October 29, 2013

Reliance On Mega-Winners

I recently performed a decade-plus review of what are called "mega winners". These are "A" items in my Merchandise Forensics framework - high unit volume, high demand volume.

You see a trend that looks something like this:
  • 2000 = 10% of A/B/C/D items are Mega Winners.
  • 2004 = 13% of A/B/C/D items are Mega Winners.
  • 2008 = 16% of A/B/C/D items are Mega Winners.
  • 2013 = 20% of A/B/C/D items are Mega Winners.
You don't notice the trend, on an annual basis - the percentages simply don't move much to draw attention.

Over the course of 13 years, however, a dramatic shift in business dynamics occurs.
  • This business is twice as reliant on Mega Winners in 2013 as it was in 2000.
Mega Winners are a blessing and a curse.
  • A blessing, because they generate the lion's share of company profit.
  • A curse, because the entire marketing structure optimizes around mega winners. Mega winners die. And when the entire marketing structure optimizes around dying items, the future of the business is in trouble.
Pay attention, folks! Is this situation happening in your business?

Think about The Sharper Image. You have a defective Ionic Breeze air purifier, and the whole ecosystem just crumbles. Or think about Apple. You have an iPod, then an iPhone, now an iPad - single items that launch the business into the stratosphere. Risk and Reward. The business wins or loses.

That's what happens when reliance on mega-winners increases. And in my projects, marketing productivity is not being cultivated by the marketing team, it's being directly influenced by the merchandising team.

Learn about this dynamic. It's terribly important to the future of your business.