What does the word matrix mean in trading. Encyclopedia of Marketing. BCG matrix: an example of construction and analysis in Excel

Enterprises that produce goods or provide services in a large assortment are forced to carry out a comparative analysis of the business units of the firm in order to make a decision on the distribution of investment resources. The priority area of \u200b\u200bthe firm's activity, which brings the maximum profit, receives the maximum financial investment. The BCG matrix acts as a tool for managing the product range, an example of the construction and analysis of which helps marketers make decisions about the development or liquidation of the company's business units.

The concept and essence of the BCG matrix

The formation of the company's long-term plans, the correct distribution of financial resources among the components of the company's strategic portfolio occurs through the use of a tool created by the Boston Consulting Group. Hence the name of the tool - the BCG matrix. An example of building a system is based on the dependence of the relative market share on the rate of its growth.

The market share is expressed and is plotted along the X-axis. A high is considered to be an indicator whose value is greater than one.

The attractiveness, maturity of the market is characterized by the value of the rate of its growth. Data on this parameter is plotted on the matrix along the y-axis.

After calculating the relative share and market for each good that the firm produces, the data is transferred to a system called the BCG matrix (an example of a system will be discussed below).

Matrix quadrants

When product groups are distributed according to the BCG model, each assortment item falls into one of the four quadrants of the matrix. Each quadrant has its own name and recommendations for decision making. Below is a table consisting of the same categories as the BCG matrix, an example of the construction and analysis of which cannot be done without knowing the features of each zone.

Wild cats New goods area. High level of sales. The need for investment for further development. In the short run, the rate of return is low.	Growing market leaders. High level of sales. Growing profits. A significant investment.
Unpromising group that has failed or products in an unattractive (falling) market. Low income. Desirable getting rid of them or stopping investment.	Cash cows Market goods with falling sales. Stable profit. Lack of growth. Minimum costs of holding positions. for promising product groups.

Analysis objects

An example of constructing and analyzing the BCG matrix is \u200b\u200bimpossible without defining the goods that can be considered in the projection of this system.

1. Areas of business that are not related. These can be: hairdressing services and the production of electric kettles.
2. Assortment groups of the company, sold in one market. For example, sale of apartments, rent of apartments, sale of houses and the like. That is, the real estate market is being considered.
3. Products classified into one group. For example, the production of glass, metal or ceramic household goods.

BCG matrix: an example of construction and analysis in Excel

To determine the product life cycle and strategic planning of the marketing activities of the enterprise, an example with fictitious data will be considered to understand the topic of the article.

The first step is to collect and tabulate data on the analyzed goods. This operation is simple, you need to create a table in Excel and enter data on the company into it.

The second step is to calculate market indicators: growth rate and relative share. To do this, you will need to enter formulas for automatic calculation in the cells of the created table:

• In cell E3, which will contain the value of the market growth rate, this formula looks like this: \u003d C3 / B3. If there are many decimal places, then you need to reduce the bit width to two.
• The procedure is the same for each product.
• In cell F9, which is responsible for relative market share, the formula looks like this: \u003d C3 / D3.

The result is such a filled table.

According to the table, it can be seen that sales of the first product fell by 37% in 2015, while sales of product 3 increased by 49%. The competitiveness or relative market share for the first category of goods is 47% lower than that of competitors, but for the third and fourth goods it is 33% and 26% higher, respectively.

Graphical display

Based on the data in the table, a BCG matrix is \u200b\u200bbuilt, an example of building in Excel of which is based on the choice of a diagram of the "Bubble" type.

After selecting the type of chart, an empty field appears, by clicking the right mouse button on which you need to open a window for selecting data to fill in the future matrix.

After adding a row, its data is filled in. Each row is a product of the enterprise. For the first product, the data will be as follows:

1. The row name is cell A3.
2. X-axis - cell F3.
3. Y axis - cell E3.
4. The bubble size is cell C3.

This is how the BCG matrix is \u200b\u200bcreated (for all four goods), an example of constructing other goods is similar to the first.

