September 16, 2015

New Items

I previously outlined three components to my system:
  1. Annual Repurchase Rates dictate the strategy a marketer needs to employ - and in most cases, that strategy is to find a ton of new customers.
  2. If we have to find a ton of new customers, and most of us have to find a ton of new customers, we need healthy levels of merchandise productivity to get the job done.
  3. If we have poor merchandise productivity, we optimize via profit to get the most out of a bad situation. If we have good merchandise productivity, we optimize via profit to obtain healthy sales and profit growth.
In the first five years of my consulting work, I tried very hard to focus on marketing solutions. Most projects focused on what the marketer could do different. Then the marketer would go back to the drawing board, try something different, make a few million dollars of incremental profit, but not change the trajectory of the business. You understand how demoralizing that is, right? You live it every single day. You work your rear end off, and at the end of the day, a -12% trend becomes a -9% because of you ... you stem a problem and make your company money, and half the company still beats you up because you are a poor marketer.

Might the customer not want to buy the merchandise you sell?

In the real world, we can clearly see the importance of new merchandise. Last week's Apple presentation is proof of that ... we can't wait to see what changes they are rolling out, and if the changes aren't significant enough, we blast them for not introducing enough new merchandise.

When it comes to the companies we work for? We know this is true as well. So why don't we focus on this issue? Go try to find an industry consultant, vendor, researcher, or trade journalist who gives more than a passing mention regarding this issue - it's almost impossible to find a focus on this important area of business success.

80% of my Merchandise Forensics projects identify a new merchandise / new item issue. 80%! That's a big number. And by focusing on this issue, my system has an advantage over every other solution that ignores merchandise while advocating marketing magic or sound marketing discipline. When merchandise productivity / new item productivity improves, marketers look great without even having to do anything!!!

To date, I've outlined four key components to my system:
  1. Annual Repurchase Rates dictate the strategy a marketer needs to employ - and in most cases, that strategy is to find a ton of new customers.
  2. If we have to find a ton of new customers, and most of us have to find a ton of new customers, we need healthy levels of merchandise productivity to get the job done.
  3. If we have poor merchandise productivity, we optimize via profit to get the most out of a bad situation. If we have good merchandise productivity, we optimize via profit to obtain healthy sales and profit growth.
  4. It is very difficult to sustain long-term annual repurchase rate increases, new customer increases, or profit optimization without healthy new item development. Therefore, new item development is a critical component of business health, and is a key component of my system.