In Retail Marketing It's Never Easy To Say Good Buy
10 principles to help create profitable brand and product engagementsFebruary 1, 2013 By Peter Weedfald
Profit is no longer solely defined by products, services, warranties or credit card interest gains. Today, profit pools are inclusive to downloads of apps, widgets, movies, music, games, etc. Digitalization, miniaturization, cloud access and wireless mobility are driving dramatic and dynamic change in profit opportunities. Intensive predatory competition is also leading to dangerous commoditization of our consumer electronics market place, pressurizing margins, destroying slow moving products, morphing market dreams into painful market risk. The entire CE industry stands at a technology crossroads. There is a clear choice at the fork in the road: Innovate or find alternative avenues for growth.
Game-changing technologies from formidable South Korean goliaths and other global leaders such as Apple have reshaped the industry with disruptive, in-demand products. These companies clearly innovate to grow, innovate to survive. And these global leaders are no longer simply providers of our home, business and mobile technologies but creators of our living dreams.
These competitive challenges often cause a crisis of confidence through corporate hallways. Despite these challenges, many CE manufacturers are focused on shifting their business models to discover new profit pools and to explore untraditional yet profitable markets such as green and environmental technologies, health and personal care, business infrastructure products, and other alternatives that lead to growth.
Success in those and other markets is typically generated by successful pull-through, building a formidable consumer demand, and hyper-targeting those with the will, the need and the means to vote for your product and pay a little extra for it.
Or it's all about the opposite: poor consumer demand generation causing poor profits, no future; time to move on to another industry opportunity, time to lower your brand-to-price value in the language of earth scorched pricing. The four opportunity or loss pillars experienced by all CE competitors across retail and Internet shelves are:
The true advantage is having a strong brand reputation and products that are considered to be a good buy. The fate of products and brands today is largely dictated by grades scored through social media report cards. The goal of smart marketers is to ensure a high performing product line. The relationship between brand-product value to price-pull advantage is your greatest demand generator.
Trying to succeed in a new market without brand recognition and a true differentiator is difficult at best.
You gain shelf space but product turns are nothing more than tombstones in the eyes and pocket books of consumers. In essence, you now have the largest museum of failed products on the planet, you are respectfully in the profit recession business and you cut, cut, cut your price, destroy your margins and ruin your brand.
Your forecasts are now dramatically diminished in the market and face an unsustainable failure. Your price point continues to fall and the merchant, along with the customer, says "goodbye."
Retail shelf space is a valuable and expensive resource for retailer and manufacturer. The relationship between shelf push and pull, managed turns, margins, forecasts, and promotions is the key to success.
For retailers, there are several key shelf management metrics that lead to successful product engagement. They are based on tried-and-true accounting and marketing disciplines. Best-of-breed merchants study these forecasts regularly to ensure retail and manufacturer success.
Gen One Ventures offers ten principles that can help to create profitable brand and product engagements:
1. Calculate shelf space in terms of space costs, product turn expectations, and product profitability per square foot.
2. Competitive line logic tied to price and profit margin elasticity, especially with respect to competing market forces.
3. Meticulous product forecasts tied to promotional stimulants, profitable turns and smart shelf investments.
4. Value differences tied to line logic between each brand, brand positioning, pricing, profitability, prior success or failure, brand maturity and market demand.
5. Associated costs for selling, stocking, storing and transporting, especially for new untested products, brands and categories.
6. Incorporation of shelf space elasticity among brands in the same category.
7. Examination of brand loyalty to best determine pricing and inventory forecasts and expected demand to inventory management cycles.
8. Mange value pricing with respect to competitive price and product assortments.
9. Solicit reviews of all demand-generation programs, especially in regards to MDF.
10. Ensure that profit opportunity is based on dollars per product sale and not on prices that have eroded or have been slashed.