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Maximizing Category Performance Through Assortment, Price & Promotion Strategies

Learn how to leverage assortment, pricing, and promotion strategies to enhance category performance and drive retail sales trends in the US market. Explore insights on managing assortment effectively, aligning prices with market conditions, and optimizing promotions for profitability. Discover best practices through case studies and strategies to improve your balance sheet with winning product assortment, pricing, and promotion management.

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Maximizing Category Performance Through Assortment, Price & Promotion Strategies

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  1. Shelf smarts Leveraging assortment, price and promotion to drive category performance

  2. Retail sales trends in US. are flat #Consumer360

  3. Driving efficiency is critical to success Sales programs (shelf placement, feature, display and pricing tactics) are the second biggest spend COGS44.1 Sales Programs 19.0 Dist 7.6 Adv 7.5 R&D1.4 #Consumer360

  4. WE’RE NOT MANAGING ASSORTMENT WELL Declining velocities against SKU proliferation Scantrack: xAOC 2013 vs. 2010

  5. Applied analytics drive ASSORTMENT performance #Consumer360

  6. MATCH PRICE TO MARKET CONDITIONS EXPECTATION REALITY 6

  7. Promoting more but getting less Promotion Frequency and Trade ROI Trend – 2012-2013 Trade ROI Promotion Frequency #Consumer360 7

  8. Only 10% of promotions are profitable Products ranked by Trade ROI(One Category – in Grocery) $1 is Breakeven $2 Breakeven $1 $0 -$1

  9. Some Manufacturers outperform peers Trade ROI by ManufacturerSales per Dollar Invested - $1 is Breakeven $1 Trade ROI $0 Negative ROI (<$0) Margin return on trade ($0 < ROI <$1) Positive return on trade (>$1 ROI) Best in Class (top 5% trade ROI)

  10. categories perform differENTly by segment Trade ROI by SegmentSales per Dollar Invested - $1 is Breakeven $1 Trade ROI $0 Negative ROI (<$0) Margin return on trade ($0 < ROI <$1) Positive return on trade (>$1 ROI) Best in Class (top 5% trade ROI)

  11. Get your balance sheet in order Product Assortment Pricing Promotion Management To enable winning promotions Get the right products on the shelf… At the right price… #Consumer360

  12. Case study: integrating assortment, pricE and promotion #Consumer360

  13. Let’s look at it in action Classic hi-lo retailer Only a few major brands $150 million category, flat sales for a couple years Over 400 UPCs 2 brands = 32% of Sales #Consumer360 Each brand has multiple sub-brands

  14. Retailer Region 10 Rationalize Develop Rationalize Develop 16 sub-brands 1 - 7 Rationalize Develop -2 4 BREAKDOWN 10 Sales Rate ($/store/week) New Sub-brand -10 15 0 10 Sub-cat 3 0 0 Squeeze Nurture Nurture Squeeze Squeeze Nurture 0 Incremental Value ($/Store/Week) #Consumer360

  15. Fixing assortment DRIVES topline growth Changes ( Abs. $MM)

  16. thresholds put significant volume at risk Sales Rate Index by Regular Price Point

  17. Current hi-low strategy with holiday focus Key holiday windows $3.85 Regular Price Heavy focus on Holiday Discounts Holiday timing Feature TPR EDLP spend Base #Consumer360

  18. Optimized “hybrid” strategy uses EDLP + Events Key holiday windows Use EDLP spend to bring regular price to $3.49 (below Threshold) Focus TPR & Feature below $3.00 (on & off Holiday) Use EDLP spend to bring Regular price to $3.49 (below threshold). Focus TPR & Feature below $3.00 (on & off Holiday). Holiday timing Feature TPR EDLP spend Base #Consumer360

  19. Hybrid trade strategy drives win-win Changes ( Abs. $MM)

  20. Let’s think about this as a system Product Assortment Pricing Promotion Management To enable winning promotions Get the right products on the shelf… At the right price… #Consumer360

  21. Fixing the baseline supercharges promotions Display provides 200% lift. Same Display effectiveness drives 100 more incremental units due to increase in baseline Total 450 Incremental 300 Cannibalization -30 +100 Total 300 Incremental 200 Cannibalization -40 +50 #Consumer360

  22. Win on all metrics: 1 + 1 > 2 +9.4% +6.7% +28.2% +3.9 +1.0 Manufacturer Profit Manufacturer Gross Revenue Trade Spend Retailer Profit Retailer $ Sales

  23. Integrated planning uses insights to drive demand #Consumer360

  24. You need to know where you stand High incrementality would lead to different actions than low DEVELOP Key category driver Increase items • RATIONALIZE • Saturated; restricting category growth • Make sure you have the best items in distribution fast Distribution (# Items) Avg Sales Rate Helps maximize category sales Review slow mover for de-listment NURTURE • Detrimental to category performance • De-list worst performers • SQUEEZE slow negative positive Consumer Response to Assortment (Incrementality)

  25. Successful trade strategies by category Best in Class (top 5% trade ROI) Remaining category #Consumer360

  26. Get your balance sheet in order + = Product Assortment Pricing Promotion Management To enable winning promotions Get the right products on the shelf… At the right price… #Consumer360

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