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Evaluate the new product plan from a strategic perspective

confusion of Li Hong, marketing manager

lons Metal Manufacturing Co., Ltd. mainly produces malleable metal castings for automobile and aircraft manufacturing, with an annual sales volume of nearly 600million yuan. At the same time, lons also occupies 30% of the vehicle jack Market as a new car accessory

although the competition in this market is fierce, Lance firmly grasps its market share by virtue of frequent contacts and stable friendship with senior management of automobile manufacturers and close cooperation between engineering departments and customers. All products of lons are sold directly to automobile manufacturers, and it has never intended to retail through auto parts stores

Yang Dong is the product manager of lons. He plans to propose to produce a new product - hydraulic jack for garage. The main reason why he is enthusiastic about this product is that it can take advantage of the excess production capacity of lance in its components, and the design department has made a mature product design. In his opinion, "a jack is a jack. Where can it be different?" Although he also admitted that the jack used in the garage was too large and hydraulic, so it could not be used in cars, from the product point of view, he believed that this measure expanded the company's related products, not into new fields

as for sales, he thinks it can be achieved through auto parts wholesalers and retailers. Therefore, he enthusiastically promoted the plan to the senior management with the use of computer technology in control, measurement and data analysis, and said that after measuring the product cost of lance and its competitors, he estimated that the unit production cost of lance was about 395 yuan

Li Hong, the marketing manager of lance, thinks that the plan is not feasible at all. He thinks that his six salesmen are overloaded with maintaining existing customers, and they can't sell a new product

if you hire someone else, experienced business representatives will charge 10% to 15% of the sales as a commission, while wholesalers will require a 20% price discount, as well as other display, advertising, promotion and other expenses. After inquiry, he learned that the price of the common hydraulic jack on the market is 810 yuan, and retailers need at least 35% discount to purchase. More importantly, Li Hong believes that the new products are not closely related to the key points of the company's operation

Li Hong expressed his opinion to his boss. However, when he received the e-mail from the chairman of the company, he found that the top management had been moved by Yang Dong's plan. They mainly felt that they could make full use of production capacity and increase sales

now it is clear that he must give a convincing reason, otherwise he must be responsible for the sales of new products. He was a little confused: should he continue to persuade his boss or should he accept a new task? Or how can you further persuade your boss

under the dual pressure of shareholders and customers, senior managers of enterprises increasingly rely on product diversification as a magic weapon to increase market share and income, win competition, and even realize the dream of rapid expansion. High pressure oil and operation parts. However, the probability of the company's decision-making mistakes has also increased, which may sometimes be devastating, especially when the implementation of the new product plan has involved the change of the company's business model, and the decision-makers are not aware of it or the new and old businesses are similar in appearance but different in substance. Lons (see the case section) is faced with such a situation in the decision-making of the hydraulic jack project. Improper handling of the project may unknowingly put lons in a dilemma

strategic analysis product plan

the decision of new product plan can be divided into strategic decision and routine decision from the perspective of its impact on the company as a whole

if a product plan has involved the content of the company's overall strategy, the company's senior management must decide whether it is necessary to adhere to this direction in strategy and whether they have corresponding psychological and material preparations. If the top management of lons really intends to open up new channels, channel construction must be listed as the primary task. If only new products are regarded as a routine need, it must be based on making full use of existing resources such as channels and brands. The hydraulic jack in this case must obviously start from scratch in terms of channels. The huge investment is obviously far from the original intention of the top management to increase revenue

the top management of lons may not realize this. Their decision on the hydraulic jack is still at the general level. What they see is that the product can "make full use of the company's excess production capacity and increase sales revenue"

however, the actual situation is that the decision has tacitly accepted that the company has partially expanded to completely unfamiliar consumer areas. At present, the company is mainly a supplier of aircraft and auto parts. Although its car jack occupies 30% of the market share, it is still a kind of parts because it is still sold directly to auto manufacturers as a new car accessory. However, the hydraulic jack is completely different. It needs to be sold directly to users, establish a huge dealer network, and need the company's support in publicity. Li Hong wants to fundamentally convince the senior management that if there is no such content, it will be difficult to play a great role just because of insufficient sales force and poor market prospect

"similar" products ≠ similar markets

in this case, Yang Dong, the product manager, believes that the project can not only effectively utilize the company's excess production capacity, but also expand the company's related products. He does not think that this is a different product field. Its lithium salt production capacity in 2017 was about 34000 tons because "jacks are not jacks. Where can they be different?"

but is there really no difference between hydraulic jack and vehicle jack? This involves a common misunderstanding in product decision-making, that is, it ignores two products that are similar on the surface, which may actually mean different markets. As a result, it will lead to "one move goes wrong, and the whole game loses"

here is a good example. Luther company, which is a subsidiary of the three strains group and is mainly engaged in medical devices, mistakenly believes that medical devices (durability) and oral liquids (disposable) are medical and health care products, and there will be no great difference. In marketing, it still uses the sales method used by the three strains of oral liquids, and even uses some of the original oral liquid salespeople

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