Global Mining and Construction Manufacturer Develops Leading-Edge Product Portfolio Strategy

Challenge

A global manufacturer of mining and construction equipment was concerned that it was losing market share in less sophisticated market segments where the barriers to entry were low and the risks to new competitors were high. The company had experienced intense growth over the last few years which it attributes to its complex product portfolio. This added complexity inhibited the company’s efforts to modularize its product development efforts and to respond quickly to new market needs. In addition, it also contributed to the company’s high product development costs.

Approach

A new product-market segmentation tool was developed jointly by the client and the Arthur D. Little team. The company’s distributors provided the team with information on their market segments and competitive terrains. This information was used as the basis for prioritizing the segments. A product portfolio strategy was then developed to better cover all market segments and define the actions needed to improve the product positioning for each of those segments. The product portfolio was then optimized based on the segment prioritization scheme. The core team developed detailed project plans for all product activities that were needed to support and achieve the company’s strategy. The product launches from these projects were planned ahead of time and mapped against the available resources. This can lead to a replanning, postponement, etc. of each of the projects until a balance is achieved between needed and available resources. The product plan with all its corresponding projects was presented to the company’s senior management as an effective IT tool for final approval.

Value

The client now has a common view of its segment priorities based on thorough market data for all existing segments as well as potential new segments. It also obtained better coverage of high-priority segments, incorporated an improved product structure with the capability to add new products when needed, and the ability to rationalize its portfolio in segments containing overlapping products. A plan was put into place to level the usage of resources in all departments in order to meet the company’s product portfolio goals over the next ten years.

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