved operations/logistics)?
Which customers purchase these lagging products?
- Have we asked them what their reactions would be if these products no longer existed? Would they switch to another offering in our portfolio, switch to a competitive alternative, or do something else?
- Does the customer makeup of our lagging products tell us something about the market segments that we serve? Are they focused on less profitable parts of the market?
What would the internal reaction be to culling some products?
Are the lagging products a drain on resources (sourcing, operations, logistics, etc.)? What growth initiatives could your organization support with freed up resources?
We hope this raises important questions for you. Have you spent enough time looking at your portfolio? Is there anything else B2B marketers can learn from P&G’s recent announcement?
