What Is a Combination Strategy?

Product portfolio strategy is the strategy of the best combination of multiple products produced and operated by the company for the market. The purpose is to make the breadth, depth and relevance of the product portfolio in the best structure, so as to improve the competitiveness of enterprises and obtain the best economic benefits. The specific performance is as follows: (1) Expand the breadth of the product portfolio, and use the existing equipment of the enterprise to increase the production of different types and types of products. (2) Develop the depth of the product portfolio to meet the market's different requirements for similar products and increase market share. (3) Strengthening the relevance of products, starting from reducing costs and improving quality of the company, minimizing the breadth and depth of the product mix, and focusing on the production of a small number of products. ^[1]

Product portfolio strategy

When companies make product portfolios, there are three levels of issues that need to be resolved, namely:

-Whether to add, modify or delete product items;

Whether to expand, fill and delete

The four factors are closely related to promoting sales and increasing profits. Generally, broadening and increasing

A method of analyzing the soundness and balance of a product portfolio is called a three-dimensional analysis chart. in

According to above

When adjusting product portfolios, companies can choose the following product portfolio strategies for specific situations:

1. Expand product portfolio strategy

The strategy of expanding product portfolio is to expand the breadth of product portfolio and strengthen the depth of product portfolio. Expanding product portfolio breadth means adding one or more

Due to changes in market demand and competitive situation, each item in the product portfolio will inevitably change.

I. Knowledge about product portfolio

(1) The breadth of a product portfolio refers to the number of product lines owned by an enterprise. More product lines indicate a broader product portfolio.

(2) The length of the product portfolio. Refers to the average number of product varieties owned by an enterprise, that is, the quotient obtained by dividing the total number of products by the total number of product lines.

(3) The depth of the product portfolio refers to the suit and specifications of each variety.

(4) The density of the product mix. Refers to the degree of relevance of the products of each product line in terms of end use, production conditions, distribution, etc.

The company's product portfolio strategy should follow three basic principles: that is conducive to promoting sales, conducive to competition, and conducive to increasing the total profit of the enterprise.

Product portfolio strategy

In 2003, in the Chinese mainland market, Hualong Group, located in Longyao County, Xingtai City, Hebei Province, ranked second in the instant noodle industry with more than 6 billion bales of instant noodle production and sales, second only to Master Kong. At the same time, it has formed a tripartite market structure with "Master Kang" and "Unification". "Hualong" has truly transformed from a local instant noodle brand to a national brand.

As a local brand, why can Hualong instant noodles achieve the second place in the country in terms of production and sales in front of the two giants, "Master Kong" and "Unification", thus becoming another powerful force in China's domestic instant noodle industry?

From a market perspective, Hualong's success has nothing to do with its market positioning, channel strategy, product strategy, brand strategy, advertising strategy, etc., and the role of product market positioning and product portfolio in product strategy is even more important. Great. Let's analyze how Hualong uses its product portfolio strategy.

(I) Product market positioning in the early stages of development: In the early 1990s, large instant noodle manufacturers targeted their rural markets to target China's urban markets. Such as "Master Kong" and "Unified" sales mainly rely on urban market consumption to achieve. The vast rural market is only a small instant noodle manufacturer with unstable quality and no brand at all, and its sales are extremely small. China's rural instant noodle market still has huge market potential.

In 1994, Hualong accurately positioned its products in the 800 million farmers and 300 million working-class consumers at the beginning of its business. At the same time, relying on local high-quality wheat and cheap labor resources, Hualong has set the retail price of a bag of instant noodles below 0.6 yuan, about 0.8 yuan lower than the average brand, and the price is low.

Before 2000, the popular noodles such as "108", "Jiayimai", and "Hualong Xiaozai"; mid-range noodles include "well-off families" and "Volkswagen three generations"; high-end noodles include "red and red", "cooked eat".

With this correct target market positioning strategy, Hualong opened the market in the vast rural areas of the north at once.

In 2002, from the perspective of sales volume, Hualongdi's distributors above the city level (including prefecture-level cities) accounted for only 27% of the total sales, and counties and towns accounted for 73%. The rural market supported the development of Hualong.

