Friday, May 24, 2013

Demand and Sales Data: How To Leverage Both

As a category manager, I am used to deal with a lot of data: Sales statistics, market research, among others. The purpose of a category manager is to understand how to build the offer of one store in order to respond to consumers' demand and hence increase sales.

I read the article of the Harvard Business review: Demand and Sales Aren't Equivalent with a lot of interest. Indeed, the goal of this article is to show that sales figures don't really necessarily translates what consumers really need. And I must admit that as a category manager, with the hands full of sales data, we tend to focus on sales data.

But as the article details, there are a lot of reasons why both are different:
  • Sales data don't show you the detail of how one household consume a product. One shopper may buy 3 different kinds of milk, but you may not know what will be the usage of it. Is there any milk that has been bought because you were out of stock of another milk? Is it because of a specific recipe? Is it a recurrent need?
  • Sales data won't show you if your products match one consumer needs: If you sell for example shampoo bottles of 600 ml and only 600 ml, you will never know if this is too much, not enough. Consumers will buy it because they won't have the choice. 
  • Sales data are mostly analysis of the past. It is tough to forecast future consumers behavior based on sales data (even though you may expect high increases of sales in different segments, but once you notice them, it is already too late). Markets evolve faster and faster, and it is important to have ways to watch what will be next.
Therefore, it is important to have data tools that will allow you to analyse the demand, and sales.