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Getting timing right

The tasks that man has had to do to get by in life have remained stable over time. The need for shelter, nutrition, commute, avoid disease, seek pleasure, be entertained etc. have existed since time immemorial. However, the context under which consumers try to address needs, evolves over time, leading to them feeling under or over-served by available solutions from time to time. Whenever there is a large and fundamental shift in the context under which consumers perform a task, which may arise due to their engagement with existing solutions, there are opportunities for new or challenger solutions to enter – successfully. 

In the early 2010s, Indian consumers outside of the large metropolitans had limited access to variety and good prices when it came to apparel. When increasing aspiration, disposable income and access to the internet coincided with this consumer context, Myntra was able to seize the opportunity by offering consumers a large variety at competitive prices. There were online fashion retailers in India before Myntra, but they perished before the demand became a market opportunity. Myntra was the first to get timing right. They got a headstart into the ‘more choice at lower price’ game and executed well on it by building a great operational side to their business. Competing with Myntra in that game at that time would have been a lost cause.

Fast forward a decade, online fashion retail is one of the largest categories on e-commerce, however the context is possibly changing for some segments of online apparel buyers. Finding the right product online is becoming increasingly difficult and time consuming with a never-ending supply of SKUs, possibly rendering some segments of consumers over-served along ‘choice’ (and underserved along ‘making a choice’). In the past few years, both online retailers such as TataCliq & Ajio, as well as, D2C apparel brands have simplified discovery and selection for consumers by keeping a curated range for specific consumer segments and carved out a consumer base. Again, they got the timing right. An online retail business built on limited, curated selection would have probably not worked out well a decade ago.

The key to right timing is identifying and being prepared for an inflection point in demand which outweighs supply (i.e. availability of options for consumers) and capitalizing on it.

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Vectors of portfolio expansion

As brands mature, companies want to expand their product portfolios, sometimes to diversify and reduce risk and other times for chasing growth. Adding more products to a brand’s portfolio comes with management baggage. Most new products don’t make it big and the products that are added, often turn out to be too small to justify growth investments but are  too significant  to cut off since they added some vanity value to the top line. Strategic portfolio development focuses on leveraging existing capabilities, assets and resources while introducing new products carefully, thereby reducing incremental management overhead and increasing the chances of positive results from new products. In this post, we explore some of the approaches established brands can take to expand their product portfolio. Expansion on the depth of need All consumers of a solution aren’t alike. The base need for a solution may be same among various consumers, but different consumers value different outcomes. For instance, the basic need for a ride-hailing service is to get from point A to point B comfortably and reliably. But some consumers may have multiple stops and hence they are dissatisfied with having to wait for a new vehicle multiple times in a trip and a day-hire works out better for them. Similarly, there are consumers who have point-to-point routes which are too short for any value add to really be experienced. They’d rather pay less for a basic service and be ready to compromise on privacy for the short duration. UberPOOL caters to these consumers. By offering on-demand, ride sharing and for-hire models, Uber is able to expand its portfolio and cater to consumers who need more (and less) of their service.  Equity based expansion Another great vector to leverage and expand a brand’s portfolio is using the brand’s equity in the right solution categories. Most established brands are unanimously recognized for certain distinguishing traits among consumers. It could be things like being innovative, trustworthy, experts etc. That means that consumers expect those brands to act in the way they imagine and will be highly receptive to their products which live up to that equity. Brands can leverage this to enter categories where their equity is likely to be valued. A great example is that of Nivea, whose cold cream sells on ‘softness’ and being ‘safe for delicate skin’. Nivea leveraged this equity and extended the brand into several categories such as body lotions, deodorants, and even after-shaves for men. They’ve captured  a small, yet significant share in all these categories successfully.  Context based expansion One classic yet underestimated approach to expand a portfolio, is to simply build on top of core value of your existing product and make it relevant or viable in places where it currently isn’t. Snack and beverages brands know this tactic well. The same Pepsi comes in a 2L bulky bottle for home, a 600 ml carry bottle, a large iced glass at the cinemas, and a 250ml that you can hold between your index, pinky and thumb as a style statement. By taking this simple idea seriously, the same cola has penetrated into multiple occasions with no change but how it is served and consumed.  The ‘pffs’ sound of the can, and the handiness of the carry bottle are integral to their occasions, and effective in their execution.  Complementary solution expansion Most solutions don’t perform the full job that the consumer is trying to do. For instance, shampoo might clean a consumer’s hair, but cleaning one’s hair isn’t the whole job that the consumer is trying to do. The consumer is trying to clean the whole body, smell good, and look & feel presentable. The consumer probably uses multiple solutions to complete the full job. If a brand is used in any part of the job, it can leverage the opportunity to introduce solutions that help do more of the job more effectively or efficiently. For example, keeping hair healthy is essential to the complete job of looking and feeling presentable, yet many consumers don’t use a conditioner. Shampoo brands have introduced shampoo + conditioners to help consumers do more of the job, better in less time and consumer pay premium for it.  A combination of the above approaches may be deployed to increase returns without bloating portfolios and increasing management complexity. 

