5 Qs With Lixil’s Bobby Joseph On Devising A Differentiated Portfolio

A differentiated portfolio, in common parlance, is about a family of brands, their roles and relationships with each other. However, marketers view it as the one that truly stands out in not just catering to the most obvious requirements of the consumer but also remains relevant by pre-empting evolving needs of the discerning consumers. 

Having to devise an effective brand portfolio strategy doesn't come easy. In fact, it often begets confusion, inefficency, misallocation of resources and a lot of other challenges. Ongoing efforts to review and refine are often needed to deliver synergy, leverage, clarity, relevance, differentiation and energy amongst the differentiated products. 

In a quick chat with Bobby Joseph, Leader, LIXIL Water Technology (LWT), India & Subcontinent, he gives us a sense of what goes behind building an effective brand portfolio strategy and how a multi-brand & multi-category portfolio strength can bring in differentiation through smart and thoughtful innovations, which can truly add value to the way the consumers interact with a brand’s products.

Joseph is a firm believer in the fact that companies who constantly innovate and differentiate their portfolio, stay consistently relevant. "Our consumers are constantly evolving. They are more aware than ever, are researching more, and are already knowledgeable of many of the functional aspects of bathroom products. This implies that products that are truly differentiated in terms of features, technologies and innovations have a higher chance of adoption, especially in the mid to higher price segments. DIY (Do it Yourself) has always been prevalent in western countries which means that the end-user is knowledgeable and highly involved in the purchase of sanitaryware products," he shares.

Excerpts:

Q. What are the broad challenges & opportunities for brands that aim for true differentiation within the portfolio?

Some of the obvious opportunities that come along with product differentiation include first-mover advantage, price premium over other similar products, entry barrier to competitors and leadership position for the brand in the category or industry.

The biggest challenge in differentiation is to launch a new offering without cannibalizing your existing portfolio beyond a reasonable limit. In other words, the goal of any new innovation is to generate incremental revenue without adversely affecting your existing business. This is only possible if the innovation is truly differentiated, thereby allowing you to charge a premium versus existing products. True differentiation also demands significant investment in research and development, coupled with a long term commitment to consistently upgrade and refresh the product line.  

Q. When is it the right time for a brand to think of product/ service differentiation? 

Consumer centricity, innovation and product differentiation need to be at the core of any business strategy. So, unless differentiation is the motto from the very start, it is going to be a challenge to firstly establish, and then, run a successful business over the long term.

In this digital age, consumers have evolved to research and compare functionalities, features and technologies of products from various brands before going in for purchase.  In such a scenario, it is even more critical to offer something that cuts through the clutter and stands out against the competition. In my opinion, product/service differentiation has to be the key from the very start of a business, and it has to remain the key, in order to flourish.

Q. How does the budget prioritization work here? What budget challenges do marketers face?

Product differentiation requires committed and consistent investment in research and development. At LIXIL, it is an immersive process that involves closely understanding consumer needs, evolving trends, demography and even culture before a product is carefully designed – It is a process that also demands time investment to produce results. 

Many a time, Marketers are under incredible pressure to show results in the short term, which leaves very little budget for long-term investments like R&D.  However, that is where budget prioritization plays an important role and we, as an organization, allocate budgets basis the priorities of our business. It is important to not only have an eye on the short-term marketing activities, but also to prioritize R&D for product/service differentiation in order to stay competitive over the long run.

Q. Marketers may not spend as much time differentiating their products internally as they do externally with their competitors. How much do you agree with this?

It completely depends on the overall strategy of the organization and how they want to position their brand. At LIXIL, we are as mindful of internal product differentiation as much as external. 

For instance, within the GROHE brand, we have laddered our portfolio into five distinct segments – G2, G3, G4, G5 and G7. Each of these segments features clear specification and technology differentiation, which allows us to target varied price segments, thereby making our products available to consumers across a wide spectrum of affluence.

Q. What are the ingredients to develop a product differentiation strategy? What tips would you have for the marketers?

The most important aspect of a differentiation strategy is constant and consistent research into consumer needs, attitudes, behaviors and purchase patterns. 

Our company has been able to leverage its expertise to curate innovative solutions which have a unique sense of purpose, identity, and value in its design. From Product Design to Experience Design – the LIXIL design team spends more time observing, listening, and gathering insights to understand unarticulated needs. The more we research, the better positioned we become to latch on to a latent or developing need/trend, and that could lead to the next big differentiator for our product lineup.

As a marketer, it is important to allocate sufficient resources to R&D, with the clear goal of creating and maintaining a differentiated portfolio over the long run. We must always remember that the product/service is the hero and it needs to be consistently differentiated for success and relevance in the market.