Develop a Product Acquisition Strategy
A product acquisition strategy is an effective way to consolidate a company’s position within a specific market space or expand its footprint into adjacent markets. When companies want to diversify their product portfolios with new technology, they frequently turn to the outside rather than building new products internally.
Why spend millions of dollars developing technologies that other companies may well be willing to sell at an attractive price? Acquiring a product line or even a whole company offers the advantage of coming with an existing customer base, inventory and in some cases, even a trained workforce. It also ensures that the buyer has a stronger competitive footing by eliminating a potential source of competition.
Product Acquisition is Not a Silver Bullet
If this news makes you giddy with excitement and you feel the urge to go out and buy a new company or product line, allow me to throw just a few pints of cold water onto your enthusiasm.
It’s not that product acquisition isn’t valid or isn’t the right move; it frequently is. The “but” in this situation is found in the details. Acquiring a new product or product line and bringing it into an organization is a major project, and it involves much more than changing the stationery and hanging a new sign.
In short, product acquisition is not a magic bullet.
Identify Information Needed for Product Acquisition and Integration
As a product manager, I was once involved in rolling out a set of acquired technology. We were adapting a third party’s existing product to a more specialized and specific use that was applicable to our market segment.
The vast majority of the adaptation required involved the external elements of the product—things like the product name, the bundles of parts, assemblies, hardware and firmware for the assorted variations in the ultimate deliverable. These were all reflected in required changes to the packaging and collateral and of course, the prices, product codes and SKUs.
The technical modifications that verticalized the offering to align with our audience required only a few hours. These minor tweaks involved screen names, field names and logos displayed within the product. It was all of that other stuff that involved several months and lots of effort to complete.
I was lucky enough to have the help of a very good product administrator to guide me through the integration process. She was able to explain to me what our systems and processes required to quantify, identify, price and process the sale of any new product.
She helped me break down all of the product parts and assemblies, identify the mandatory elements and the optional add-on elements and establish the various relationships between these elements in terms of pre-requisite and co-requisite linkages.
Configure-Price-Quote Software Identifies Product Specifics
Today, CPQ technology is available to help with much of this “product administrative” work. The very nature of the CPQ function is to identify the specific parts, assemblies, prices and usage data within a product set.
CPQ Digitizes Expert Knowledge and Centralizes It
Not only is the specific product administrative data required, so is the tribal or expert knowledge related to usage and application of the product in the real world. That data may be supplied by product or industry experts, legal teams, sales managers and finance folks.
Experts add specific knowledge to the configuration and pricing systems to make sure the product sold is completely in alignment with the customer’s requirements, operational environment and regulatory mandates.”
When a new product is acquired, product managers will work with CPQ and other back-office systems to identify specific individual parts. Each part requires an assigned name and a product code that is linked to a unit list price. Each part is also linked to other parts as well as higher-level assemblies that are configured from those individual parts.
Additional information related to dependencies between parts and assemblies is provided to establish co-requisite and pre-requisite relationships.
CPQ’s Interactive Prompts Facilitate Sales and Customers
Business rules governing the use of parts, prices and configurations manage this critical data during the configuration process, which is ultimately driven by an interactive interview process with inputs provided by the sales rep and customer.
Using technology and relevant systems requirements to guide this integration process reduces the chance of forgetting something important. With so much complexity, opportunities to forget about small and not-so-small details are plentiful. This requirement is only satisfied by providing all of the information available about virtually any part, sub-assembly or assembly within the product family.
When the product is fully loaded into the system, you can be confident that all of the questions have been answered and all of the blanks have been filled in.
The newly acquired product will be your new product.