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Look Before You Leap: Product Portfolio Strategies for Price-Sensitive Segments
Often companies believe it will be easy to expand their offerings into more price-sensitive segments, assuming if they can develop and successfully sell premium, highly-featured products and services, de-featuring will be simple. However, launching a lower-priced offering to meet the needs of a dynamic market is an endeavor ripe with challenges, especially when the goal is to capture market share and, at the same time, maintain profitability. An unsuccessful execution can threaten the very revenue and margins the company seeks to grow or protect, which can lead to cannibalization and an uncertain future.
It’s important to take the time to carefully assess whether to expand your portfolio to enter and capture a price-sensitive market segment. The journey of discovery is complex and requires a multi-dimensional view of the marketplace, competitive landscape, and organizational capabilities. While moving forward with expansion plans may at first appear to be the right choice, restructuring your commercial offer for market segments which are not price-sensitive can sometimes be the right solution.
In this white paper, we will examine the common strategic rationales for business-to-business companies deciding to develop a lower-priced offering for more price-sensitive market segments. We will provide case studies to demonstrate how other firms have made the decision whether to expand their product portfolio, revealing best practices for addressing inherent obstacles.