In many industrial sectors, economic pressure on customers is growing noticeably. Rising energy and raw material prices, volatile supply chains, and increasing competitive pressure are forcing purchasing departments to consistently scrutinize costs. At the same time, many applications are now technologically mature: not every machine, component, or software function is used to its maximum capacity in everyday life. Against this backdrop, customers are increasingly demanding so-called good-enough products, i.e. solutions that are functionally adequate but less expensive than classic premium offerings.
This raises a strategically sensitive question for premium manufacturers: should a deliberately reduced product line be introduced alongside the high-end portfolio?
Arguments for a good-enough line
A key argument in favor is the defense of market share. Customers who would otherwise migrate to competitors or low-cost providers for cost reasons can be retained in the company’s own portfolio. In addition, new customer segments can be tapped, such as price-driven markets or applications with lower technical requirements. Good-enough products can also serve as an entry-level offering, which can later lead to upselling or cross-selling opportunities. Last but not least, such a line can strengthen a company’s cost competitiveness and reveal internal efficiency potential.
Arguments against introduction
On the other hand, there are considerable risks. The biggest is the cannibalization of the premium business: existing customers could deliberately switch to cheaper alternatives, even if they would actually need the higher performance solutions. There is also a risk of brand dilution, especially if the premium positioning is strongly defined by quality, durability, and technological excellence. A second product logic is also challenging from an organizational perspective: development, sales, and service must be clearly differentiated to avoid conflicts of interest.
Evaluation of the options
Whether good-enough products make sense depends heavily on the context. Their introduction is particularly recommended if customer requirements can be clearly segmented, the brand can credibly support differentiated offerings, and a clear separation between the premium and good-enough lines (e.g., via brands, channels, or specifications) is possible. It is equally important that cost leadership is actually achieved – not just pretended through price discounts.
On the other hand, rejection is advisable if premium positioning is the key competitive advantage, customers hardly differentiate between performance levels, or the organization cannot master the necessary complexity. In these cases, it is often more effective to communicate the added value of the premium offering even more clearly or to further develop it rather than relativize it.
Conclusion
Good-enough products are not a panacea, but a strategic option – with clear opportunities, but equally clear prerequisites.
For many premium suppliers, their long-standing market leadership obscures the view of a new reality: catching-up competitors, converging quality levels, growing price pressure, and changing requirements in a globalized competitive environment.
Schlegel und Partner regularly examines market and customer requirements in a wide range of industrial markets and helps its clients to strategically design their product portfolios with a view to their own competencies.
Are you interested in discussing this topic?
Please feel free to contact us:
Dr. Helmut Weldle
Phone number +49 6201 9915 52
Helmut.Weldle@schlegelundpartner.de
Dierk Plümer
Phone number +49 6201 9915 50
dierk.pluemer@schlegelundpartner.de
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