Wednesday, July 31, 2013

Category Management Series: The Pricing

One of the key elements of a category management strategy is the pricing aspect of it. The topic is very large, because there are almost as many price strategy that there are companies...

There are different key aspects though to take into consideration in order to set a pricing. These aspects are not ranked! Because once again, depending of the global strategy of a company you may use one component more than the other:
  • Companies costs and margins: Obviously, if you are running a business, it is not for free, and you need to earn money. Therefore it is important to understand how much money you will spend once selling one product, in order to have a price that will secure you some profits.
  • Competition: Of course, you will always been in a competitive environment. Maybe you are the "Apple" of your sector, or with very innovative products, you will always need to find products that have the same usage that may be an indirect competition.
  • The facial value of your product/service: Customers may have an idea of how much money they may put in your products. This facial value may come from the money you allow your customer to save, or the time you will save, or the comfort you will provide. It is important to see how much money your customer is eager to spend on your products.
For a retailer, and most companies with wide product ranges, there is also a very key component of the pricing strategy: The equalization. The equalization process comes directly from the important competition you have in the retail business. Therefore, your pricing strategy is one of the key reasons why your customer will choose your store rather than another. Your equalization process obviously needs to get customers perception that you are cheap, but also needs to take care of the three aspects of the pricing above. 

In the Category Management Series: 

Monday, July 29, 2013

Publicis & Ovicom Joins Forces To Create Advertizing Tycoon

I learned this morning that French advertizing company Publicis has decided to create a holding with American group Omnicom.  The group is going to be a holding with headquarters in Holland (??? Probably for taxes reasons) with operations main office in the US and France. The new holding will become the largest group of advertizing in the world.

The merger is supposed to allow both companies to save money on expenses, and also to create different synergies. Now is it a good thing?

This is a question I don't really know actually... Indeed, some clients may be reluctant to remain in an agency for example that deals with their competitor, so I believe that they may loose some clients due to that. I actually believe that maybe the new group will need to sell some of their agencies due to that reason.

Also, I believe that where the group may create the best added value is about its consulting activities, rather than their power of purchase. Media companies are struggling financially, and I don't think they are in the capacity of providing better pricing due to the fact those both companies will buy together.

Now I am very happy for Publicis. I believe that Publicis did a great job and had the good strategy for years now. They have been able to shift from traditional media to digital with success. It is always great to see a French company succeeding as much as Publicis does.

Friday, July 26, 2013

Tesco's Talking Shop Blog

I recently discovered the Tesco Talking Shop Blog thanks to an article of French magazine Linéaires. Tesco is one of the leading retailer in the world, thanks to its leadership in England and different other countries. Tesco has also been rewarded thanks to its customer centric approach, and the usage they make from their loyalty reward program data.

In this blog, top executives of the company discusses about their job, they're philosophy, and what the innovations are at Tesco. It is a great source of information in order to know what the company is at.

As a professional of retail, it is a great opportunity to understand better what makes Tesco so unique. I invite you to have a look if you have the change.

Thursday, July 25, 2013

Should Businesses Experiment? thanks to @ariegoldshlager

I wanted to share with you my thoughts about an article I read on the blog of @ariegoldshlager : Why Businesses Don't Experiment. Actually, I found this article very interesting, because it is true: From my personnal experience, I believe that companies tend not to test much. Most of the time, they would rather change their whole business at once than to conduct tests.

The thing is that testing is difficult, and requires you to have clear patterns and protocol to respect, in order to have usable data at the end of the test period. Testing is not only about launching a new product and letting a few sample of people try it, it is about targeting the right sample to use, and to define right from the beginning the data that will provide you a clear answer.

As Arie points out, companies would rather have consultant letting them know what to do with their core business and take their advises for granted than taking couple of months to figure out what the decision will imply.

Now I believe that once you want to make a decision either to experiment something or to set it on a larger scale, you should think about those two things:
  • Experimentation is a great way to apprehend the impact one decision will have on the different component of one business, and then you would be able to correct it, in order to provide the best service to your customers once you make it on a larger scale.
  • Experimentation takes time, and in nowadays society, in tough economy and tough competition, being fast is one of the key element of success.
I may not give a clear answer to this situation, but I believe that before skipping an experimentation process, you should deeply look after it, in order to know what would imply a testing period, how to do it, and then make a decision either to experiment or not.

Wednesday, July 24, 2013

Walmart To Set Lockers In Store For Online Deliveries

In Store delivery is probably the biggest challenge for online business. Indeed, E-commerce is still growing, but its growth pace has slowed down a lot lately. The share of retailing made on the Internet is becoming steady, which is a good and a bad sign:
  • A good sign because it shows that online business is durable and counts for an important share of the overall retailing
  • A bad sign for retailing because most of the growth of retail was based on online activities.

