‘When to bring in or push for new variants, new pack sizes?’

Q: I’M a brand manager in a local FMCG (fast moving consumer goods) company which is a family-owned corporation.

I’m in charge of a brand of bath soap which is the third biggest brand of the company.  My brand is available in six variants and in four sizes.

Because we’re a far No. 4 in terms of market share in the category and also we don’t pay display rental, not all six variants are available in supermarkets. However, we occupy a top-to-bottom display.  Usually, we only have four of our variants available in the trade; the three are our top-selling variants, and the other one is our new variant which was just launched last year.

I would like to ask your advice as to when to rationalize the other slow-moving variants.  What are the factors one should consider, and how do we convince top management about the decision?

Lastly, the Nielsen data tell us that one size of the market leader is delivering a good amount of sales.  It’s within our capacity to manufacture this size as well but we don’t have the budget to create awareness for this specific size in case we decide to manufacture it.  What are the factors that we should consider before manufacturing this new size?

A: You’ve already a good number of variants (six of them) and pack sizes (four of them).  So study first how was each of those variants and sizes decided and approved by your top management.  Learn from that history.  Unless your new variant and the new size is radically different from any of the previous additional variant or size, “the factors” that worked from these previous additions after the first one will probably be the same factors that will work to convince your top management’s approval of the new variant and the new size.

But with six variants and four sizes that make for a total of 24 (store keeping unit) SKU [= (6 variants) x (4 sizes)], that total of 24 SKUs will require a whole lot of shelf space if they are all to be made available in each of your supermarket accounts.  That’s assuming you can get your supermarket accounts to give that much shelf space.  But it seems like you have a fairly strong and friendly relationship with your supermarket accounts.  Without paying any “display rental,” you’ve been given “top-to-bottom display” shelf space for four out of your six variants.  However, this is probably as much as you can go.  You’ve reached your limit.

So we agree that it’s time for you “to rationalize (your) other slow-moving variants.”  This is of course assuming that you want now to be more careful about how much farther your good trade relationship can take you and your “slow-moving variants.”

Because there are many factors to consider, you need a focus.  Ask yourself: “What basis is going to be most convincing to both your top management and to your trade accounts to support your slow-moving variants?”

Nothing can be more convincing than showing that there’s a market segment of shoppers who are in need of any one or both of your two laggard variants.  A market segment in need gives you the market size of the revenue and sales productivity potential of a variant in question.  Revenue productivity is the kind of music that both your top management and trade accounts will dance to.

How do you show a variant’s revenue productivity potential?  The most valid way is to do a variant shopping behavior research among supermarket shoppers.  But given your obvious budget limitation, this is an “expensive” option.  So how do you do a “quick-but-clean and cost-effective” consumer variant shopping research?  Please note that we say: “quick-but-clean.”  There is no place in your marketing system for a “quick-and-dirty” research.

There are two ways.  The first is to source the necessary data from your trade accounts or from at least one of them whom you have special, friendly relation.

Specifically, get the sales data over time for a competitor’s variants that are the variants of concern to you. If there’s increasing sales trend, then that’s the proof you’re looking for that there’s a market segment in need of such a variant.

What if you can’t get to depend on a “special, friendly” supermarket account?  Then do an actual quick-but-clean, cost-effective consumer variant shopping research among supermarket shoppers.  For the details of designing and executing this kind of research, see the Senior MRx-er’s 3rd edition book, User-Friendly Marketing Research.  Here’s a summary of that research design that you can yourself undertake.

Select your shopper respondents as those “from whom you can learn the most” about the variant shopping you’re after.  These are the supermarket shoppers who shop the variant in the morning, the afternoon and the evening.

Our assumption here is that morning shoppers are different from those in the afternoon and in the evening.  Get 10 morning shoppers, 10 afternoon and 10 evening shoppers.

Then intercept interview a shopper who just bought a variant of concern to you.  Ask just two questions.

First:  “Ma’am is this the first time you’re buying this variant or is this a repeat buy?”  If a repeat buy, then ask this follow-up second question:  “Ma’am, is this a second, third or what repeat?”

Back in the office, tabulate the responses.  If the “percentage of repeat buy” is twice or more than twice the “percentage first buy,” then take this as establishing a market segment in need of the variant. Use this pair of statistics as your indisputable “proof” to both your top management and your trade accounts.

For your question on “rationalizing a new pack size,” proceed as we’ve prescribed in your rationalizing your slow-moving variants.

Keep your questions coming.  Send them to us at [email protected] or [email protected]. God bless!