I often hear clients say, “We’ve been told by management that we should only have a standard and premium model.” Then product teams are tasked to fit the line to that limitation, while no product analysis was done to support the decision.
While reduction in configurations is important, how it is achieved is just as important. Using a quantitative approach earlier in this decision-making cycle can help the management team make an informed decision. Maybe a reduction to two models is just too aggressive; adding one additional model might be the difference in having proper market coverage. Examination of customer buying trends and patterns should be the first indicator for product direction. Determining product strategy based on market needs as opposed to retrofitting the product to an idea could lead to more effective product lines for both the manufacturer and consumer.
Mike, I agree with the importance of a quantitative approach. One approach is to prepare a frequency distribution chart of historic configurations. This provides useful information to act on but you can go a step further with an Operations Research analysis and “discover” configurations which can replace a number of the existing configurations on the frequency distribution.
Bob,
You are right. Ranking the configurations based on popularity, margin, etc are very useful, and can be used to guide customers to better configuration choices.