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Product Life Cycle—An Approach to Product Portfolio Optimization
In an effort to optimize profit, every month Tastykake holds a Product Review meeting—formerly called SKU Rationalization meeting—to determine which products have reached the end of their life cycle so that they can be discontinued. At times, the meeting becomes very emotional because some people are quite attached to certain products and find it difficult to let them go. To minimize losses and maximize profit, an exit strategy is also worked out. New product launches are also reviewed to determine which ones to go ahead with full speed, and which ones should be launched with a limited edition label. The purpose of being a limited edition is to test the market. Because of limited shelf space, the company follows the policy of one in and one out. Whatever decisions are made are communicated to the S&OP team.