I believe that there is a great opportunity for growth for online retailer thanks to this system:
  • They benefit from new delivery places. In the case of Walmart, in a highly visited place.
  • They can optimize their supply chain by delivering large quantities of goods in one single place, cutting the cost of the last mile (which is very expensive).
  • The system is quite cheap (even though I don't know the fees Walmart may apply to the online retailer, in the caze of Amazon's locker for instance).
  • They can skip the problem of deliveries that unsatisfy a lot of online customers. Who has never had a problem of a product that never came, or late, or had to call the post office to know where the mail has been shipped... This system I believe is more secure.
Thanks to this system, I believe that will get more exposure, and a competitive advantage. It is a very easy way to leverage the store network available in order to get market share online.

Tuesday, July 23, 2013

Amazon's Strategic Plan By Entering The Online Grocery Business

I read several articles on the web lately about Amazon's strategy to enter the Grocery Retail Market. I actually already wrote a blog post not so long ago about Amazon expanding their Amazon Fresh concept to new cities. has an interesting theory about these investment: Amazon is aiming to propose same-day delivery thanks to its ability to sell fast moving goods. Indeed, selling groceries, especially fresh products, imply Amazon to set up a supply chain allowing fresh products like fruits or meat to stay for the shortest period of time in warehouses, but also to deliver them with short notice.

Amazon is not looking for high margin rates, especially because grocery already works with razor thin ones:
“No one has cracked the nut of grocery home delivery in the U.S.,” wrotePaula Rosenblum, managing partner, RSR Research in a recent RetailWire online discussion. “The low margin nature of the business, coupled with the need for fuel-guzzling refrigerated vans and trucks, make it very hard to do — and that’s in ‘easy’ cities, which means relatively new homes, no five floor walk-ups or winding stairways.”

Mr. Heckman added, “It could also mean that delivery fees are lower, order size minimums are waived, and it certainly could mean that home delivery and in-store pick up will never pay out using traditional metrics and full allocated costs.”

Amazon has already started in France to sell fast moving goods, but mostly the pricy ones, with slow frequency of purchases: baby food and diapers for example.

What is interesting with this strategy, is that it somehow looks like a revert strategy of what hypermarkets have thrived on for years. Hypermarkets proposed non grocery products at discounted prices in order to attract foot visits for customers eager to find great deals, and then to sell food, which is where their core business were.

But now, Amazon wants to do the opposite: Attract people with grocery food, thanks to the home delivery service they can set up, in order to sell more of their core business item.

Friday, July 19, 2013

Sales representative/Store Staff are the best people for your customer relationship management effort

A very quick note to share with you this story:

I believe you should pay attention to it. So many times I have emphasized in this blog that the best medium of your CRM strategy is the people directly in contact with your client. This story is just a great example. Beyond the big data, beyond the technology, human contact remains special, when it is carefully handled.

Thursday, July 18, 2013

Why Mobile Commerce Should Not Be Taken Individually

Very interesting article of about mobile commerce ROI. Actually, the comment sounds familliar as mobile commerce is in the very same situation than traditionnal retail once e-commerce appeared.

When E-commerce started to spring up, a lot of people thought that traditionnal retailer would have a great competitive advantage as they owned store with high traffic to propose delivery and added value to online shopping. But one of the reason why it did not work that well at first was the way retailer was seeing the online store of the company: It was stealing some business from them, and on top of that they had to deal with the dirty work: after sales service, returns of non working products, the cost of stocks when people did not come to pick up their goods.

For mobile commerce it is even more true. Mobile commerce is 100% part of a ubiquitous shopper. One shopper may use its mobile added to different kind of channels, such as traditionnal stores, a computer, or maybe even a call center. That way, to link a sale to an activity on a mobile phone is difficult. And the perception of the return on investment of mobile commerce is difficult to get. 

Mobile commerce is growing fast though represent a limited share of the overal commerce, in most industries where it exists yet. But it is important to have in mind that the mobile phone will be the ultimate tool to link all the other communication and sale channels.

Tuesday, July 16, 2013

Category Management Series: Category Management And CRM

Here is a new article about category management. As you all know, I am category management at DIA but also a customer relationship management expert. And a lot of times, people wonder what is the link between those two activities.

A category manager, as I say most of the time, is in charge of the 4 marketing Ps of a category (a group of product).
  • Products: The category management is head of the offer of a retailer. It defines the listing of products, optimizing both customers' needs and expectations and the retailers' sales and profits.
  • Price: A category manager works on the price of the products in order to have a great price perception for customers, being competitive, but also have a good mix allowing the category to contribute in terms of margins.
  • Place: The category manager sets the merchandizing plan trying to influence shoppers decision.
  • Promotion: The category manager tries to define the best promotion plan throughout the year, with different goals, such as marketshare gains, speeding up sales of specific products, highlighting innovations to help them to have a good start...
A category manager has always in mind what are the priority of its company, in terms of sales and profitability. But it is also linked to customers' choices and needs. A category manager needs to analyze sales, new customer trends, market data... It needs to know what the customers need.

