How to focus the production resources on the products with the highest potential?
The Challenge: Our client considered purchasing a new production line – an improved capacity one, able to produce different types of new products to be added to the current portfolio.
In order to focus its production resources on the products with the highest potential, the company wanted to find out which are the most promising products in the future portfolio.
As long as the company was already well established in its category and markets, the possible cannibalization was also a topic of extreme interest and importance.
In short, the key question behind this tough business challenge was: “What combination of product types in our portfolio would generate the highest possible purchase interest among the widest possible audience at lowest possible production cost?”
The Approach: We designed and ran a quantitative survey, product test in central locations.
Six different new product types (which could be produced by the new production line) were tested.
We ran TURF analysis to answer the specific question.
The Outcome: Our research revealed that the optimal “additional” portfolio consists of 3 product types only.
Adding a fourth product type would not increase neither the appeal, nor the reach of the portfolio enough to justify the increased production cost.
As long as there were two possible sets of an optimal additional 3-product-types-portfolio, we complemented the research with Source of Volume analysis, which revealed significantly lower levels of cannibalization for one of the combinations – and thus resolved our client’s issue completely.