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Published on February 9, 2008

Due to a limited understanding of the customer, half of consumer products, financial services and manufacturing companies say that they find it difficult to decide which products to phase out and which to retain, and only one-third of these companies are creating new products based upon customer needs, according to a new survey from the Economist Intelligence Unit sponsored by the George Group, part of Accenture.

The research is based on an online survey of 186 senior executives working at consumer goods, manufacturing and financial services firms. Twenty-one per cent of the respondents were CEOs or board members. 

"We found that companies often launch and retire products and services on a piecemeal basis, without much thought to the overall product portfolio," said Dan Armstrong, senior editor at the Economist Intelligence Unit.

They also tended to introduce new products and services faster than they got rid of old ones, expanding the product and service portfolio to an unsustainable size.

Key findings of the survey include that "product-lifecycle management" is weak and products and services are often introduced for reasons that have little to do with customers. Just over 60 per cent of companies surveyed cite new product/service introductions by competitors as a rationale for new product introductions.  Meanwhile, 31 per cent point to pressure from retailers or other middlemen for new features or packaging.Forty-five per cent of the companies surveyed give limited, or no, consideration to the costs of new product introductions or the continued production of loss leaders.

The Nation