Changing the format of the axes

When all the products are displayed, it is necessary to split it into quadrants. This distinction is the X, Y axes. You only need to change the automatic settings of the axes. By clicking on the vertical scale, the "Format" tab is selected and the "Format selection" window is called on the left of the panel.

Changing the vertical axis:

• The maximum value is the average ODR multiplied by 2: (0.53 + 0.56 + 1.33 + 1.26) / 4 \u003d 0.92; 0.92 * 2 \u003d 1.84.
• Major and intermediate divisions are the average ODR.
• The X-intercept is the mean ODR.

Changing the horizontal axis:

• The minimum value is taken as "0".
• The maximum value is taken as "2".
• The remaining parameters are "1".

The resulting diagram is the BCG matrix. An example of building and analyzing such a model will give an answer about the priority development of the company's assortment units.

Signatures

For the final completion of the construction of the BCG system, it remains to create the labels of the axes and quadrants. It is necessary to select the diagram and refer to the "Layout" section of the program. Using the "Inscription" icon, the cursor is brought to the first quadrant and its name is written. This procedure is repeated in the next three zones of the matrix.

To create the name of the diagram, which is located in the center of the BCG model, select the icon of the same name, following from the "Inscription".

Following from left to right on the Excel 2010 toolbar of the Layout section, similar to the previous text boxes, axis labels are created. As a result, the BCG matrix, an example of construction in Excel of which was considered, has the following form:

Analysis of assortment units

The construction of a diagram of the dependence of the market share on the rate of its growth is half of the solution to the problem. The crucial moment is the correct interpretation of the position of goods on the market and the choice of further actions (strategies) for their development or liquidation. BCG matrix, example analysis:

Product # 1 is located in the area of \u200b\u200blow market growth rates and relative share. This product unit has already passed its life cycle and it does not bring profit to the company. In a real situation, it would be necessary to conduct a detailed analysis of such goods and determine the conditions for their release in the absence of profit from their sale. Theoretically, it is better to exclude this product group and use the freed up resources to develop promising goods.

Product # 2 is in a growing market, but requires investment to increase competitiveness. It is a promising product.

Product number 3 is at the peak of its life cycle. This type of assortment unit has high indicators of ODR and market growth rates. An increase in investment is required so that in the future the business unit of the company that produces this product brings a stable income.

Item # 4 is a profit generator. It is recommended that the funds received by the company from the sale of this category of the assortment unit be directed to the development of goods No.

Strategies

An example of the construction and analysis of the BCG matrix contributes to the selection of the following four strategies.

1. Increasing market share. This development plan is acceptable for products located in the Wildcats zone, with the aim of moving them into the Stars quadrant.
2. Maintaining market share. It is recommended to use this strategy to get a stable income from Cash Cows.
3. Decrease in market share. Let's apply the plan to weak Cash Cows, Dogs and unpromising Wild Cats.
4. Elimination is a strategy for the Dogs and the hopeless Wildcats.

BCG matrix: an example of construction in a Word

The method of building a model in Word is more laborious and not entirely clear. An example will be considered on the data that were used to build the matrix in Excel.

Product	Revenue, monetary units		leading competitor, monetary units	Estimated indicators		Market growth rate,%
	2014	2015		Market growth rate	Relative market share

The column "Market growth rate" appears, the values \u200b\u200bof which are calculated as follows: (1-data of growth rates) * 100%.

A table of four rows and columns is built. The first column is combined into one cell and labeled as “Market growth rate”. In the remaining columns, it is necessary to combine the rows in pairs to get two large cells at the top of the table and two rows at the bottom. As in the picture.

The lowest line will contain the coordinate "Relative market share", above it - the values: less or more than 1. Referring to the table data (to the last two columns), the definition of goods by quadrants begins. For example, for the first product, ODR \u003d 0.53, which is less than one, meaning its location will be either in the first or in the fourth quadrant. Market growth rate - negative value equal to -37%. Since the growth rate in the matrix is \u200b\u200bdivided by a value of 10%, then the item number 1 definitely falls into the fourth quadrant. The same distribution occurs with the remaining assortment items. The result should match the Excel chart.

