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
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.