A ‘Wicked’ Product or Service Mix.

I had assumed that using wicked to mean excellent or wonderful was the idiom of youth, or perhaps youth a few years back, and was amazed to discover that it has its roots in the early 1960s  So now you know that I’m talking about excellent mixes of products or services rather than bad ones.

Most business offer a mix, for example accountants may offer, audit services, bookkeeping, accounts preparation, tax advice, payroll services and business consultancy. An artist may sell original work, limited edition prints, notelets and other items carrying the images.

The mix may have grown haphazardly or been appropriate in the past, but not wonderful in current conditions. So, keep it under constant review. Some businesses will only carry out an extremely basic assessment, if sales value exceeds costs it’s in. Others may expect a product to contribute a certain amount towards overheads before including it in the mix. A more sophisticated approach would be to allocate overheads to products on a rational basis thinking about how those products impact overhead costs. For example, something that needs to be stored at a given temperature (high or low) will impact energy costs more than something that can be stored at ambient temperatures. Even then somethings may be omitted from the decision process, a product that can only be bought in bulk and sold in small quantities may have a better cost profile than some others; however, what is the impact on the business of tying up working capital in stock?

Products or services do not exist in isolation, they are often interconnected and interdependent, so systems thinking needs to be applied to product mix. That is where my thoughts to turned to ‘wicked’, if you read about systems thinking you will come across the term ‘wicked problems’ meaning difficult ones. The connections between products or services are relatively simple; however, it is easy to overlook them and it is sometimes difficult to understand the impact. For example, an artist selling notelets may find her work becomes better known that way and that increases the chance of selling more original pieces. Or it may cheapen the brand and discourage buyers at the higher end.

When I sold to independent sports shops there was an item in the range that made us little money; however, it was a star – it was our way in. It was something they couldn’t get elsewhere; it came with a neat countertop point-of-sale display and only required a small investment, so shops were prepared to buy from an unknown distributor. That gave us the opportunity to build relationships and they would then buy more products from us. Later, when we were more established, there were products in the range that kept us in, they were not stars; however, they did stop our customers sourcing them from somewhere else and possibly straying to a competitor for all their needs.

There are many relationships, for example, is a less profitable product taking sales away from a more profitable one? Do products have different seasonal characteristics, two massive summer sellers could mean you cannot meet demand, one summer star and one winter star could mean more overall sales.

Examine your products or services and understand their characteristics, then think about the system of relationships and then think about what is not there, what is missing. Would adding something in there improve the whole system. Just don’t disappear into the matrix and please be kind to the dog

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Published by edward620

Ultrarunner

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