2.2.1 Combining strategies - product and innovation


The product strategy develops a balanced and rolling programme for the product mix during at least the next five years, with an outline product mix for later years. The forward planning of the product mix depends on the culture and size of the company, volatility of the market and the rate of technological development. In a large company with a reasonably stable market and slow change of technology, planning can be ten or more years; in a small company with few resources it can be one or two years.

In the product mix planning, there is recognition of today's breadwinners and also of the future breadwinners, the place in the product life cycle of the product areas, the competitive status of the products now and in the future. This identifies the areas for product improvements, line extensions, repositioning, new innovations in the present product system and radical new products outside the present system. There needs to be a constant interplay between the innovation summary and the development of the product mix, so that out of it will come the product development strategy that will be the basis for the product development.

It is also important at this time to predict the effect on products that other innovations will have - for example, a new processing line, or a restructuring of part of the company. Often these are analysed separately, especially the company reorganisation, with little thought of how this would affect the product strategy and therefore the financial outcomes of the company in the future. There can be very adverse outcomes. They may be cost saving at the time, but may have severe impacts on the new product planning and the future returns.

Think Break 1. What are the basic product areas in your company's product mix? In the    product mix, identify today's breadwinners - the products providing the    main part of the sales revenue, and tomorrow's breadwinners. What is    the place of the other products in the product mix? 2. From your study of the product mix, what types of product innovation do    you predict for the next few years?