Getting Assortment Strategy Right

Optimizing Assortments in Emerging Markets
By Tom Young, Principle

Leading edge manufacturers have made significant investments in assortment planning capabilities within the U.S. and other mature markets.  However, the challenge of developing capabilities across emerging markets has largely been unmet.  While the benefits are many, a "one size fits all" approach to assortment planning will not succeed if it does not adapt to the specific local consumer needs and data variability in each market.

In most emerging markets, assortment planning is performed infrequently and only for the largest customers.  Revenue ranking reports and other less sophisticated techniques are most often used.  Moving to a best practice assortment planning solution allows for implementation across a much broader set of customers and much more effective recommendations.  New insights are generated with advanced yet easy-to- understand analytics and presentation-ready reports.

HRCP's MixMaster® International provides both a best practices framework and an online tool to crunch the numbers.  Weeks of tedious labor are replaced with hours of focused analysis.  The user is intuitively guided to leverage their own unique market data and their own market insights, to produce a specific set of add/drop recommendations.  Equally important, the tool provides an understanding of the drivers and benefits of the assortment recommendations and answers key questions, such as:.

• Does the assortment optimize the retailer's strategy (that is, maximizing traffic, profitability, etc.)?
• Is the assortment growing the category and our client's brand portfolio?
• Where is volume being transferred when duplicative items are removed?

The largest retailer in Australia was looking to expand the assortment of baby toiletries, but maintain current shelf space.  Finding low performing and duplicative products was essential.  The data available for this analysis included unit sales and revenue, loyalty index, advertising support, absolute profitability, margin, and growth rate. 

MixMaster® analyzed these inputs and grouped items into "competitive sets" to identify where the most duplication existed.  Ultimately, reductions were found in Baby Bath, Baby Shampoo, Baby Soap, Baby Powder, and especially Nappy Rash Creams which allowed for important new product introductions which grew the category.

HRCP's MixMaster® International solution has been leveraged across a myriad of markets and categories:  from Australian Baby Needs to Dubai Face Care to Swedish Sanitary Protection to Columbian Oral Care.  Compelling assortment recommendations, incorporating the unique products, benefits and attributes of the category, have led to increased sales and efficiency for both the manufacturer and retailer.

So, what are the first steps to tackle assortment planning in emerging markets?  Initiate a pilot with a mix of markets to generate success stories for a larger roll out.  The markets should represent a cross section of sophistication.  For example, include a high complexity market which is accustomed to performing assortment analysis and has robust data, a medium complexity market with limited assortment analysis experience and data, and a low complexity market where little to no assortment analysis is performed and very limited data is available.  Once the successful pilot is completed, an internal best practices approach can be established and rolled out to the broader organization.   

There are many benefits from a consistent emerging market assortment planning solution.  In many countries and categories, your company will enjoy the advantages of being first-to-market and enjoy accelerated revenue and profit growth.