Product Value Optimization

Optimization of the product margin

When it comes to product design and optimization, only looking at costs is too short-sighted: products must strike a balance between functionality and cost efficiency to sales price, as a customer usually only pays for required functions. Solving problems that the customer does not know exist and overengineering do not translate into a higher selling price or the higher price results in a loss of market share. The primary reason for this mismatch is that decisions about functionalities are not derived systematically. For a company, this results in two levers to increase profit:

• Reduction of costs for features
• Increase of the (subjectively) perceived value and thus sales price

Ideally, both levers are used in combination. To determine which features should be included, customer wishes need to be understood and the relationship between functions and costs needs to be evaluated systematically. The pragmatic methods that TARGUS uses for this vary depending on the product, market, and customer, but always include functional and value analysis as well as market analysis (among others to be able to evaluate the effects of differentiation in the product portfolio). Customer wishes and value perceptions can, for example, be investigated in customer workshops, social media analyses or using Kano or Conjoint analysis.