When building a market and marketing strategy for a logistics company, it is easy to fall into the omnibus effect, i.e., being a company that does everything. While comprehensiveness is certainly an asset, it can also pose a threat. Combining certain transport, warehousing, or freight forwarding functions is, of course, intentional, but it is also worth remembering specialization, which is the logic behind the development of every industry. Above all, one should not succumb to growth for the sake of growth in all directions. For example, specialization towards clients from a specific industry is becoming increasingly important.
Analyze your product portfolio
If a company already has a wide portfolio of logistics products, it is worth analyzing it. A product portfolio requires a specific review and programming. If you have many products, this needs to be done more often. You must be able to give up some product categories because they consume too many costs and have a small share in the company’s revenue.
Others, in turn, although they do not currently generate much revenue, have great potential for the future. However, most so-called portfolio analyses do not allow for calculating the potential of a product (brand). So what should be done? First: look at what market shares your product has and what trends exist in this regard. If the portfolio is good, at least 50% of products should be recording an increase in market share. A good situation also occurs when the weighted average indicator of market share change for portfolio products is above 3 percentage points. If it is below – one should consider changes in the portfolio or
Of course, the situation is not bad either when this indicator is around zero. If it is below zero, it means that most products (brands) have a tendency to leave the market. This is a situation leading to disaster.
Many companies, however, do not pay attention to the quality of their portfolio, stubbornly spending significant amounts on products that do not show any market prospects. Often, the choice of a given product category is decided by established patterns of thinking or purely economic analyses, while in the meantime, market and marketing considerations can determine success. It is worth mentioning here two such errors – myths that persist when choosing new categories and products.
The first myth, persisting in the minds of managers, is the belief that it is enough to have a good product to win in the market. The truth, however, is different: it is not better products that win in the market, but better promoted ones, or more precisely – better positioned ones. The second myth that “affects” many managers (including those responsible for product positions in the market) is that a thorough understanding of customer needs will allow for formulating a good market offer. The truth, however, is that the offer should be decided to a greater extent by positioning analysis and a thorough knowledge of competitors’ offers. So before you introduce a new product to the market or want to create a brand from a product, be sure to conduct an analysis of what competitors are doing, what products they have, and what distinguishes them.
What is the point of a customer feeling needs in some area – even very strongly. This does not mean at all that they will automatically buy a product that better satisfies their needs. That is not the case at all; some believe it, but it is not true. The positioning process, i.e., comparing and valuing, has a much greater influence on product choice than the compliance of the product with felt needs.
It is worth choosing those product categories that are growing fast or have great potential
Market potential means its size expressed in value. For companies that want to invest in new logistics categories, the growth rate is interesting. One can adopt the principle that it is best to enter categories that record a fast growth rate, i.e., faster than the growth rate of the economy expressed by the growth rate of the gross domestic product (GDP) and faster than the logistics sector as a whole. However, especially for large companies, not only the growth rate is important, but also the size of the potential of a given category (market). If a large company for some reason has to withdraw from a category, e.g., courier shipments, the basic question it asks itself is whether entering a new category will compensate for its losses. Therefore, it is best if this new industry is – in terms of potential – comparable to the previous one.
The article comes from the magazine “Logistyka” No. 1/2006.