Article

Why CPG firms should leverage incubator partnerships

Incubating new brands or product lines and making them independently successful is quite different from growing established ones. Although the competencies required are similar in nature, the context under which both objectives are pursued are widely different. When growing established brands, a lot of information – awareness & equity of the brand, pricing benchmarks & power, costs, competitive differentiation etc. – are already known. Whereas, when incubating a new brand, these building blocks – and many more, have to be built and made to work well together, for the brand to sustain independently.  In theory, one can accomplish this feat with enough grit and trial-and-error, provided there are enough resources to burn through. In reality though, the task is to get there before competition catches up – or the venture runs out of funds. Therefore, in the case of incubating ventures, prior experience incubating an innovation, relevant consumer insights,  experience in keeping a venture afloat with little information and managing risks – all become huge advantages. But by the intrinsic nature of CPG product cycles, new incubations or product innovations aren’t undertaken very frequently and hence the above competencies may not exist or be available in-house. It is also difficult for firms to attract talent seasoned with incubations since it provides a limited canvas for them. Rather, CPG firms can access these competencies by way of partnerships with incubators. Full-scale incubators deeply augment a promoter firm’s existing capabilities and provide great leverage. Incubators offer venture incubation as a service by bringing enterprise, strategy, research, design, product, marketing and project management under one-roof with domain expertise and experience. The key tangible benefits of these partnerships are: Faster to market Due to their extensive experience with projects of varied nature, incubators knowledge and insights which is otherwise time consuming to generate, thereby being able to build a convincing business and investment case faster. Incubators have a well-oiled team with cross-functional capabilities in-house, which can otherwise take months to gather, just to get the project started. Incubators also have well tested frameworks, models and execution capabilities, which quickens the process through conceptualization, design, go-to-market and operations, without having to reinvent the wheel. Cost effective Incubators bring flexibility in deploying human resources as and when required, thereby bringing predictability and lower fixed costs. With proven models and frameworks incubators can help avoid a lot of wasted costs and optimize investments which are commensurate with the business scale. Better outcomes Prior expert experience that incubators bring help avoid common pitfalls thereby controlling risk to the venture. Expertise and superior operational capabilities increase the gamut of tasks that can be executed well, thereby giving the venture more shots at success. A broader understanding of the market, consumer, proposition development and competition greatly increase the chances of developing solutions that are really differentiated and motivate consumers to act. In conclusion, leveraging incubators greatly pushes the odds of success in favor of the promoter firm, at lower cost and time. NorthSide anticipates this to become a norm in the years to come.

Article

Do traditional consumer businesses need product management?

“We got rid of the classic product management function. Apple didn't have it either. We morphed the function to a more Apple-style product marketing function. We combined product management with product marketing and we said that you can't develop products unless you know how to talk about the products."  – select excerpts from Brian Chesky’s quote It is common in technology-driven companies products with new features fail due to poor positioning and marketing execution. The case of mismatch between product and its marketing remains true for traditional consumer businesses as well, where marketing over communicates the product benefits.  Traditional consumer businesses are equipped with sophisticated marketing expertise and the ability to position simple products in novel ways that motivate consumers to act. Most traditional consumer businesses rely too heavily on creating perceived value which excites consumers into trying, but products behind the claims often fail to deliver the actual value and low repeat purchases lead to failure of products. It would be hard to argue a case against developing products that deliver value that consumers can evidence (especially since it means charging more money). Then why do traditional consumer businesses not develop successful new products? In our collaboration with several consumer brands, we found that there is a mismatch between expectation and expertise that leads to this. In most firms, brand managers are responsible for discovering changes in consumer needs and for generating business advantage by delivering against them. However, brand managers lack know-how and research & observation techniques that lead to the level of nuanced need identification and specifications required for sharp product design briefs.  Since they are tasked with pushing the business topline and bottomline, they turn the only lever they know how to twist to deliver – positioning. One could argue that with consumer businesses, products don’t need to evolve as frequently, but with rising usage of more products and services per capita, many product and service formats have started competing with each other and hence purely relying on positioning and marketing execution is a unidimensional approach to competition. A good product manager would act as a creative problem solver and their agenda should be to strike harmony between all stakeholders and unlock value for all. In conclusion, a product manager would translate the concept or proposition into value that can be physically evidenced by consumers, while driving business results.

We are NorthSide. A strategy and execution company, that helps companies, incubate ventures and scale up brands by integrating market intelligence, insight generation, market segmentation, brand proposition development, creative services, e-commerce and quick commerce scale-up, all under one roof.

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