BCG matrix: an example of construction and analysis determines the strategic positions of the assortment units of the firm and participates in making decisions about the allocation of resources of the enterprise.

The point of sale can be positioned as a store with the widest assortment or the lowest prices, a boutique with premium branded goods, etc.

Demand research and customer segmentation

To identify exactly your customer and understand his interests, fears and purchase motivation, segmentation is carried out. To do this, all consumers are divided into different groups, united by certain characteristics. The choice of parameters for classification is determined taking into account the characteristics, advantages and cost of goods, geographical coverage, and format of the outlet.

Segmentation of consumers can be carried out by sex, age, income level, occupation, social status, place of residence, interests, behavioral and other factors. Segmentation can be carried out for a store or chain of stores, as well as for different product groups.

For example, segmentation of buyers is carried out for a chain of construction stores. To promote this direction, one can single out a group of corporate clients (construction companies, construction teams that provide repair and decoration services, etc.) and individual buyers (purchasing building materials for self-repairing their home).

Each of these groups can be divided into subgroups. Further, the demand is also studied with the study of the number and volume of purchases made by different groups (such data can be obtained by studying competitors or analyzing their own sales for previous periods). If, as a result of the study, a clear advantage of corporate clients in terms of volumes and quantity of purchases was revealed, then when forming the assortment matrix, it is necessary to focus on professional goods and equipment.

Segmentation is carried out in several stages:

1. Determination of segmentation criteria. Selection of the most important parameters from the maximum list of possible characteristics, allowing to divide all consumers into homogeneous groups.
2. Using the selected signs of segmentation, you need to identify loyal and disloyal customers. This division will allow analyzing the high and low loyalty of the target audience in the context of social, demographic, behavioral and other factors.
3. Drawing up a portrait of the target consumer of their competitors. You can analyze the target consumers of those competitors whose products are cheaper than those whose prices are on a par with yours and those whose prices are much higher.
4. Analysis of differences and selection of important segmentation criteria. It is necessary to study all the groups received and identify by what signs they differ. The most important ones are the reason for buying, switching to another brand or rejecting a product. These behavioral and psychographic traits tend to be the most significant, and demography and geography are more likely to be descriptive characteristics that enable planning.
5. Dividing potential buyers into segments and a detailed description of each of them. Each segment should be described according to social, demographic and geographic characteristics, behavioral (places and frequency of purchases, important properties of goods, the number of brands purchased, etc.) and psychographic factors (values, priorities, motivation for buying, etc.).
6. Assessment of the potential of each segment (the approximate number and volume of purchases made by different groups of consumers).
7. Selection of target market segments. One or two target groups with the greatest potential are selected, and it is taking into account their characteristics that a further promotion strategy is formed in a particular store.

Sample Product Matrix in Competitive Analysis

Comparison of their own assortment with the list of products from a competitor is carried out to identify the strengths and weaknesses of competitors and their company. This type of research begins with identifying the main competitors (3-4 large companies) offering similar products or substitute products. Next, an analysis of the product range of various competitive companies, their list of services, advantages is carried out.

To compare the product policy of the main competitors, a product matrix is \u200b\u200bcompiled for each individual company, indicating the assortment groups of products, with a grouping by manufacturers, models, quality, prices and other characteristics.

The data obtained is used for optimization in the formation of its own assortment. For example, in the process of competitive analysis, it was revealed that most of them offer a very wide selection of product groups, but all of them are represented only by the most popular positions. In this case, you can choose the tactics of maximum depth within the product group (increasing the choice by model, volume, color and other characteristics of a particular product).

Selection of the main product groups of the product grid

The assortment or commodity matrix is \u200b\u200ba complete list of goods presented at the point of sale. Product content needs to be formed even before the store opens, taking into account its format, location, features and preferences of the target audience. The spontaneous formation of an assortment, focused on the current demand or copied from competitors, without analyzing the cost and each product group, can lead to losses and ruin.

