Brands that sell their products to the mass market are constantly seeking to find the assortment that will maximize their revenues. This means creating product ranges that reach as many target customers as possible, in order to achieve the highest possible sales.
In this article, Sidely reviews the key issues in assortment strategy.
Our aim? Help you define or redefine your product offering to improve your sales results.
And since there's so much to say on the subject, we've decided to break it down into three main parts:
But then, what is an assortment in marketing?
The aim of assortment strategy is to select and manage the range of products offered to consumers. This involves defining the quantity, variety and type of products to be included in the assortment, as well as its width and depth.
This approach involves selecting, managing and organizing the products you sell, focusing on how they interact with each other to best meet customer needs and help you achieve your business objectives.
In this way, assortment strategy encompasses the creation of a coherent set of products that complement each other, thus contributing to the company's overall success in the marketplace.
Assortment strategy is influenced by factors such as market trends, customer demand, brand strategy and competition. For mass-market brands, the aim is to optimize product visibility and availability, while meeting the varied needs and preferences of consumers, and maximizing sales and profitability.
To do this, it's important to mix loss-leader and complementary products. The loss-leader will enable you to generate volume, attracting consumers to your brand. You'll then encourage them to buy ancillary products, which are generally more expensive. You need complementary products to sell.
In practice, the structuring of your product offering is largely correlated with that of your competitors, your aim being to gain market share while setting yourself apart from the competition.
-> What's the difference between range and assortment?
The word assortment is used both by brands and by sales outlets to designate all the products they offer for sale. Range is a technical term used in product marketing to designate a category of products.
As you will have gathered, the term "assortment" refers to both your company's product offering and that of your distributors, who sell both your products and those of your competitors. This is why the last part of this guide will focus on supermarkets.
To describe a manufacturer's product range, we generally speak of width and depth:
💡 Example
A manufacturer of electronic products offers two product categories: alarm clocks and watches. 5 models of alarm clocks and 10 models of watches are marketed.
-> The assortment can be said to be narrow in width (2 categories) but considerable in depth (up to 10 models for watches).
To determine the breadth and depth of your range, you need to study not only consumer needs, but also your company's operational costs.
While the definition of the assortment is primarily the responsibility of marketing, it is now understood that all the company's links are necessarily involved: finance, production, logistics and sales, to name but a few.
It's also possible to classify your products by type of purchase. When a customer buys your brand, that purchase may involve several actions and decisions on their part, themselves influenced by their in-store journey.
There are two types of purchase: everyday purchases are guided by rational reasons: habits, immediate need, price appeal, etc. Then come impulse purchases, influenced by the external environment or desire. Then there are impulse purchases, influenced by the external environment or desire: price, merchandising, promotion, crush, etc.
💡 Example
It's a beautiful day, and you decide to go to the beach.
Once there, you realize that you don't have any sun cream. Luckily, a store has had the good idea to put some on display on the way to the beach. This first purchase introduced you to a brand you'd never bought before. The low price helped to convince you to spend the money.
But you still have such a bad memory of your last sunstroke that you also decide to buy a moisturizing cream. This time, you enter the store. And, faced with the considerable choice on the shelves, you find yourself reflexively buying a product from the same brand.
-> In this example, the sun cream acted as a loss leader. The moisturizer can be seen as a complementary product.
Mastering the classification of products by role is therefore important for building up an assortment adapted to the target market, but also for ensuring that your different references, although destined for different uses or targets, always make the maximum contribution to overall sales, while avoiding cannibalization phenomena, i.e. a situation of competition between your products, which reduces the potential value of your sales.
To create an assortment strategy that meets your various marketing and sales objectives, you can assign different roles to your products:
Read also: how to choose and define your flagship product.
In the end, a good assortment strategy makes it possible to assign objectives to the various products:
Assortment obviously has a considerable impact on your sales, but also on your investments, inventory management and production costs.
The first challenge of assortment is linked to distribution strategy. You won't be able to offer the same assortments to all retailers, yet you can sell your products to all of them.
Distribution strategy doesn't stop at the brand name or store level. It is also possible to reserve certain products for e-commerce or for your retail salespeople.
💡 Example
It's common to find specific beers in wine shops that you can't find in supermarkets. Simply because they are reserved for the former. The same goes for specialist running stores, which offer tennis ranges or colors that you can't find on the brand's website or in more general stores like Décathlon or Go Sport.