(2) Regional product strategy in the mid-term development: As a rising challenger, Hualong promotes regional marketing strategies for high-, medium-, and low-product combinations in different regional markets. It has created an idea of studying regional markets, understanding regional culture, promoting regional marketing, operating regional brands, and creating regional advertisements, and it has been gaining consumer favor in the local market. Since 2001, we have implemented a regional brand strategy and launched a series of new products with different tastes and different brands for consumers in different regions. Table 1: Hualong's regional product strategy adopted for different markets. The main products are widely announced to seek a series of specifications and price positions. Henan Liuchome's interpretation does not kneel (not expensive) Liuchome is divided into 14 flavors including braised beef and spicy beef. Lowest price, most affordable product Liuchome 108 Liuchome 120 Super Liuchome Shandong Jinhualong Shandong people agree on the value of "real" Jinhualong is divided into 12 flavors including braised beef, spicy beef and other low-priced low-end noodles Jinhualong 108 Mid-range noodles Jinhualong 120 High-priced high-end noodles The core appeal of Dongbei Dongsanfu is the Northeast s blessed noodles Dongsanfu braised beef and other 6 flavors and 5 specifications of low-priced low-end noodles Dongsanfu 130 high-priced and high-end noodles can be made by everyone. Come, you can say that the flavor is not fragrant and you can make braised beef and other 3 flavors and 5 specifications at high prices. Mai Lang's flexible instant noodles, challenge strong brands such as "Master Kong" and "Unification", divide the high-end market and cook boiled beef noodles in 4 flavors, 16 kinds of high-end and high-end prices Series, urban and rural consumption mainly bubble noodle bowl noodles and noodles In addition, Hualong also has the following series of products: · The most high-end product "Xiaokang 130" series, which is positioned in the well-off family; Series; · A-Crunchy Noodle Series suitable for children; · "Jia Yimai" series launched to thank consumers; · "Halal" series launched to respect ethnic minorities; · "Farm Brothers" series to return farmers brothers; · The "cooking and eating" series suitable for middle-aged and elderly people; the above series products have more than three flavors and more than 6 specifications.

(3) Analysis of Hualong Instant Noodle Combination Strategy Hualong has six product lines including instant noodles, condiments, cakes, flour, coloring pages, and paper products, that is, the length of its product portfolio is 6. Instant noodles are Hualong's main product line. Here, we also focus on the product portfolio of instant noodles.

1. Hualong's instant noodle product portfolio is very rich, and the length, depth and density of its product lines have reached a reasonable level. It has a total of 17 product series, more than a dozen product flavors, and hundreds of product specifications. Its reasonable product mix enables enterprises to make full use of existing resources, explore existing production potentials, more widely meet the various needs of the market, and occupy a wider market. Hualong's rich product portfolio has strongly promoted the sales of its products and strongly promoted the formation of Hualong's position as the second best in the instant noodle industry.