In addition to the preliminary compilation of a commodity matrix before opening a retail outlet, it is also necessary to update such a list at least once every six months. Ideally, such a task should be performed by a group of specialists: a category manager or a procurement officer who knows the suppliers and has information about what is being sold and how much, as well as a marketer and sales director.

Features and stages of drawing up an assortment matrix:

Correction of the commodity matrix is \u200b\u200bcarried out based on the analysis of sales for the previous period (the number of goods sold, total profit, position profitability are taken into account). The base of goods of the outlet is formed with an indication of all key parameters - the assigned internal code, name, brand, purchase and retail prices, stock balance, etc.

The entire assortment can also be conditionally divided into price categories (usually, the division occurs into cheap, medium and expensive segment).

Deepening the assortment of goods

In order to satisfy the needs of the target audience to the maximum, a marketer (commercial director or other) of a retail network or an individual store must constantly work to optimize product content.

By choosing a strategy to increase the number of products within one product group, you can achieve a competitive advantage by offering products that competitors cannot offer. This is called assortment deepening (differentiation).

This policy allows us to offer target consumers product variations that best suit their needs. The in-depth assortment is relevant for the sale of adult and children's clothing and footwear (offered in various colors and sizes), furniture, mobile phones and other consumer goods.

All activities for managing the assortment of a chain of stores or a specific point of sale are aimed at several goals - increasing retail brand awareness and target audience loyalty, increasing sales and business profitability. Improving competitiveness and increasing market share are also long-term objectives. To achieve the set goals, it is necessary to choose the right store format, form a sales concept, and draw up a product matrix taking into account demand and the competitive environment.

Write your question in the form below

“Hello reader. Today we will talk about the assortment. Or, more precisely, about how it should be. In any company, the assortment should be divided into appropriate categories and product groups. This is convenient for both buyers and employees working with the assortment. The assortment of any trading company should be based on an assortment matrix - this article will discuss its preparation. "

The article turned out to be not at all small, but in a nutshell this component of a marketer's work cannot be described. The one that be patient.

What is an assortment matrix and what is it eaten with?

Assortment matrix - in fact, this is a certain nomenclature list of absolutely all product names sold in a particular store, or a network of retail stores (if the assortment matrix is \u200b\u200bformed for the entire network), compiled taking into account the characteristics of this store (network), as well as the assortment policy of the organization in the whole.

To summarize, drawing up an assortment matrix is \u200b\u200ban integral part of the assortment policy of a trading company, regardless of its organizational structure.

In general, compiling an assortment matrix in a retail store cannot be an end in itself, but should be the result of forming an assortment for a specific point of sale. However, in any case, the assortment matrix is \u200b\u200bcreated only after a clearly defined trade policy and company strategy. Ideally, the category manager (procurement manager, purchaser) should be responsible for creating and implementing the assortment matrix, since only he knows where and what goods can be purchased.

Naturally, the assortment matrix is \u200b\u200bnot created by the efforts of one categorizer. In this process, it is desirable that the marketing department, pricing department and the management team, represented by the commercial director, take part. However, their role is more limited to providing information on a particular product or product group, but the decision should be up to the category manager.

Stages of drawing up an assortment matrix

Stage 1. Before compiling a product nomenclature, you need to clearly understand the format, size and features of the store for which it will be intended. At this stage, almost all factors of the outlet are taken into account:

• number of storeys, store area, its shape;
• its location (area, availability by buyers, presence of competitors, etc.);
• socio-economic characteristics of the area where the store is located;
• the estimated display of goods and trade equipment.

Based on these data, the format of the retail outlet is determined (discounter, self-service store or off-the-counter trade, its specialization, etc.). An understanding of customer preferences in terms of the breadth of the line is also formed. Positioning is being developed. In other words, the compilation of the assortment matrix and, as a consequence, the purchase of goods, begins after there is a clear strategy and positioning in the minds of buyers. However, this is ideal. In fact, it often happens that initially there is a purchase of goods for sale, and chaotic (if only the shelves are clogged), and then methods of selling it to your client are already developed. Which is fundamentally wrong in today's competition.

Stage 2. We segment buyers based on current demand research. This stage allows us to understand who our client is, what his habits, requests and needs.

