Typical P’s analysis

July 14, 2011 § Leave a comment

After Monday´s post on NPD strategy I was asked to write about the P’s and the C’s and give some examples, so I’ll assume that we went through a complete research project (that included insight discover in a focus group, screening of ideas and a concept test) and we have found one ideas to develop for the next generation of products. My approach would be to analyze (and this should have been done long time ago) the company’s business model regarding the P’s.

If you’re in a Branded FMCG Company, you will probably expect to have a model such as this:

As the graph explains, your main objective should be to establish your brand through promotion to a differentiated positioning. This is only achievable with a good product design and package that sells with a fair price, in your usual trading ground, with “usually” no extra efforts to your people.

Now, the next case is not very usual, but if you come across a Nesspreso opportunity within your business, this is what the P’s graph would look like. Keep in mind that is was probably very difficult for a company such as Nestle with the above company behavior to invest in a Business model such as the one below.

The graph shows a brand that centered itself on a patented product and the positioning through great advertisement as a premium coffee. It’s interesting that while price is unimportant <remember that this coffee is 6 or 7 times more expensive than regular ground coffee> a differentiated place with trained people can manage a great experience (that will ultimately contribute to the brand’s positioning).

If you don’t know anything about this example, keep in mind that it showed success after 10 years into building a brand through great TV campaigns, and a brutal investment that most companies don’t commit to and now is one of the most important businesses of Nestle. Chapeaux to Nestle that was able to pledge to an innovation that differed from their usual (above) model.

The same analysis can be built for a “Private Label Brand” (you know, your typical Carrefour, Tesco or Costco’s Kirkland Signature):

The story behind this graph shows a brand (or Company) that is designed to drive sales through price. Its products should be as good as A-Brand’s related to, with almost no-promotion and little positioning, but with great spaces in the shelf (well within the chain stores).

Evidently, these are just some model’s I’ve come across with (and I’m sure each company is a whole different world) and what is important is that you cannot expect for a business to support an innovation or promotion that differs from the model. This is kind of your business’s DNA.  But if you find an opportunity to develop a new business model (such as Nesspreso), keep in mind that you’ll have to prepare to answer how big the opportunity is.

I will keep my Porter’s forces & C’s analysis for other posts.

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