Platt Perspective on Business and Technology

Building for an effective portfolio of marketable offerings 4: adding in crowdsourced insight

Posted in macroeconomics, startups by Timothy Platt on December 23, 2014

This is the fourth posting to a series on the factors and considerations that would help a business to more effectively determine its best range and selection of offerings that it would bring to its market, focusing here on manufacturers (see Startups and Early Stage Businesses, postings 173 and loosely following for Parts 1-3.)

I have been discussing analytical approaches in this series, that seek to understand and structure portfolios of manufactured offerings from several perspectives:

• Taking an internal-to-portfolio perspective and thinking about the assortment of offerings provided in terms of how they fit together and create marketable synergies for customer-perceived value offered (see Part 2),
• Taking an external-to-portfolio perspective, and thinking about the assortment of market offerings in terms of overall business effectiveness, and in terms of costs and returns for designing, producing, distributing and bringing offerings to market (see Part 3.)
• And how these can be seen as representing approaches that would expand out or contract in the overall portfolio. When these approaches are used coordinately, the result would be a dynamically balanced portfolio that would be both cost-effective for the manufacturer and competitively attractive in its marketplace.

And this brings me to the topic of discussion for this series installment. I have briefly touched upon the issues of market insight in earlier series installments and noted in Part 3 that I would turn next to consider crowd sourcing and tapping into the increasingly far-reaching and comprehensive online conversation as a source of market insight. Retail businesses, and certainly as of this writing, are far ahead of most manufacturers in moving beyond simple focus groups and other essentially pre-internet approaches as resources for gaining marketplace insight. Competitive 21st century manufacturers need to connect into and tap into the interactive online, social media driven conversation too, and both to identify and understand the shifting and emerging market demographics they should be targeting as customers, and for capturing insight as to how their products and their competitors’ products are received by real end-users. And this insight needs to be applied across the entire manufacturing cycle and all of its stages from initial product conceptualization and design through manufacturing, through packaging and distribution and marketing and sales – and even if all sales are to wholesalers and the original manufacturer essentially never directly sells anything to an end-user.

• How would this apply to a parts manufacturer whose products would go into other businesses’ finished products as “under the hood” hidden components?
• I would match that with a second, more marketplace oriented alternative question. How can such a parts manufacturer produce and market their offerings that would make them more compelling choices for the businesses they sell to? This means producing and distributing, marketing, and even packaging them in ways that would help their business customers more effectively meet their end-user customer needs.
• This calls for better understanding those end-users and the criteria that their direct customers would use in making their supply chain purchasing decisions.

I wrote in Part 3 of “finding a better balance of what to include and what to leave out entirely from an offerings portfolio, or to outsource to supply chain partners to provide.” And in that I addressed that complex of issues from the perspective of the business that produces those final complete products that would be used by end-users. What I am doing here is to flip that around to consider the same issues but from the parts providing supply chain partner business’ perspective.

And with that stated, I challenge one of the underlying assumptions that I have just been making: that a behind the scenes parts manufacturer whose product offerings end up hidden in an end-user oriented business’ products, of necessity only sells or markets to their next-step manufacturer supply chain partners. And as alternatives to that perhaps default business model approach, I would offer two alternatives that both depend on active connection with and conversation with the end-user market and its customers to work:

• Customization and similar after-market product upgrade opportunity, and
• Repair and maintenance opportunity.

And I turn to the automotive industry as a rich source of potential examples for both, where cars and trucks that are produced, branded, marketed and sold by end-user oriented manufacturers and through their-branded sales outlets as new, are manufactured from seemingly myriad numbers of part-types and separate automotive model-specific stock keeping units (SKUs) that are themselves produced by supply chain partner businesses.

These businesses in many cases have at least potential opportunity to produce, market and sell directly to repair and installation businesses. And if they can do that, they also can at least potentially design, build and sell to customization upgrade businesses, and market both to them and also directly to the end-user vehicle owner market. The goal there is to create market pressures from these end users that would bring repair and maintenance, and customization shops to use their parts.

I am going to continue this discussion in a next series installment where I will look in more detail into the issues of how a marketable manufactured product portfolio meshes with the manufacturer’s business model, and how a shift in one to meet changing business needs and emerging opportunity can require matching evolutionary change in the other to match. Meanwhile, you can find this and related material at Macroeconomics and Business and its Page 2 continuation, and also at Startups and Early Stage Businesses. And also see Business Strategy and Operations and Page 2 and Page 3 of that directory.

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