The methods of influencing the target audience, advertising and marketing concepts are determined. At the same time, on what basis these segments were created, it does not really matter. The main goal here is to understand who our client is and what their expectations are. The result of this stage of drawing up the assortment matrix should be the selection of the key segment of buyers, which will be the focus of the main efforts. There are several ways to obtain this information. One of the options is a survey of potential buyers.

Stage 3. We compare our own assortment with the assortment of competitors. At this stage of drawing up the assortment matrix, it is necessary to understand who our competitors are and what position our retail outlet will take in relation to them.

A large number of competitors, in principle, is not required, 3 - 5 will be quite enough. Having chosen the main competitors, you need to understand what advantages and disadvantages distinguish each of the competitors. It also compares the price level for key product groups. Based on the data obtained, as well as the adopted own strategy, we determine what our competitive advantages will be, for example, the depth or breadth of the assortment presented.

Stage 4. We define the main groups of goods presented in the store. Having decided on the location of the outlet, the preference of buyers, the depth and breadth of the competitors' assortment line, a vision of its own assortment is formed.

Based on the general concept of the store, the price level for the main groups of goods is fixed. Will our company be at a price higher or lower than the market, or something in between. Having understood the price level, we start looking for suppliers for the sold product groups.

Stage 5. We divide the assortment into categories. This is perhaps the most interesting part of this task, at least for the marketer. Based on the preferences of the buyer, as well as on their own knowledge of the psychology of the buyer, the marketer begins to break down key categories into subcategories, and then into separate positions.

Why the most interesting? Yes, for one reason, when scattering the assortment into categories and subcategories, you need to proceed from the considerations of the buyer. Those. practically start to think like a customer who comes to our store thinks. Why did he come? Behind the TV, so that it was huge, or behind the Samsung TV with a diagonal of 110 ', the color is gray. Or maybe he just needs a TV, and in order to keep within 5,000 rubles. And so that the client does not leave without a purchase, the store's assortment should be filled, relying on the key factors of the target customer.

Stage 6. Understanding the balance of the company's assortment. At this stage of drawing up the assortment matrix, we analyze the balance of product items and categories. It is necessary to balance the assortment both in depth and in width, based on the key roles inherent in the product group. There are not so many roles for product categories. I will try to list the main ones:

• unique products - work for the company's image, and relate more to impulse demand goods, i.e. those that grab, without hesitation, on the way to the checkout;
• priority goods - allow you to ensure maximum profit and attract the main stream of buyers. For such goods, the buyer can specially come to our store and, not finding the right product, leave without buying anything;
• basic goods are also capable of providing a flow of buyers and have a high turnover. For these goods, the buyer also comes specially, knowing that he will definitely find what he needs;
• seasonal goods - aimed at rotating the assortment and attracting new customers;
• convenient product categories - form a loyal attitude of customers.

Stage 7. Final drawing up of the assortment matrix, formation of the final document. This is the final stage, at which all information about the product is entered into a single database.

Additional properties are determined (color, brand, key parameters, packaging, etc.). In general, any data that can contribute to the convenience of the customer's choice and analysis is recorded in one single array. The assortment minimum is calculated (i.e. the basis of the assortment of any store) for a particular retail outlet. It should be noted that there should be no deficit at this minimum in principle. That's why he is at least, below only - a coffin.

Ultimately, in order for the assortment matrix to be understandable, really applicable in practice and easy to use, three key rules must be observed:

1. customer focus;
2. the specifics of the store;
3. optimization and nuances of assortment supply to the store.

Algorithm for creating an assortment matrix.

As mentioned earlier, the ideal assortment matrix is \u200b\u200bcreated for a specific store, and the store has not yet been opened. However, things are often quite different. The store has been operating for a long time, a certain circle of buyers has been formed and a decision is made, not whether we should change the assortment, well, we started. Below is an algorithm for creating an assortment matrix, so to speak from life, as I happened to do. In fact, it was necessary not to start everything from scratch, but to redo what had already been done.