2. Hualong Noodle's successful experience in product portfolio: Phase product strategy According to the different development stages of the enterprise, timely launch of products suitable for the market. In the early stage of development, the target market was positioned in the rural markets of Hebei Province and surrounding provinces. Because the rural market itself is constrained by the level of economic development, it is impossible to accept high-priced products. Hualong is very aware of this. From the beginning, it launched a "mass noodles" series suitable for the rural market. Zi opened the threshold for Hualong to enter the rural market, and then the "popular noodles" series became popular all over the country, grabbing most of the low-end markets. A few years after the development of the company, Hualong has accumulated greater capital and more sufficient market experience, and has launched a mid-to-high-end series for the general public in other markets in the country: such as the mid-range "well-off family" and "three generations of the public" High-end "Red Red Red" and so on. Hualong thus opened a large northern rural market. In 1999, Hualong's output value reached 900 million yuan. This is another staged product strategy launched by Hualong based on market development needs and the company's own conditions, and it has also achieved success. Since 2000, Hualong's development has been more rapid. It has also gradually enriched its own product series, and has developed more than a dozen product varieties and dozens of product specifications for different markets across the country. In 2001, Hualong's sales soared to 1.9 billion yuan. At this time, Hualong mainly seized the low-end market. Since 2002, Hualong began to take the line of high-end noodles and developed the first high-end noodle brand-"Jinmailang". Hualong began to vigorously develop the mid-to-high-priced market in the urban market, which was a great success in large cities such as Beijing and Shanghai. · Regional product strategy Hualong has been implementing a regional brand strategy since 2001, and launched a series of new products with different tastes and different brands for consumers in different regions. Hualong's product strategy and brand strategy are: promote different products in different regions; less national brands, more regional brands. As a late challenger, Hualong chose to start in the low-to-mid-end mass market. Considering that the marketing environment in China is very different and geographically different, different markets, different cultures, different values, and different life forms different. Therefore, Hualong wanted to maximize the regional market, formulated a regional product strategy, tailored to local conditions, each broke, and maximized the local market segmentation. For example, Hualong has developed "Six-chome" for Henan Province in the Central Plains, "East Three Blessings" for the East Three Provinces, and "Jinhualong" for the Shandong Province. ). Hualong promotes regional product strategy-in fact, it has created a train of thought to study regional markets, understand regional culture, promote regional marketing, operate regional brands, and create regional advertisements. Later, it began to implement a regional brand strategy, and launched a series of new products with different tastes and different brands for consumers in different regions. Such as the "Halal" series for the Hui nationality, and "Kenjin" series for the three eastern provinces. · Market segmentation product strategy Market segmentation is a market method commonly used by enterprises. Through market segmentation, companies can determine the different responses of customer groups to product differences or marketing mix variables. The ultimate goal is to identify the consumer groups that provide the company with the largest potential profit, and thus launch corresponding products. Hualong is a master at market segmentation. And achieved great success. Hualong launches different products according to administrative divisions, such as Six-chome in Henan, Jinhualong in Shandong, and Kengzao in Northeast China. Hualong launched different current products according to geographical attributes, such as products launched in urban and rural areas. Hualong launches different products according to the degree of economic development. For example, in the economically developed Beijing, the most current Jinmailang barrel noodles and bowl noodles will be promoted. Hualong launched A-Crunchy Noodles series suitable for children according to age; "Cooking and eating" series suitable for middle-aged and elderly people; Hualong launched "Jiayimai" series to thank consumers; "Farm Brothers" series; Hualong attaches great importance to market segmentation, and not only rely on a model. It tried a variety of different segmentation variables or variable combinations to find new channels to compete with competitors, expand consumer groups, and promote sales. · High, middle and low product mix strategy As can be seen from the above figure, Hualong Noodle's product mix is a combination of high, middle and low product mix. The low profile still occupies most of its market sales. The overall high-, middle- and low-grade product mix strategy in the national market. There are both a low-end Volkswagen series, a mid-range Jiayimai, and a high-end Jinmailang. High, middle and low-end product strategies in different regions. For example, in the Henan market where instant noodles are very fiercely competitive, the ultra-low-priced Liuchome series has been the main push. The main slogan of "Liuchome" is "not kneeling (expensive)." This is a product developed by Hualong in order to compete with many instant noodles in the Henan market. Its retail price is only 0.4 yuan / pack (0.24 yuan / pack to dealers). At the same time, Hualong set up its factory in Xuchang, Henan, which made many instant noodle brands in Henan very sad. In other markets across the country, such as the Northeast, after the "East Three Blessings", the mid-range "Kenjin" series was launched, and the "Jinmailang" series was launched in large cities. The combination of high, middle and low grades in the same area to develop markets with different consumption levels. For example, in Northeast, Shandong and other places, products of three different grades, three middle schools and different prices (see table) are launched to meet the needs of different consumers. · Innovative product strategy Each product has its life development cycle. Hualong is an expert in new product development. It pays great attention to the development of new products and new product series to meet the changing needs of the market. Hualong constantly innovates in product specifications and tastes. From 50g to 130g, Hualong has developed dozens of product specifications in 10 years. Developed more than ten new flavors such as jade prawns, spicy beef, and barbecue flavors. Hualong made bold innovations in product shape and packaging. For example, the "round noodles" series with round noodles is launched; the "noodles are good, and they are wonderful. The taste is howling" series of noodles. The cover reflects the trendy, fashionable, cool "A Kid" series and much more. Product concept innovation. For example, Hualong has created the concept of "cooking and eating" suitable for middle-aged and elderly people. Cooking and cooking are non-fried instant noodles. · Product extension strategy Product extension strategy is Hualong's important product strategy. Each series of products has its follow-up "offspring" products. For example, after the launch of Liuchome, the launch of Liuchome 108, Liuchome 120, and Super Sixchome; after the launch of Jinhualong, the launch of Jinhualong 108 and Jinhualong 120; after the launch of Dongsanfu, the launch of Dongsanfu 120 , Dongsanfu 130; Not only the extension of the product itself, but also the extension of the product brand in the same market. After launching the "East Three Blessings" series in the three provinces of Northeast China, the "Can Make Good" series was launched. In short, Hualong Noodle's product portfolio strategy is relatively successful, which deserves our careful analysis and thinking. Some aspects may be worthy of reference and worthy of promotion and application.