Managing your Product Range - Part 1

In today’s dynamic marketing environment your product range cannot remain static.    The effects of social media, technology, intense competition and changes in customer needs and wants means that it is vital for a business to continually analyse their products and find ways to keep them fresh, relevant and interesting.

The problem is that 9 out of 10 products are designed to fill a void in the company’s product range rather than a void in the market, most products are still created in a vacuum, driven by what the brewer can achieve rather than what the customer actually wants.

In larger companies there are individuals whose sole role is to;

·      Analyse the product range versus the competition

·      Think through what the trends are and try to ensure new products are on hand to ride the new trend

·      Analyse cost and profit in great detail

A small company generally does not have the staff for that much detail, so here is a simple way you can look at your range because getting the range correct will result in significantly more money.

The Pragmatic, Simplistic Approach

1)     Any new Beer must have a purpose

a.     A focus on a particular market sector – Inner city pubs/ Country pubs/Distributors?

b.     A particular type of customer – session drinkers, beerophiles?

c.     Fill a gap in the range - based on some market research, not simply –Oh we don’t have a dark, light, amber, copper, (fill in the space)  beer, let’s make one!

d.     Its addition should enhance the brand because it’s special, innovative, unique etc

2)     Not all beers are created equal

a.     Nearly all markets work on the 80/20 rule – 80% of volume comes from 20% of the range – If you look at the bigger breweries they all have a key product they lead with which is the Hero product & it generates 70-80% of the volume regardless of the number of beers in their range.

b.     Generally the rest of the range is there to support the Hero beer

c.     The hero product should be the most promoted beer, the one that leads you into new outlets & distributors because they have heard about it before! It is the door opener!

-        Dark Star – Hophead

-        Brewdog – Punk IPA

3)     There should always be a product pushing your accepted price point upwards.

a.     As a craft brewer operating on a smaller scale than the massive breweries you constantly need to find routes to hold your prices up. Your ethos should be about producing quality, handcrafted beers of distinctive taste and a rewarding experience. Pricing down leads to a race to the bottom which a smaller brewery can never win against a larger one

b.     One route to support your beer pricing is to produce a special which is sold in small quantities but at a significantly higher price. One medium sized brewery given the challenge, produced a beer that sells for £100 for a 20L key keg, where their normal price was £85 for a 30 litre Keykeg. They sold out! Now whenever faced with price pressure they can point out that compared to £100 the £85 price for 50% more is a steal!

4)     Know the costs – in detail

a.     Producing a new beer costs money – trials, marketing material, pump clips, time spent promoting it versus promoting existing beers.

 i.     If it costs more to make, you must sell it for more?

 ii.     If it simply replaces an existing beer;

-        is it going to sell for a higher price?

-        Can you produce it for less?

Product ranges are never static, as a minimum every 4 months the Brewery should review the full range. There is no problem having 15 or 20 beers in the range as long as they are not all being produced and sold and promoted at the same time with a limited resource.

Every beer costs money and takes time to sell. The questions to ask are

·       Do we have the right mix of products?

·       Do we have new products coming through which will keep the brand moving forward?

·       Can we do more with fewer products?

o   Less range gives us more efficiency in production and improves quality

o   Less product allows more sales focus on the products in stock.  

·       Do we have a Hero product?

Needless to say, product range management is essential if you are to successfully grow your drinks business.  

Watch out for part two of this blog next month when we'll be outlining another model you can use when developing your product range.  If you're interested in reading this second part sooner, just drop us a message and we can send it to you by email. 

Or to discuss your product range management further, why not arrange a ‘no obligation’ chat with one of our associates.