For consumer packaged goods companies, the smartest
product strategies are double-edged swords: while
diversifying product lines to capture market share in consumer micro-niches is a winning plan for growing revenue and margins, it creates challenges for operations, particularly in the areas of cost management and proof of quality, which is the foundation of a firm’s brand equity. Each new product line brings a new set of recipes, specifications, quality regimens and optimization challenges to the factory; in the face of increasing consumer and retailer concerns, manufacturers cannot be driven by choosing between cost and quality—they must have comprehensive operational strategies that address both.
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