Why you should delete (more) products
Working in product-based business for most of my career, there's a continual stream of new products lined up for launch.
Every marketer wants another SKU to target a (magical) new segment and NPD to fill the budget growth for the next year.
The reality is:
🛒 Retailers don't have elastic shelves
👝 Customers don't have elastic wallets
🏭 Warehouses don't have endless space
💰 Cashflow doesn't magically expand to cover development costs
Just as a year-end review with your accountant can give you a good perspective on your finances - an indepth deep dive into your product range can have a huge impact.
THE BENEFITS OF A GOOD ANNUAL CULL OF YOUR RANGE INCLUDE:
✅ Consumers have MORE time to find and buy your best sellers.
The leading authority in all things loyalty, Professor Byron Sharp (How Brands Grow) notes that most volume comes from light lapsed buyers. These are people that only buy from your category once or twice a year at most. The 80:20 rule is more like 60:40 at best where your loyal users are smaller than you believe, and have less impact on total volume sales.
By reducing the choices on shelf and focusing on your best sellers - you’re giving consumers time to come back into the category and your brand (thanks to your consistent distinct marketing campaign) your odds of driving total brand improve.
✅ More marketing spend to focus on top sellers.
Avoid the drag of lots of hungry mouths to feed that inevitably comes from broad range, overlapping sub-brands and consistent NPD. The constant pull of social media, advertising, packaging design and general coordination expands the more SKUs you add to your range. This creates a constant challenge of ever-increasing marketing budgets and the ‘hope’ that the investment will deliver a return on all the costs for development.
Give your agency the chance to create an integrated campaign that lasts longer than 3 months (avg marketer attention span) and creating enduring brand equity by repeating the same message over and over and over. The research on attention and its impact on advertising effectiveness is clear. You need to grab attention early (first 2 seconds) and often (as many times as you can in at least 5+ media channels). The best campaigns build distinctiveness over the long term… they don’t change with each new brand manager or annual budget.
✅ Better factory efficiency (and often lower cost of goods)
Your copacker or contract manufacturer gets longer runs = lower cost/unit. If you manufacture inhouse then you can look at asset utilisation much better. This understanding of complexity & cost can get hidden in the excitement of launching new flavours, sizes or offers within your range. The belief of ‘its only a couple of products’ soon balloons out as there is unique materials (ingredients, labels, packaging, cases) to coordinate, and your manufacturing team need time to manage often shorter production runs.
✅ More focused sales team
No NPD launches to hide behind if they're not performing, and MORE time to get the best placement & promo strategy for the top sellers. A sales team LOVES to hit goals. If brands are constantly launching new products, then they’re adding to the pressure to get more on shelf every time, AND a ‘launch and leave’ mindset of moving onto the next thing. This can hide poor performance as the last (failed) NPD gets the blame for slow sales.
By deleting products and focusing efforts, you can make sure teams deliver on all the other elements of success instore. More space, better promotional program, better facings for your top sellers. Win. Win.
✅ Happier category manager
You're proactively deleting poor performers (that they'd likely cut anyway) and can allow more space & time to drive top sellers & overall category. There’s an expectation sometimes that buyers are just waiting for new products to appear and accept. Unfortunately with over-stocked warehouses and distribution centres, and stores trying to optimise space for positive financial returns, the reality is that there are ALWAYS products that are going to be deleted each review.
By taking the lead in doing what’s right for the category and deleting poor sellers, you’re subtly communicating to the buyer ‘hey, I get it, lets do what’s right for the shopper in your store’. This means when you DO launch new products, they may be more willing to consider if your story is strong.
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It might not feel comfortable to give up your pet products, but trust me, its worth it.
Your accountant will thank you for reducing inventory levels, your bank balance will thank you for taking away some cashflow stress and your operations team will thank you for improved efficiencies and likely better DIFOT levels too.
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If you want help in cutting the tail and reviewing your range, drop me a line. Its always a satisfying session doing indepth reviews and deciding what to keep, cull or change.
