On this episode of Dear Strategy, we answer the following question…
“What are the key elements to have in a successful strategy for a non-core product? And what things should we avoid?”
The key to this answer has to do with the way you choose to define what a “non-core product” is. Personally, I can think of three different interpretations of this phrase (even though on the podcast I only covered two of them):
- An ancillary product that works with and supports a main product. An example of this might be an app that controls some piece of equipment. In this case, the core product would be the piece of equipment, and the non-core product would be the app.
- A relatively lower revenue (and sometimes higher margin) product that is completely separate from, but still in support of, the main or “core” product that a company produces. An example might be a company that provides accessories – like covers, adapters, etc. – for the main products that it sells. In this case, the main products would be considered “core,” while the accessories would be considered “non-core.”
- A relatively lower revenue product that is completely separate from, but NOT in support of the main or “core” products that a company produces. An example of this might be a company that decides to get into a brand-new product category that is completely different from the main products that it sells. In this case, the main products would be considered “core,” while the newer and growing product categories might be considered “non-core.”
Now, for all of these scenarios, the key elements to include in your strategy are the exact same things that I continually refer to in this blog. Those are: a clear vision, a thorough situation analysis, a solid plan, and a clear path toward strategic execution. That doesn’t change, no matter what type of strategy you are developing. For more information, by the way, you can always download a copy of our Strategy Generation Framework that outlines each of these steps in much more detail.
But the really interesting part of this question is the one that asks, “What things should we avoid?” So let’s talk about that a bit…
For the first scenario, the biggest pitfall I would be on the lookout for is the temptation to run your two product types (core and non-core) as completely separate businesses. It may seem obvious that any two products that work intimately together should also be managed intimately together. But, unfortunately, this is not always the practice that companies tend to adopt.
Many companies that I work with have digital products that support one or more tangible products. Because these product categories are so different in their design, development, and overall construct, they are often managed by two different product managers and supported by two entirely different teams. By itself, that’s not necessarily a problem – that is, until the “internal territories” start to form! And then, before you know it, these two seemingly “integrated” product lines start to grow their own separate goals, strategies, and agendas. And that’s when things start to go off the rails – usually at the expense of the customers who end up with two entirely unintegrated products that are supposed to work seamlessly as one.
So how do you avoid this from happening? Simple – just make sure that your product strategies are 100% coordinated. If you have 2 separate product managers, make sure they both report into one common business or portfolio leader – and make sure that portfolio leader gives them one common set of connected goals. Problem solved.
For the second scenario, the biggest mistake I see is when companies don’t pay attention to the effect that their non-core products have on the way customers will ultimately view their core products. For example, I can think of several companies that sell really high-quality “core” products with really low-quality “non-core” accessories – both of which carry the same brand. Often times, the accessories are outsourced and “cheapened” for the purpose of being able to maximize margins. And although all of this may look great on paper, is it really the best strategy to adopt?
When all of those high margin accessories start to fail after just a few years in service, what effect do you think that will have on the way customers feel about the core products of those companies? I think the answer to that question is obvious – but unfortunately, it only becomes obvious after the fact. Which is probably why I continue to see some companies fall into this trap of sacrificing long-term “core” product brand equity in favor of short-term “non-core” product margin. So you might want to think that through a bit more before heading down that same road.
For the third scenario, a common problem that I see is almost an extension of what I described above. When companies release new lines of “non-core” products, they sometimes feel they can do so by riding on the coattails of the more successful “core” products that they already have in the marketplace. And that strategy can certainly work – but only if those new products are of equal or greater quality AND of equal or greater value than the core products that carry the same brand.
I have personally seen companies release non-differentiated products into already saturated markets under the flawed assumption that their brands alone will allow them to attain dominant positions with those products. In other words, they assume that having a dominant position with a “core” product will automatically translate into having that same dominant position with a “non-core” product. As logical as it may sound, that strategy is really difficult to pull off – particularly if you’re trying to carry your non-core products based on brand reputation alone.
Customers want products that solve problems and address unmet needs. Your brand might be great, but, by itself, does it solve any problems for your customers? Probably not. That’s the job of your products. And those products; core or not, are going to need to stand on their own merits. And that theory applies, by the way, to all of the scenarios above.
So the bottom line is, no matter what your definition of non-core products might be, you need to have a strategy for them just as you would for any of your other products. And those non-core strategies need to work with the strategies for your core products – not separate from them, not because of them, and not in spite of them. If you follow that advice, your non-core products will not only fit quite nicely into your overall portfolio, they may even qualify to become a core part of it someday.
Listen to the podcast episode
Dear Strategy: Episode 112
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Bob Caporale is the founder of Strategy Generation Company, the author of Creative Strategy Generation and the host of the Dear Strategy podcast. You can learn more about his work by visiting bobcaporale.com.