Hence, the category manager relies a lot on customer data, in order to make decisions. I believe that category managers may not leverage a 100% the full potential of CRM, in terms of knowing customers, being more efficient in its promotions and so on. But thanks to new technologies, especially mobile ones, it will become easier and easier to do so. New tools exist in order to interract more with them, to help them in their every day life, and these are the next challenges of the trade.

This is what I am trying to do as a category manager: 
  • Always try to know more about customers decision making process
  • Analyzing new trends, new usage of the products
This article is part of the category management series. Here are the other articles:

Monday, July 15, 2013

Category Management Series: The Client Is Not The Customer

It is something important in terms of category management because it is one of the main difficulty of category management. In the retail business, suppliers provide products for customers, but need to go through a client, the retailer, in order to do so.

Hence, the supplier needs to take care of two peoples' expectation:
  1. The customer: They need to define a product that will match their needs, will be better than the competition, and will have an affordable price.
  2. The retailer: They need to propose high level of sales, good profit, low inventory, among other issues.
Of course, the goal of category management , both for the category management staff of the supplier and retailer, is to respond to both people. The difficulty is when there is one of both that is not fullfilled. Seth Godin recently wrote a blog post about the difference between the client and the customer. I believe he explains well the difference.

It is always better when the client is the end user (the customer) of one product, because it ease the customer relationship management process. Hence, one supplier (or provider as Seth is writting) needs to have two specific approach for the same purpose: selling a product to an end customer.

Let's not forget also that the supplier (or provider) do not always define products matching customers' needs. Sometimes (quite often actually) they launch new products to increase the profitability of a production unit: I acquired a new plant that do plastic tubes, I am going to put my best products in plastic tubes. I bought a brand recently, I am going to get my flagship product with the flavor of this new brand...

I believe that category management is efficient when it starts from customer needs. Of course, both the supplier and retailer may have industrial or economic interests, but in order to make long term decision, and analyzing all the different economical aspects of the decision, they should focus on how the category development may benefit the end consumer.

This article is part of the category management series. Here are the two previous articles:

Monday, July 08, 2013

How Walmart Became The N°1 Retailer On Facebook

Walmart is of course the world laster retailer, especially due to its dominant position in its domestic market. Over the time, Walmart has been able to grow a base of 30 million fans on Facebook. French professional magazine LSA recently posted an article on the reasons why Walmart succeeded in its digital strategy.

Using Images and Video Media: 85 % of the content generated by Walmart's page is either videos or images. 

What kind of content?

  • 45% of posts are about products, depending on the seasons.
  • 17% is buzz contents, viral videos, that have nothing in common with the company's retail activities.
  • 15% are tips on how to use products, or to better consume.
  • 13% are interractions with fans, mostly through polls.
  • 10% are about ethical causes, such as recycling, donations.
Here is a sum up of Walmart's strategy

Wednesday, July 03, 2013

Amazon's Strategic Move Into Grocery Business

Amazon  has been mastering E-commerce since it started its business. Amazon has set its reputation on cultural products, books, CDs and video games among others. As the time went by, Amazon expanded to new fields, and now is able to sell clothing, and even groceries.

For five years, Amazon has been testing Amazon fresh in Seattle, and now plans for 2014 to open its concept in 20 new urban zones. Among one of the main reasons Amazon is betting on Amazon fresh, is to be able to offer to its customers delivery the same day of the order. 

Grocery E-commerce has raised a lot of questions. Indeed, there are very few companies in the world that have been able to develop a profitable business modell out of it. The most efficient and profitable way is for sure what exists now in france, drive through supermarkets.

But Amazon has for sure a lot of strength to succeed:
  • A great knowledge of E-commerce website, with the ability to upsell for example.
  • The excellence of their supply chain, which will help them to lower the cost of the last mile delivery
  • A great data base of customers to leverage, and to convert to Amazon Fresh.
  • Amazon already own top of the line warehouses, which means they don't need to invest much more to store the groceries.

Tuesday, July 02, 2013

What Is Going On In India?

India has been for the past decade one of the most promising country in the world. It is considered part of the BRIC (Brazil, Russia, India and China), a group of country which share common assets that set them among the potential leaders of the future.

I have always considered India as one of the most promising of these countries for several reasons:
  • They have a large population
  • They have the chance to have access to the sea, which helps both importation and exportation
  • They speak English, the language of world business
  • They have high skills in computing, which is an opportunity.
But laetely, India has struggled to grow as much as expected.

A recent AT Kearney's report show that India fell to 14th on the most attractive destination for global retailers list. Those past years, a lot of retailers expressed a lot of interest in India, such as Carrefour which launched a cash & carry store couple of years ago, Walmart also, or Auchan that set a strong partnership with a big Indian company.

But things are moving slowly. The infrastructure remain low, and the average income too. What is the main issue remains political uncertainty and corruption. 

How long will retailers need to wait before leveraging the full potential of this continent-country?