ASSESSING THE HEALTH & STATUS OF PRODUCT LINES.
The business unit has to analyze and find out the present status and future potential of each of its product line/ products/ brands. Based on this evaluation only, it can formulate its marketing objectives and fix the income and profit targets for each product line and each brand.
The business unit first explores the position with respect to each product line.
Â§ Contribution of each line to the income and profit of the unit
Â§ Rate of growth of each line
Â§ Present market share position
Â§ Time the present industry trends continue
Â§ Expectancy of the level of contribution from this line
Â§ Whether it can account for a higher share.
The idea is to find out to what extent the unit can bank on each product line, while fixing the income / profit quota.
For instance, in the soaps and detergents Strategic Business Unit (SBU) of Hindusthan Lever Limited the detergents line accounts for 58% of the SBU income and the soaps line for 42%. The SBU investigates:
Â§ Likely growth trend of the soaps industry and the detergents industry.
Â§ Rate of growth in each line
Â§ Likely share of HLL in each line
Â§ Can it overtake the industry growth rate and garner a higher share
Finally whether HLL should assign the same contribution of 58% of the proposed income to the detergents line and 42% to the soaps line or the market studies reveal that the soaps line can take a slightly higher load and contribute, say 45% of the proposed income targets of the SBU.
The bathing soaps line at HLL has brands like Lifebuoy, Lux, Pears and Liril. Lifebuoy accounts for 60% of this income what should be the analysis:
Â§ New apportionment to the brand Lifebuoy, say for the next two years
Â§ Trend in bathing soaps industry
Â§ Competitorsâ€™ strategy with their brands like Camay identical to Lifebuoy.
Â§ Will competitor like P&G enter the lower end segment
Â§ Expectancy of HLL to retain the same share in bathing soaps
Â§ Can there be a leveling off in Lifebuoy sales
Â§ Can the brand bring in the same level of contribution as before to the increased income targets of the SBU
In conclusion an SBU figures out the current health and future potential of its product lines by using several indicators and techniques like market share analysis, profitability analysis, marketing cost analysis and sales demand forecasting. This information is a basic input for working out the growth objectives of the SBU. The business unit has to size up its competitive advantages as the next step in internal appraisal. This analysis percolates down to each product and brand within a line, so that finally the business unit has a clear picture of the income and profit potential of each brand in its fold.