[DVJ Insights] Martin Hellich: Managing complexity – ways to professionalize the tactics of portfolio management

For product or category managers navigating the competitive landscape, the experience can indeed feel like a balancing act, caught between competing pressures and rapidly changing market conditions.

As global dynamics evolve, the task of managing a portfolio's product variants becomes increasingly complex, often necessitating swift, tactical decisions.

Internally, the drive to reduce production, logistics, administrative, and sales costs — such as shelf space — may lead managers to consider reducing the number of product variants. Conversely, the goal of enhancing sales and market share may require an expansion of variants to cater more effectively to diverse consumer segments in the market.

Even when the product assortment seems optimal, external factors such as new competitor strategies or emerging consumer trends might demand adjustments. These adjustments could include changes to product features, pricing, packaging, or marketing propositions, which are essential when reevaluating the portfolio's breadth.

Making these changes in isolation could overlook the synergistic potential akin to an orchestra, where the collective effect of the instruments creates a resonance greater than their individual contributions. This underscores the necessity for product or category managers to master the art of portfolio re-composition, ensuring the coordination of differentiated feature- packages, price-ranges, and more, across all products simultaneously.

Furthermore, when different sales channels are involved, this complexity increases as it necessitates the definition of channel-specific portfolios, thereby multiplying the decision-making layers required.

Decisions can be improved

It is therefore not unexpected, based on our interactions with product and category managers, that many decisions are often informed by historical experiences. These experiences, inherently constructed from accumulated data, contribute to organisational learning as they facilitate a feedback loop that correlates actions with their resulting outcomes. But it usually doesn’t consider the complexity of the various marketing parameters to optimise but rather builds on heuristics derived from past experience.

Therefore, the quality of these decisions could be significantly enhanced through the implementation of tailored research initiatives. These projects, designed to be both time-efficient and cost-effective, are crucial yet underutilised in product and category management. This oversight often results in a quality gap in decision-making across various brand portfolios.

CMI should play a vital role

Given the rapid changes occurring globally, there is a growing imperative for support from Consumer and Market Insights (CMI) professionals. By expanding their consultancy services to category management, CMI professionals can offer solutions that strategically* and tactically optimise product portfolios. This approach not only addresses immediate needs but also positions brands more favorably for future challenges.

Customer conversations

Our many customer conversations show that marketing professionals attach great importance to strategic portfolio management.

Joakim Wictorin , Sales & Marketing Director Nordics at GB Foods, says they prioritize portfolio management through a brand-building approach, focusing on local consumer preferences and tastes. They measure success using market share and sales figures as KPIs, so that their product portfolio remains competitive as the market changes.

Joakim Wictorin emphasized that innovation drives the growth of their portfolio, with a focus on sustainability, convenience and health trends.

Marlijn van Straaten , CEO Benelux at Dr. Hauschka, told us that their portfolio management strategy is focused on creating products that connect with nature’s cycles, taking into account the time of year and the life stage the consumer is in. A key element in the marketing strategy is therefore to let the user experience, feel and live the brand.

Martin Hellich is Head of Brand & Innovation bij DVJ Insights

www.dvj-insights.com/nl/

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