THE COMPANIES THAT BECAME MORE VALUABLE BY SELLING FEWER PRODUCTS
In business, growth is often associated with launching more products, entering new markets, and giving customers more choices. Yet some companies discovered that doing the opposite could make them stronger, more profitable, and easier to manage.
1. APPLE: FROM DOZENS OF PRODUCTS TO A CLEARER STRATEGY
In the 1990s, Apple faced serious financial difficulties. Its product lineup had become confusing, with numerous models aimed at overlapping customer groups.
When Steve Jobs returned to Apple in 1997, he pushed for a much simpler strategy.
Apple reduced its product range and focused on a smaller number of computers designed for specific customers. The objective was to concentrate resources on products the company could develop, manufacture, and market effectively.
This strategy helped establish the foundation for Apple's later expansion into products such as the iPod, iPhone, and iPad.
Apple's success was not simply the result of selling fewer products. It also involved better execution, distinctive design, strong software integration, and a clearer brand identity.
The important lesson is that a smaller product portfolio can give a company more room to make its best products exceptional.
2. MCDONALD'S: WHEN SIMPLIFYING THE MENU CAN SPEED UP SERVICE
Fast-food restaurants depend on serving large numbers of customers consistently. Every additional menu item can introduce more ingredients, preparation steps, storage requirements, and opportunities for mistakes.
McDonald's has periodically simplified its menu or removed items to improve operations and respond to changing business conditions.
A famous example is the McDonald's experience during the COVID-19 pandemic. In 2020, the company temporarily reduced its menu in several markets to help restaurants operate under extraordinary conditions.
The simplified menu allowed employees to focus on a narrower range of items while restaurants faced staffing and supply-chain challenges.
This does not mean that fewer menu items always produce higher profits. Removing a popular product can disappoint customers or send them to competitors.
The strategy works best when the operational savings and improved consistency outweigh the sales lost from discontinued items.
3. COCA-COLA: CONCENTRATING ON WHAT CUSTOMERS ACTUALLY BUY
Coca-Cola has built an enormous portfolio of beverages over the decades, but maintaining every product indefinitely would be expensive and inefficient.
In 2020, the company announced that it would discontinue certain underperforming products as part of a broader effort to simplify its portfolio and concentrate on stronger opportunities.
One notable example was Tab, the diet soda introduced in 1963. Coca-Cola announced that it would discontinue Tab, along with several other brands, as it focused on products with greater potential.
The decision illustrated a difficult reality: a product can have loyal customers and historical significance without being strategically important enough to justify its ongoing costs.
Companies must consider production complexity, distribution space, marketing budgets, and the opportunity cost of supporting weaker products.
Sometimes, removing a product creates more room for the brands with stronger demand.
4. WARREN BUFFETT'S APPROACH: SOMETIMES THE BEST DECISION IS NOT TO BUY
Berkshire Hathaway's investment strategy offers a related lesson.
Warren Buffett has repeatedly emphasized the importance of understanding a business and remaining disciplined about price. Berkshire has also maintained a relatively concentrated set of major investments at different points in its history, rather than buying every company or stock available.
This is not exactly the same as a retailer removing products from its shelves. But the underlying principle is similar: adding more options does not automatically improve results.
For an investor, every new investment requires research, capital, and risk management. For a company, every new product requires development, production, marketing, and support.
The question is not how many opportunities an organization can pursue. It is which opportunities deserve its limited resources.
5. WHY TOO MANY PRODUCTS CAN BECOME A FINANCIAL PROBLEM
Launching new products can generate excitement, but every product adds complexity.
Imagine a company selling 100 different products. Each requires some combination of inventory, packaging, marketing, quality control, customer support, and distribution.
Some products may sell consistently. Others may move slowly, occupy warehouse space, or require expensive promotional campaigns.
The result can be a business that appears large but struggles to earn attractive returns.
Consider this hypothetical example:
Business measure | Before simplification | After simplification |
|---|
Products offered | 100 | 60 |
Annual revenue | €10 million | €9.5 million |
Annual operating costs | €9 million | €8 million |
Operating profit | €1 million | €1.5 million |
Operating margin | 10% | 15.8% |
These figures are illustrative, not the results of a real company.
In this scenario, revenue falls by €500,000, but costs fall by €1 million. Operating profit therefore increases by €500,000.
This is why revenue alone does not tell the whole story. A company can sell less and still become more profitable if it eliminates products that consume disproportionate resources.
However, cutting too aggressively can also damage a business. The key is identifying which products create genuine value and which mainly create complexity.
6. FEWER PRODUCTS CAN ALSO STRENGTHEN A BRAND
A company with an enormous catalogue can make it difficult for customers to understand what it does best.
A narrower range can create a clearer identity.
For example, a fashion brand that concentrates on a few recognizable designs may develop stronger brand recognition than one that launches hundreds of unrelated items. A software company that focuses on a specific customer problem may deliver a better experience than one that tries to serve everyone.
There is also a marketing advantage. When a company has fewer priorities, it can concentrate its advertising budget, improve product quality, and communicate a more consistent message.
But the right level of choice depends on the market. Customers in some industries expect broad selection, and removing too many options can push them toward competitors.
The goal is not to minimize the number of products at all costs. It is to make every product earn its place.
MAACAT PERSPECTIVE
The instinct to keep expanding is understandable. New products promise new customers, additional revenue, and opportunities to enter new markets.
But growth creates obligations. Every product that remains in a company's portfolio competes for money, time, attention, and operational resources.
Apple's product simplification, Coca-Cola's portfolio changes, and McDonald's temporary menu reduction illustrate different versions of the same strategic question: what should a company stop doing so it can do the most important things better?
A stronger business is not necessarily the one that sells the most different products. It may be the one that knows exactly which products deserve its resources — and has the discipline to let the others go.
