Make Sure All Your Products Are Profitable (HBR Article Collection)

Most new products don't generate the expected profits. Why? We develop offerings to suit the "needs" of statistically average customers--not real human beings. So consumers reject them. We also expect new products to expand category demand. But people don't eat more or shampoo more just because they have more product choices. And the more offerings we develop, the more complex--and costly--our operations become. Result? Shrinking margins. How to make products profitable? Instead of trying to understand your "typical" customer, ask real people what jobs they want to get done. Then develop offerings they'll "hire" for those jobs. FedEx, for instance, expertly performs the "I-need-to-send-this-from-here-to-there-with-perfect-certainty-as-fast-as-possible" job. And rather than continually extending product lines, build market share for your core offerings--those accounting for most of your sales. You'll build healthier margins. Finally, gauge every potential new product's impact on revenues and costs. Introduce variety only if the costs of doing so won't outweigh the new revenues. Your reward? Handsome profits and happy customers.