April 05, 2022

Dominant, Complimentary, Auxiliary: Paired with Customer Development

Each of the categories we've analyzed the past few weeks are outlined below, in terms of rebuy rates into the category, rebuy rates into all other products, and this year's gross margin percentage. Tell me what you observe?


The two columns on the right label each category. We have several segments.

Dominant:

  • Category 19, Category 12.
Complimentary Plus (Complimentary and High Gross Margin).
  • Category 06, Category 01, Category 08, Category 11, Category 21, Category 14.
Complimentary Minus (Complimentary and Low Gross Margin).
  • Category 00, Category 03.
Auxiliary Plus (Auxiliary and High Gross Margin).
  • Category 10, Category 15, Category 18, Category 16.
Auxiliary Minus (Auxiliary and Low Gross Margin).
  • Category 07, Category 20, Category 13, Category 04, Category 02, Category 09, Category 17.
As a marketer, you should be particularly careful about featuring "Auxiliary Minus" items. These items belong to categories where the customer is unlikely to repurchase from the category, less likely to repurchase from the rest of the brand, and if the customer buys from the category the customer generates lower-than-average gross margin dollars. In other words, the marketer who features these products sub-optimizes Customer Development and sub-optimizes profit. 

That's a bad combination.




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