Market segmentation, demographic analysis and socio-economic profiling have, for decades, been a mainstay of business education and management practice. Companies, especially makers and sellers of consumer goods, have often used these theories and tools to create a plethora of product variants to target every segment of the market.
But perhaps, it is time to step back and wonder if there is equal, if not greater, merit in the few-sizes-fit-all approach.
Earlier this week, car maker Renault announced that it was going to slash the number of models it sold in the UK in order to enhance profitability. Starting February 2012, the company will no longer sell five models that, it said, accounted for less than 10% of total retail sales.
File photo of the Apple iPhone 4S . Photo source Apple via Bloomberg
Soon after, Acer announced that it was going to embark on a three-year-long project to pare product lines and sub-brands. It was doing this to prevent consumers from getting confused by too much choice. Currently, the company sells computers under the Acer, Gateway, Packard-Bell and eMachines brands.
Other tech marquees like Dell and Asus have also announced their intentions to simplify and bring greater focus to their product range.
Some analysts have said that these companies may be taking their cues from Apple’s minimal product strategy. For all the furore around the iPhone, Apple has only ever launched five models. This trend also extends to the company’s other hardware products. In each vertical—slim laptop, performance laptop, desktop—Apple sells one or two models with a couple of variants in each one. In all, Apple reaps billions of dollars in revenue and profit from a catalogue that numbers fewer products than what many other tech companies launch each quarter.
There are benefits in a more focused catalogue. It is easier to back a dozen products with high-octane marketing than a 50. And there is such a thing as too much choice. Especially in a cluttered space like technology or automotive.
Indications are that it is time for companies to question traditional logic. And for some management textbooks to be rewritten.
When does it make sense for producers to pare the number of their models? Tell us at email@example.com