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Product Portfolio Management – Managing a Mix of Customized and Standardized Products

Jansson, Henrik (2010) MIO920
Production Management
Abstract
ABB Machines in Västerås, Sweden develop, sell, and manufacture
generators and large electric motors worldwide. During the past years
new competitors have emerged from a lower output range and some
customers have reduced their demands in order to reduce the generator
costs. In order to meet these changes in the market ABB Machines has
developed a new pre-engineered standardized generator that allows for
easier purchase and more efficient production. This new generator,
here referred to as Basic, will have less flexibility compared to the
current range of generators but provide the same robustness and
quality.
ABB Machines needs help with integrating the new product range into
its existing product portfolio. There are a number of... (More)
ABB Machines in Västerås, Sweden develop, sell, and manufacture
generators and large electric motors worldwide. During the past years
new competitors have emerged from a lower output range and some
customers have reduced their demands in order to reduce the generator
costs. In order to meet these changes in the market ABB Machines has
developed a new pre-engineered standardized generator that allows for
easier purchase and more efficient production. This new generator,
here referred to as Basic, will have less flexibility compared to the
current range of generators but provide the same robustness and
quality.
ABB Machines needs help with integrating the new product range into
its existing product portfolio. There are a number of challenges with
regards to marketing the new product both internally and externally
that need to be covered by this thesis.
The purpose of this thesis is to answer the question; How should the
new product rage, Basic, be integrated into ABB Machines existing
product portfolio? The aim is to provide useful recommendations to
ABB Machines of how, in the most successful way, manage this
product integration.
After some background information about ABB Machines in Västerås
was gathered through interviews a theoretical framework was created
from various books, articles, and journals related in different ways to
the subject. The theoretical framework was used as a foundation for
several case studies conducted at different companies. The companies
were selected due to their successful product introduction and
similarity to ABB Machines’ situation either based on product, marked
position, branch or other. The case studies were based on interviews
and the companies were analyzed with regards to their processes and
their ability to overcome the obstacles that ABB Machines is facing.
5
Delimitations:
Conclusion:
The case studies together with the theoretical framework were used to
determine the preferred company behavior and after an analysis of
ABB Machines in Västerås they were used to make recommendations
of how to act in the situation that ABB Machines in Västerås was in at
the time of writing.
A few potential issues have been left out of this thesis for various
reasons. The risk that the new product would cannibalize on the
existing products’ volumes is one of them. Another issue, strongly
related to the above, is to what extent the standardized generator should
be sold in terms of how large part of the total sales should consist of
Basic orders in the long run. This is a question for ABB Top
Management and will also be left out of this thesis. Lastly, how to
select new suppliers related to the new product and ensure their
appropriateness is an issue of importance, but will not be discussed in
this thesis.
In order to manage both standardized and customized products the
internal processes need to be separated and clearly documented. If the
same processes are kept for both products ABB Machines risks that the
standardized products will be too time consuming and therefore too
costly. Without separated processes it will also be difficult to maintain
the standardized products’ lesser flexibility and stay within the borders
of the limited options, which is essential for product success.
When it comes to external marketing the limitations of the standardized
products must be clearly communicated to the customers and what is
included in a standardized order must be stated in an obvious way in
the sales process to prevent discussions and confusions later in the
project. If the above is managed properly and no confusion about the
differences between the standardized and the customized products
arises the price difference between the two can be explained through
the advantages of standardization, which according to the studied
companies should be well known among companies within ABB
Machines industry. (Less)
Please use this url to cite or link to this publication:
author
Jansson, Henrik
supervisor
organization
course
MIO920
year
type
M1 - University Diploma
subject
other publication id
10/53580
language
English
id
1976174
date added to LUP
2011-06-16 16:15:43
date last changed
2011-06-20 12:31:03
@misc{1976174,
  abstract     = {ABB Machines in Västerås, Sweden develop, sell, and manufacture
generators and large electric motors worldwide. During the past years
new competitors have emerged from a lower output range and some
customers have reduced their demands in order to reduce the generator
costs. In order to meet these changes in the market ABB Machines has
developed a new pre-engineered standardized generator that allows for
easier purchase and more efficient production. This new generator,
here referred to as Basic, will have less flexibility compared to the
current range of generators but provide the same robustness and
quality.
ABB Machines needs help with integrating the new product range into
its existing product portfolio. There are a number of challenges with
regards to marketing the new product both internally and externally
that need to be covered by this thesis.
The purpose of this thesis is to answer the question; How should the
new product rage, Basic, be integrated into ABB Machines existing
product portfolio? The aim is to provide useful recommendations to
ABB Machines of how, in the most successful way, manage this
product integration.
After some background information about ABB Machines in Västerås
was gathered through interviews a theoretical framework was created
from various books, articles, and journals related in different ways to
the subject. The theoretical framework was used as a foundation for
several case studies conducted at different companies. The companies
were selected due to their successful product introduction and
similarity to ABB Machines’ situation either based on product, marked
position, branch or other. The case studies were based on interviews
and the companies were analyzed with regards to their processes and
their ability to overcome the obstacles that ABB Machines is facing.
5
Delimitations:
Conclusion:
The case studies together with the theoretical framework were used to
determine the preferred company behavior and after an analysis of
ABB Machines in Västerås they were used to make recommendations
of how to act in the situation that ABB Machines in Västerås was in at
the time of writing.
A few potential issues have been left out of this thesis for various
reasons. The risk that the new product would cannibalize on the
existing products’ volumes is one of them. Another issue, strongly
related to the above, is to what extent the standardized generator should
be sold in terms of how large part of the total sales should consist of
Basic orders in the long run. This is a question for ABB Top
Management and will also be left out of this thesis. Lastly, how to
select new suppliers related to the new product and ensure their
appropriateness is an issue of importance, but will not be discussed in
this thesis.
In order to manage both standardized and customized products the
internal processes need to be separated and clearly documented. If the
same processes are kept for both products ABB Machines risks that the
standardized products will be too time consuming and therefore too
costly. Without separated processes it will also be difficult to maintain
the standardized products’ lesser flexibility and stay within the borders
of the limited options, which is essential for product success.
When it comes to external marketing the limitations of the standardized
products must be clearly communicated to the customers and what is
included in a standardized order must be stated in an obvious way in
the sales process to prevent discussions and confusions later in the
project. If the above is managed properly and no confusion about the
differences between the standardized and the customized products
arises the price difference between the two can be explained through
the advantages of standardization, which according to the studied
companies should be well known among companies within ABB
Machines industry.},
  author       = {Jansson, Henrik},
  language     = {eng},
  note         = {Student Paper},
  title        = {Product Portfolio Management – Managing a Mix of Customized and Standardized Products},
  year         = {2010},
}