Category roles (part 2). The most important role; destination

In follow up on my post on category roles in general (06/01/2017) I want to introduce the most important role;  destination.

The assortment within the destination category brings autonomous traffic, but only if you respect the rules.

 

A number of these destination rules are:

This is the category for which the retail formula  is famous.

You are simply the best in this category. You distinguish yourself in one (or more) of the marketing mix elements.

 No compromise in this category! 

Within your total formula the destination role  can only be applied to a limited number of categories

Promotion is done often, but always with a limited discount.

Never out-of stocks is very important.

Margin is average because this category needs investments.

When this role is executed well and everybody in the organization respect the rules for this role, this will bring autonomous traffic!

For further (or tailor made) information please do not hesitate to contact.

Data-driven category management and assortment….

You can do excellent execution in many retail steps………

marketing branding and communication, e-commerce activities, supply chain, product packaging, visual merchandising etc. etc.,

but if the assortment does not match the needs of the customer (within the specific channel) no maximum revenue can be reached.

The importance of following the total buying process to achieve the right assortments is often underestimated, despite offering the customer the right products is what retail is about!

Most underestimated step in the buying process is STEP 1;

‘Assortment framework and guidelines based on the company values and customer needs.  Framework and guidelines build up from the right data analysis’.

To manage STEP 1 an efficient category strategic and operational plan is a pragmatic data driven approach.

The well-considered and tailor-made analysis within this plan brings the category manager the necessary assortment frameworks and guidelines.

For example 1 useful analysis is this goldmine graph.

This graph provides insight into the profitability of a category, product group, product or supplier (in relation to the others) and leads to the right improvement.

 

For further (or tailor made) information please do not hesitate to contact.

 

 

Higher profit and satisfied customer….

 

There are different approaches for different kind of product groups. Each category needs its own assortment approach to be able to reach the maximum revenue and margin.

 

We start from the formula DNA, then respect the different categories. Followed by a specific assortment structure suitable for the productgroup.

I now appoint 1 important assortment structure….

‘Good, Better, Best 

The method ‘Good, Better, Best ‘ is very suitable for technical products with, for the customer,  a complex and mostly not transparant buying process.

For example mattresses and pillows. Which customer knows exactly how to make the right choice? How does he /she knows which item solves the need/ the problem best? Which product satisfies most?

A lot of (more expensive) purchases lead to cognitive dissonance, a sense of discomfort caused by the internal conflict after the purchase. ‘ Good, Better, Best’ helps the customer being satisfied  because of the transparent choice.

The ‘Good, Better, Best’ system leads the customer in a simple and clear way to the best solution for her/his need. And for the retailer also relevant; he leads the satisfied customer to a more profitable product.

Practice has proven  that the customer is willing to pay more for the added value! As long as the customer understands the price- added value combination!

Important for this assortment is to respect the structure conditions (3xC):

Customer needs versus solutions.

Content versus transparency

Cross- and upsell choices.

For further (or tailor made) information please do not hesitate to contact.

 

‘If you have to compete only on price you are not special enough’

There are retailers who have proven to be a successful prizefighter, they have a conscious strategy and all values and all decisions are based on this low costs high volume strategy.

Many retailers also act like a prizefighter, but they compete on the price out of weakness in stead of strength.

What is their distinctive capacity if they act out of weakness ?  And in which step in the retail proces they took the wrong turn?

Often the formula and brand values are strong enough and the strategy is clear about the distinctive capacity, but for example the assortment and the strategy among this,  is not developed and executed in the right way.

And then there is 1 element left to convince the customer to buy; the lowest retail price.

Buying proces: Most underestimated step in the buying proces is STEP 1. Framework and guidelines based on the company values, customer needs and the right data analysis.

 

The power of category roles

Category roles give a retailer a clear focus and guidelines for what we to do and what not do with their total assortment. Especially in the unlimited possibilities of online retailing, it is important to make the right decisions on this .

Only then can you give strength to the brand, you act according to the needs of the customer and make it possible to reach maximum revenue.

An important question we need to ask ourselves :

Which category is a traffic builder and which category is a basket filler? 

And which category are we famous for?

This determines which choices we make and gives the answer to the questions:

  • What we do with the the number of sku’s per category, how far do we go on that? What is the right mix assortment between the categories?
  • What is the investment in a category and what level of innovation is needed?
  • What is our promotion strategy? which items we promote and what is the discount we offer?
  • What is your sales price level in relation to the others in the market?

In other words, what “total game” we play with our mix of categories, how do we strengthen our brand values and how do we achieve maximum revenue?