Managing Product Assortments with A Consumer-Driven Assortment Tool
By Greg Orth, Director

Managing product assortments at the shelf is a key executional component of every consumer packaged goods company's growth strategy. To maximize volume, it is imperative to have the proper assortment at that point of interruption between your product and the consumer. However, so many assortment tools and processes fail to account for and incorporate a critical element: the consumer.

HRCP's MixMaster® is a robust analytical tool that creates in-store product assortments based on actual consumer behavior. It goes beyond traditional practices, providing consumer-driven analysis to help manufacturers and retailers make assortment decisions with greater accuracy and confidence. MixMaster® builds on the consumer strategy base created by HRCP's Market Map, which defines precisely where and how to compete for the consumer. Using this proprietary consumer analysis, the tool creates an accurate, in-store product assortment driven by actual consumer behavior.
  

MixMaster® vs. Other Methodologies

Traditional approaches to assortment rely primarily on straight-line trending of item volume and share data, with additional "judgment" and guesswork regarding product substitutability (if done at all). The data used in such methodologies have nothing to do with how consumers actually choose and use the product, or what they are substituting for a certain item.   

Getting the right assortment for high-velocity items is the easy part. However, big mistakes can be made at the lower levels when straight velocity measures may delete an item that is highly incremental to the category while a highly cannibalistic item stays on the shelf. In addition, traditional approaches overstate the incremental contribution of adding additional SKUs. As a result, retailers make critical assortment and merchandising decisions based only on what they ship from the warehouse to their stores, not actual consumer behavior.   

HRCP's MixMaster® is uniquely differentiated. It is a consumer-guided analytical tool that creates accurate, in-store product assortments based on actual consumer usage and shopping patterns. Its consumer-driven approach provides meaningful, fact-based direction, while aligning marketing, sales and the retailer around how the category is organized. This information enables you to optimize retail SKUs for maximum ROI.  
  

Grounded in the Consumer

MixMaster® employs consumer behavioral data regarding consumer use, purchase, velocity, loyalty, and actual switching behavior. This data, derived from the HRCP market structure, yields a much deeper understanding of panel data. HRCP's proprietary market structure shows: 

• Why and how products satisfy consumer purchase and usage occasions
• Why and how consumer preferences dictate loyalty and substitutability
• How these factors affect net volume flows across SKUs within a segment or category 

Being able to understand, and subsequently incorporate, product attributes in the assortment planning process can only be done in an environment based on a market structure. MixMaster® also integrates POS facts that provide the traditional straight-line view of the world: velocity, revenue and ACVD trends, along with identification of "new" and "declining" SKUs.   

MixMaster® ensures that new or emerging segments are treated with equal importance. This consumer-based analysis captures switching of current items within categories in addition to added or deleted items. The tool accounts for consumer preferences at every level of the market structure regarding size, type, form, etc.  
  

Optimize Financial Performance

MixMaster® helps improve SKU ROI for the trade because it employs consumer purchase data and provides scenarios to improve financial performance. Assortment decisions and inventories align with consumer purchase and usage, therefore keeping inventories at optimum levels and maximizing turnover. In addition, the tool combines its proprietary consumer database with list price, base price, selling price, cost of goods, and trade dollars to ensure profitability is optimized for both manufacturer and retailer.   

MixMaster® helps improve returns for manufacturers as well. By identifying the most productive and least productive SKUs, it yields the optimal assortment for the highest inventory turnover rate. As a result, margins improve as support for lower volume SKUs is eliminated and consumption-driven promotion becomes the focus.  
  

Why use HRCP's MixMaster®?

First, MixMaster® is grounded in actual consumer behavior, allowing easy creation of accurate in-store product assortments. In addition, it accurately calculates transferable demand from product switching to get a true read on item performance. Assortment criteria can be changed quickly and easily to run multiple scenarios: consumer impact, category percent coverage and revenue; retailer impact and revenue, GMROII, margin and ROI; manufacturer impact, line management, revenue, and ROA. Reports are generated simultaneously with resulting analysis, and all changes are stored for easy scenario comparison.   

MixMaster® operates in a user-friendly environment with access through a Web-based application on your desktop. HRCP manages all of the data, which eliminates a large amount of IT legwork  while creating a seamless process and platform that enables you to access MixMaster® anytime and anywhere. By accessing MixMaster® via the internet and having HRCP manage the data, you can perform a complete line analysis using sophisticated simulations in minutes, delivering all key measures. This allows you to spend time focusing on the analysis and not get bogged down mining the data.   

Assortment planning is a critical component in retail execution.  HRCP has created a robust analytical solution that is turn key and user friendly while delivering the complex insights needed for accurate product mix.  MixMaster®'s unique consumer perspective creates the best assortment for your consumer, your customer and you – with ease.