Neville Stein considers capturing data

I have always been a big fan of making business decisions based on data. It’s true that instinct or gut feeling can also play a big part in the decision-making process, but basing future production capacity on historical data is key.

The problem is, so often growers, particularly those in the ornamental sector, are having to make decisions on what to produce several years before the product gets to the market. If you are a grower your own historical sales data will be a guide, but perhaps we are missing a trick. I believe that we need to be working closer with retailers to capture data, that when analysed will show trends.

These trends will show categories that are under performing and need more marketing effort, and those that have peaked or should be dropped from a product portfolio. This data when used in conjunction with key marketing tools, such as the Product Life Cycle and the Growth Share matrix, should enable a grower to make more informed decisions. If you are unfamiliar with it, the Growth Share matrix, devised by the Boston Consulting Group enables products to be plot on a matrix which considers the relative market share and the market growth rate. There are four categories in which products can be grouped; dogs, cash cows, question marks and stars. Plotting your products in this matrix will then give you a guide as to what to do with that product. You might need to invest more to make it a star; if it is a dog, you might need to remove the product from your portfolio etc. The key to making this successful is having historical data that will enable you to spot past performance and identify future trends.

The Product Life Cycle is another great tool that can be used to assist your decision-making process. This tool describes the progression of a product through 5 distinct stages—development, introduction, growth, maturity, and decline. The concept was developed by German economist Theodore Levitt, who published his Product Life Cycle model in the Harvard Business Review in 1965. This concept is still used today to help organisation understand how to manage the sales of a product as it goes through its life cycle.

Let’s look at what this means in practice. Take, for example, a product that might be at the maturity stage – sales are levelling off. How do you continue to grow sales? Well, the simplest way and which so often happens is to reduce prices to remain competitive amongst the competition. Another way is to look at product extension – how can the product be changed in some small way but fundamentally remain the same. Take for example, Lucozade. When I was growing up it was a drink you had when you were unwell – the company behind the product essentially took the same product and re branded it as a sports isotonic drink! Thereby extending the life of the product.

How then can you take your same products and extend the sales life? Create a new market? Enhance the packing? The key here is to understand which products are where on the Product Life Cycle and making sure that you have a strategy in place for when sales mature and decline.  Ideally it would be great to have a continual supply of new products coming into your portfolio, but if you capture and analyse date you can manage and extend the life of established products as well as select better new products to stock.

Remember, you can’t manage what you don’t measure, and if you can’t manage your products, your competitors might take advantage!