We are in the middle of exploring more targeted approaches your business can implement in the current market cycle and how to capitalize on these unique times. Building off our recommendation to consider Scaling Through Acquisition is the urgent need to address products and packaging.
Did you know that a significant amount of what you perceive as product innovation in the marketplace comes from how products are packaged, rather than new innovations to the item? As we move through the current economic cycle, now is the time to review your products and their packaging to ensure they still meet your customer’s needs.
These concerns – what you offer and how you deliver it – must be examined in detail before you can capture the exciting opportunities for innovation during the recovery.
Here is how we guide our clients in appraising their current products and packaging and then create a structure for greater profitability and relevance.
Our Assess-Design-Evaluate Methodology
First, we conduct an in-depth assessment to ensure that your positioning, products, packaging, and pricing are all relevant for the markets you serve as well as the impact within the current economic cycle. The goal is to align all four of these elements to maximize penetration of your target market (i.e. experience, product, and price are all aligned for the market you serve).
Customer demand and your businesses’ financial goals will determine if your product strategy is successful, but it needs to be well crafted on the front end to achieve efficacy.
To understand your customer’s core needs, we engage in a dialogue to uncover key market triggers. The outcome is a clear picture of who your target customers are, what products or services they want now, and how they want those products and services packaged. Packaging can be a complex consideration in times of rapid change.
You may have to consider deconstructing or unbundling your offering so that customers will still buy it. Can you sell it in smaller pieces or installments? Will you continue to rely on your existing supply chain, or do you need to pivot elsewhere? It is helpful to draw inspiration from how you had to adapt during a prior recession or market downturn.
We rely on our 5-Question Packaging Framework to lead this decision-making process.
- Market – Who comprises your target market, and has this changed?
- Product – What do your customers pay for, and do they still want it?
- Packaging – How is the product or service delivered, and is this still desirable?
- Result – Why do clients buy from you instead of your competitors, and do they still feel the same way?
- Trigger – When and how much are your customers buying from you, and is this volume still sufficient for your business needs?
Considering a Price discount?
Remember: sometimes, you can increase the volume of product you move by reducing price, thus gaining market share. But you need to consider how sustainable this strategy is and what needs to change before initiating this strategy. Your margins will be smaller, so it is vital to know how long a discount can run and at what volume. Determine the precise value it will bring to your company before implementing such pricing strategies.
For example, a consulting firm struggling to sell full services to clients right now can change how it packages the offer. The firm could conduct limited workshops at one-fifth the price for a pre-determined period to get volume and build deeper relationships with its client base and gain new ones. This is a win-win solution because the client still receives some benefit at a rate they can afford while the firm remains connected to its market base.
What It Looks Like In Practice
A community bank was in a quandary due to its low product diversification in its loan offerings. It marketed only two loan types: one for commercial real estate and the other for multi-family units. A marketplace assessment revealed the need for a first-time home-ownership program that targeted single-family housing in an otherwise cost-prohibitive market. This bank’s creation of this new loan enabled it to achieve three goals: 1) product innovation; 2) superior pricing and increased revenue due to the first-to-market move; and 3) decreased overall business risk because of lending portfolio diversification.
The bank continues to monitor its products and packaging through all market cycles to identify customer need and to capture additional product innovation due to faster or slower recovery times. All businesses must continue to change to keep in step with shifting market desire.
Destined can help you create the architecture needed to add highly profitable, relevant products and services. Contact Adrian Bray.