You hear this a lot in SKU rationalization projects, where you’re trying to clean up the pieces of a non-performing assortment of products. “We need this to offer a full line”
Yet we’ve stocked the item for years and it clearly isn’t delivering the turns or margins we need to sustain it.
So how do we approach this?
Start With Buyer & Distributor Behavior
The first strategic question: is your market full line buyers?
Within janitorial supplies, large brands like Kimberly Clark would probably laugh at this question. But this should be a real concern for converters and emerging brand teams.
Can you successfully compete at the full portfolio level, as the first or second brand out of the salesperson’s bag? Or is your real business designed around cherry-picking, even if you want to style yourself as a full line provider.
There’s nothing wrong with cherry-picking, mind you. In fact, if you’re seriously constrained on cash or capacity, it often is more profitable to get “good” at one product line than scatter resources across a far broader space in search of “adequacy”. “Good” products can often stand on their own, delivering steady profitability and holding their share in the market without undue effort. Portfolios of “adequate” items often turn into diminishing returns business over time…
But if you don’t have full line buyers, be wary of investing your resources into product spaces that haven’t performed.
Understand Field Sales Perspective
Building on the last, look carefully at how your sellers and distributors introduce your product to the end user. How would they pull stuff out of the bag and in what order?
Your distributor rep is probably thinking like this:
- Proprietary systems that the manufacturer rep spent time training them to sell; often high margin and with various trips / incentives for hitting key sales targets
- Any product their boss is paying extra commission for them to sell, such as their house private brand
- A price-fighter offering for a specific category; usually universal product and may be split across multiple vendors to cherry pick the best cost on each item
- Specialty items – assuming they don’t dump sourcing this stuff to their merchandising specialist
- Single item “story of the month” – they have a hot cost or new feature they are pitching to their customers
Complicating things – they may only pull one or two of the above out of the bag during a given sales calls.
If you had to give them a brochure, what should it say about your assortment? Would it be narrow and focus on a couple of key items (“latest cost savings ideas from…”) or would it try to sell them the full line, knowing they may need all of it?
Which role are you competing for?
As you can see, you’ve got a choice between breath of offering or investing the same effort to achieve excellence on a few items (best cost, unique features, etc.)