Consumer Products
Consumer Products is about velocity and margin; hence it is often termed FMCG or Fast Moving Consumer Goods. The million dollar question is; if it is speed or velocity that is a better term?
Speed describes only how fast an object is moving; whereas velocity gives both how fast and in what direction the object is moving. Coca-Cola is the fastest consumer good product ever crated, reaching an average hypersonic speed of 12.2 Mach. Three pillars to achieve this speed, goes through Space + Product + Activation; hence we say that ‘SPA is good for your wallet, as it is for your body’. Every module has its own unique value; hence knowing these, is paramount for accelerating growth.
Macro Trends (PEQN-Model)
Some years back SIAL identified four consumer trends into the 2000s; abbreviated to PEQN. The closer a supplier is able to hit the bull’s eye of the model, the bigger the chance for success.
The PEQN-Model sums up many other trends in a great way, which makes it as an arch for growth. Not only for product development, but as well as for any development to take place. Take ‘Natural’ as an example: It is a collection of ‘Save me’; either through planet or health & wellbeing. ‘Practical’ is on the other hand, is a collection of digital, functional, involvement etc. There are not too many innovations that is able to hit the center of all four sectors, but the ones which do, will achieve exponential growth. Looking at innovation through a modular approach, has proven most beneficial.
MODULES OF A PRODUCT
A product is a sum of modules designed for selling.
A product is not just a product, but rather the sum of four general classifications or categories, and 60 more specific descriptions. Knowing the value of these factors will enable brand owners to better succeed. Here we have only listed a few vital modules.
Linking these descriptions to scan data, will create a competitive advantage, and better launches. It will also ease proper and smart game-planning for brands.
a world of choices
There is a wide FMCG assortment, that would take you 20 hours to pass with only one facing each - at hiking speed. Is this wide assortment essential for continous growth?
Every year 30K new products are lauched, where 83% fail within 18 months.
The assortment in a normal supermarket has doubled the last decade, but the selection is still at 350 SKUs for an average family basket in a year.
There is a science in optimizing the assortment, and the million dollar question is if you are only out there to grab shares, or to grow the total category? A category captain has the responsibility to act in the best interest for the retailer - to be objective and neutral - to grow the top-line as well as the bottom-line performance.
the paradox of choice
Some shoppers just love a wide assortment. Other shoppers dislike the complexity of a wide assortment.
Too many choices lead many shoppers to feel stress, choice paralysis, and sometimes even regret.
‘People hate bad more than they love good’; hence the purchase intent normally decreases at a given level. The net effect of these positive and negative feelings is normally at 1% of sub-category level.
This is theory (and true); but the real science is to calculate and evaluate the assortment from 16 various angles; through the ‘16 Matrix Analysis’. Just by plain optimizing the space, the category normally jumps 20-25%. Less is normally more, and every brand manager needs to plan their launches with care.
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