Benefit: an effective assortment not only meets market expectations, but also those of your distributors, as your strategy will better match their assortment policy. You have a role to play in advising them, because you know your range and your market better than they do. Conversely, they know their locations and customers better, and will know what's best for them. It's a balancing act: it's up to you to find the right balance.
Risk: on the other hand, a poor assortment will have a proportionally negative impact on your business: unsold goods, storage costs, damage to your image with distributors... A poor strategy can be very costly!
So, any brand operating in the supermarket sector needs to think about its product strategy from a global perspective, taking into account the competitive landscape and the brand's positioning.
By knowing which products to launch, and what role to assign to each, you give yourself the means to achieve the following marketing objectives:
🧠 Sidely's advice: your assortment should always reflect your overall brand strategy, and each product should be consistent with your image and reputation.
Now that we've covered the basics, let's find out how you can design your assortment strategy.
Your company's assortment strategy corresponds to its positioning and approach to the market.
💡 Example
a brand may choose to specialize in the marketing of a single product range in order to rationalize its production, logistics and marketing costs on a single niche and try to capture maximum value.
Conversely, a brand wishing to reach as many consumers as possible will tend to develop a very large number of references in order to reach as many customer segments as possible.
Clearly, these two companies will not have the same assortment strategy.
Let's take a look at the steps involved in finding the right product range for your business strategy and, above all, your market.
Let's finish with the side effects that most manufacturers encounter along the way.
To understand what works, you need to get out in the field.
For all these reasons, the definition of your assortment strategy should aim to limit risk as much as possible, based on reliable data and solid processes.
What's more, it's a process of continuous improvement, whether you're looking to stabilize, defend against the competition, gain market share, or specialize.
Finally, for brands that sell to supermarkets, your ability to work with your distributors as part of a trade marketing approach will enable you to gather the data you need to study purchasing behavior.
You now have the keys to defining your product assortment strategy.
And, as promised, we're now going to focus on the world of supermarkets, for which the term assortment takes on a special dimension!
Just like you, your distributors use the word assortment to designate all the product references they offer their customers. The term can be applied to the catalog made available by centralized distributors in the case of integrated distribution, or to the "cadencier", i.e. the references offered by a single sales outlet, a case more often found among independents.
Range width and range depth are still relevant. This time, however, a new level of granularity has been added: supermarkets categorize their assortments into three main types:
Generally speaking, your distributors are constantly trying to anticipate and adapt to changes in demand. Their assortment strategy, like yours, consists of trying to meet market expectations as far as possible, whether in terms of range breadth or depth. And, as in your case, the ultimate goal is to maximize profitability.
If your aim is to be listed in supermarkets, you now need to understand how assortment is decided in the supermarket world.
Everything you've read in this article will enable you to propose an "ideal assortment" to your distributor. But they still have to buy it!
In practice, the assortment is generally negotiated centrally, with the common core, i.e. a compulsory assortment to be placed in the stores. Most centralized stores are regional.
Secondly, on average, integrated sales outlets have to comply with 80 to 100% of the assortments negotiated by the head office. This means they have little scope for adding complementary products.
The independents want to keep a higher margin of maneuver to adapt to their local market. They respect between 60 and 80% of the assortments negotiated at the central level.
In this way, product and department managers generally follow the instructions of the central purchasing agencies, which manage the assortment at their level. This is why we also speak of assortment policy. This role is often assigned to the merchandising manager.
It begins by defining which product categories or families should appear on the shelves of the various sales outlets, according to their size, typology and, in some cases, their location. The common core favors flagship or leading products, for their reputation and turnover rate. Innovation is also prized.
The second step is to decide on the depth of the ranges. Here again, turnover is taken into account, and the aim is to optimize sales per linear meter.
Finally, it is not uncommon for the assortment plan to include variants for stores with specific characteristics (surface area, purchasing power of the area, etc.).
In supermarkets, negotiations are annual, and include all distribution criteria for the coming year. The assortment is reviewed on this occasion, taking into account the seasons and changes in the market. It is therefore extremely important to analyze your results by brand, by outlet, by category and by product.
To develop your distribution strategy and analyze your performance with such finesse, discover the application used by leading retail brands!
We hope this guide has helped you structure your thoughts on creating - or revamping - your assortment strategy. Your commercial objectives in supermarkets necessarily lead you to structure a product offer that meets both the expectations of your target market and the assortment policy of your distributors.
That's why we've taken the time in this article to review the definitions, issues and methods involved in finding the most strategic and profitable assortment for your CPG brand.
