New perspectives on an older framework

1. Rethinking Product Lifecycles
To Fight Commoditization
Thomas Emrich
Managing Director at ValMark Group
(401) 450-2841
tlemrich@valmarkgroup.net

2. Relationship Before Task
Tom Emrich, ValMark Group 15+ Years Experience Managing
Product Lifecycles In Different Industries

3. Our Task This Evening
Help these two because, when it comes
to product lifecycle management,
neither one has it right!

4. 3 Ps
Purpose
•Knowledge sharing
Process
•Open discussion with slides
Product
•Practical ideas and tools you can put to use right away

5. What Do You See?

6. What I See
1. The Loneliest Letter
2. A Self-Fulfilling Prophecy
3. A Line That’s Too Thin
4. Too Many Loose Ends
Explore Each

7. 1. The Loneliest Letter
 Product lifecycle curves, or S-curves,
can not be managed in isolation
 Every product curve is enabled or
constrained by related S-curves for
market demand and technology
 If you want to effectively manage
product lifecycles, at a minimum, you
need to align and manage S-curves
in groups of three
 Opportunities and threats can lurk on
either one

8. It’s Not Rocket Science
Success requires discipline …
Let’s talk about how Nokia used shifting
demand and technology curves to win
the day, only to lose it a few years later
for similar reasons

9. A Simple Tool To Get You Started
Share Flow Analysis Tree
Changes in
demand curve
Changes in
tech curve
Changes in
product curve

10. 2. A Self-Fulfilling Prophecy
Is a visit from the
Grim Reaper
inevitable?

11. Can Renew Product Lifecycles
 Make product improvements
 Reposition the product
 Expand into new geography
 Develop new distribution
 Target new users and usage

12. Great Example
Harley-Davidson
 Product improvements
 Laser focus on quality
 Reposition the product
 Not a motorcycle, but a
lifestyle
 Target new users and usage
 Gangs to Professionals
 Transportation to Recreation
1999 – 2007 Revenue

13. 3. A Line That’s Too Thin
What is it – animal, mineral, vegetable?

14. Line Can Represent Many Things
Core Product SKU
Extended
Product
Product Line
Services
Product +
Options
Product +
Services
Other
Combinations

15. Manage Line That Matters
Start with positioning strategy… …then scope the width of your line
 Define it so that the entity (the animal, mineral,
vegetable) is inclusive of your differentiators
 Why manage a lifecycle that does not include the
source of your competitive advantage?
 If the source of your advantage is not product-
centric (a real possibility), why manage product
lifecycles at all?
 Maybe you should manage a different type of
lifecycle
 Channel
 Customer
 Other

16. 4. Too Many Loose Ends
Product proliferation results when lifecycles not tied off properly
 Increases complexity
 Strains inventory systems
 Drives supply chain costs
 Lowers profitability
 Actually decreases sales
 Complexity drives customer dissatisfaction

17. Few Know How To Tackle Problem
Research report from MAPI… …identified four roadblocks
 No formal process
 Issues with fixed cost allocations
 Product manager mindsets
 Lack of true cost data

18. No Formal Process … Borrow This One
Map current
architecture
Complete
strength
assessments
Identify
switching
profiles
Pareto
elimination
targets
Develop and
execute
migration plan
Trim non-value-
adding
products

19. Issues With Fixed Cost Allocations
If this is your reality…
 A high fixed cost business in a price sensitive
market may decide to sacrifice margin to gain
in volume – overcoming the overhead burden
 But this business still has options if you look for
those opportunities (often easy to find) where
customers are willing to substitute one of your
products for another
 It may take proactive communication and
pricing strategies, but the substitution gives you
the ability to trim non-value adding products
while maintaining volume and working around
the fixed cost allocation dilemma
…think substitution

20. Product Manager Mindsets
 We ask managers to be champions
and advocates for their assigned
products; then are surprised by their
reluctance to assess whether or not the
product should stay in the portfolio
 Many companies get around this by
requiring mandatory cuts
 Can destroy versus create value
 Better approach is to adopt the
mindset that all products are guilty until
proven innocent
 Have Product Managers work to
objectively prove innocence

21. Lack of True Product Cost Data
 No simple solution
 Options available
 Narrow playing field by using Gross Margin ROI and Net
Marketing Contribution to initially assess product
performance above and below the gross margin line
 This analysis is within the capability of most data systems
 If a product’s performance puts it in the lower right
corner of the 3x3 (see right), it’s probable that the
product is guilty and a candidate for elimination
 You may decide that this analysis is sufficient to make the
decision, notwithstanding other strategic considerations
 If you decide to go further and manually build a detailed
product cost dB – you will have already gone a long way
toward increasing focus and effectiveness

22. Recap
1. Manage lifecycles in groups not individually
2. Proactively renew targeted lifecycles
3. Define lifecycles the right way and leverage your
competitive advantage
4. Periodically rationalize portfolio by viewing all
products as guilty until proven innocent

24. Call To Action
If it’s been a while since you
checked the fundamentals of
your product management
efforts, please contact me at
anytime.
After all, a phone call or email
doesn’t really cost anything.
I look forward to hearing from
you.
Thomas Emrich, Managing Director at ValMark Group
Phone: (401) 450-2841
Email: tlemrich@valmarkgroup.net