When a buyer calls a line review, it galvanizes the entire team. And when you are the top supplier, you are always the target. The competition wants your business and the buyer wants more margin. One way or the another, it’s going to cost you.
Because the business world is filled with teamwork and collaboration, Doug Thompson and I are teaming up to share how we would each respond to specific sales and marketing situations.
We’ll take a challenge and independently approach how we’d solve it, blend the thinking (or debate the merits of each approach), and come up with an approach to keep the business
How can we hold our distribution as the dominate supplier at both big box retailers despite a product line review for our category?
Our challenge: what if a line review was called and our buyer wants something new and different from the other box. And to make it even more realistic, the buyer is also hinting that they are looking at going private label on a portion of the business. Best of all, we got the phone call to come in and pitch.
To give focus to our thinking, we have selected the ladder category since one major brand, Werner Ladder, appears to us to have the majority of the category at both big boxes.
Here’s our thinking “out loud” so you see the collaboration and teamwork behind our conclusions.
“If the buyer isn’t seeing growth, then it’s all about profit”
Greg: This request is really about the buyer wanting to differentiate from the other box. The private label hint suggests that Werner Ladder is not driving top line sales for the category.
If the buyer isn’t seeing growth, then it’s all about profit. Either we as the incumbent brand drop our price or the business is going elsewhere.
“The buyer wants a concession but he is also looking for an advantage”
Doug: We know that both boxes are trying to increase the percentage of private label in their aisle. In most businesses a few key SKU’s make up a majority of the sales, and finding a source for 3 items covering ~$200M is bound to get someone’s attention.
Yes, the buyer wants a concession but he is also looking for an advantage. I think you immediately look at two things.
- Creating an advantage.
- Determining how real the PL threat is.
“Creating an advantage starts with product differentiation”
Greg: Creating an advantage starts with differentiation. There are a couple of ways to do this:
- Improving the set by shifting the mix to higher volume skus.
- Value-added accessories to drive ticket (a ladder stabilizer, for example, on all extension ladders).
- Improvement to the product that could drive a greater margin in addition to differentiation.
- New price points.
- Offering to create an OPP ladder that has fewer features or lower rating.
It may not be affordable, but adding an aggressive promotion plan designed to drive sales along with one or more of these ideas would clearly get the retailer’s attention.
“I think it is time to put together some brainstorming sessions to find out what innovations consumers wish they had on a ladder”
Doug: I am not sure that you want to push more volume into core SKU’s, that will only make it easier to private label in the future.
As ladders have a huge safety component, I think a de-featured ladder for $10 or $20 less might not sell if the story and accessories push the consumer to at least an MPP (mid price point) ladder. I am thinking the path may be to split the volume.
Add a feature onto the current product to make a premium version, and take something out to make a cheap one. Pros won’t touch a cheap ladder so you will probably shift them up. Consumers will probably go cheap unless you have a gadget that attracts them.
I think it is time to put together some brainstorming sessions to find out what gizmo consumers wish they had on a ladder. I’ve got a couple of ideas already.
“Holding your space as the dominate brand requires you to be both nimble and smart”
Greg: Finding out what shoppers want is critical. Not only will it give us confidence that the innovation we offer will perform better on the shelf, but it will also allow us to be category experts.
Staying the dominate brand requires you to be both nimble and smart. Big box customers include both DIY and pro customers. By asking both groups what they want, we’ll be able to share what’s important and why to the retailer.
We can then build a bay that maximizing the sales potential based on that retailer’s core consumer, even customizing our mix and assortment based on common store clusters.
More importantly, we’ll learn from those consumers and pros how to best communicate on the packaging. It’s a critical step to improving bay navigation and helping consumers quickly and easily find the right ladder for them.
“Let’s go walk some stores and see what we insights and issues we can pick up from the guys who are talking to customers each and every day”
Doug: Agreed. Any kind of trademark and overarching packaging themes will help protect us from competitors.
The ability to help segment your offering by store helps keep the small players out as well. I’ve got qualitative research set up for next week for both consumers and professionals, let’s see what we get out of that.
I also have a friend at the testing lab, let me give him a call and see if he has seen any unusual activity from other companies looking to certify new products.
Let’s go walk some stores and see what we insights and issues we can pick up from the guys who are talking to customers each and every day.
That’s how we’ll dig up the facts that will help us tell our story — and create differentiation for each customer along the way!
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