The first thing you need is a small commodity group containing items that are similar in their application, in this example, a “roulette” group. A base is formed by the main key parameters (product code, name, profit and quantity of goods sold per year, current balance, retail price, brand, productivity).

The second thing we do is divide the existing assortment by price segments. Of course, the number of price segments can be anything, but I divided it into three equal pieces (cheap, medium, expensive). Blocks are also identified by key additional properties.

Third. We form a certain matrix of assortment representation in one or another price segment. As a result, we get a certain table containing key data on the analyzed group. In this table we fix the number of positions, sales data.

Fourth. We analyze the received data. As a result, an understanding should come about which combination of “price segment” / “product property” is saturated or, on the contrary, not filled in the context of the current assortment.

Fifth. We draw up a similar table for the selected competitors. I personally selected three competing companies and recorded the number of offered assortments in their price lists by key parameters. In other words, we create a similar matrix by the number of positions for our competitors.

Sixth. In accordance with the adopted strategy of the company, we draw a conclusion about the reduction or expansion of the range. Also at this stage, a decision is made to fill in the empty intersections of the segments.

This was the end of my mission, all the data was agreed with the category manager and transferred to the internal database management department for making changes to the program and fixing positions. If the manager wants to expand the assortment in any of the fixed segments, the program will not allow this.

On this, perhaps, and finish. I think now, your reader, you have a certain understanding of what the assortment matrix is \u200b\u200band what key points must be taken into account when compiling it.

Kind, Ladies and Gentlemen! The topic of our lesson is "ASSORTMENT MATRIX" .

"Assortment matrix - what is it?"

Let's start by answering this question:

ASSORTMENT MATRIX - this is the optimal set of commodity items in your stock catalog that you are trading at the moment, in terms of commodity levels, categories and characteristics.

An effective assortment matrix MUST :

• Maximize sales, profits, battery, market share - depending on what goals your business faces;
• Fully meet customer expectations, and for product groups with the "Develop" strategy exceeds these desires;
• Maintain an optimal production cycle and stock within the specified standards, minimizing illiquid, excess and zeroed stock balances.

So the funniest thing is that the assortment matrix in the form of standard excel plates, which numerous textbooks are wooing us, prof. sites and miracle consultants, this is a complete bullshit and profanity.
And why? Because the Assortment Matrix is \u200b\u200bnot an Egyptian pyramid that has stood in one place for four thousand years.

Once and for all, feel the next. Assortment matrix is \u200b\u200bnot a constant sign, it is an infinity symbol. It's a super dynamic thing that can change every day.
And typeset it in Excel, sign it at the chef, and then collect the signature "Familiarized" from buyers and salesmen, a rare stupidity and a stupid waste of time.

But we immediately have a second question.

And how to manage and control this very matrix if it changes every day? And how should it look, in principle?

My friends, in order for the assortment matrix to be formed quickly and automatically, buyers and salespeople must constantly answer three key questions:
Why are we trading this product?
What product do we DO NOT need?
What product do we need?

"How do you make your sculptures?" Michelangelo asked.
"I take a stone and cut off all unnecessary" He replied.

"How to make your own Assortment matrix?" - you ask.
“Take a list of your products and cut off all the unnecessary ... and then add in there what your customers are missing”, - I will answer.

But no. I will not just answer. I will give you my personal tool along with instructions.

GROUP DESCRIPTION OF GOODS

I'll start the demo with my favorite construction and distribution example, although from time to time I will throw up options from other product groups in order to convince you of the applicability of my methods for any product business.

And the first thing we need is to break down our assortment into enlarged groups and subgroups. These are links to tutorials in which I showed how to do it:

I will not repeat myself. The main thing is that at the output you can build such a report with sales for each group and subgroup.

Grouping of goods for an assortment matrix

Read, understand. And we get to the point. So.

Step 1. For groups with a strategy KILL , we have a very simple plan of action. we we take it out of the range , we sell the leftovers of goods and forget about it until the next strategic session.

Step 2. In the second step, we we describe products from each group by subgroups in the hierarchy and logically we check each of the subgroups for compliance with the market , so as not to engage in commercial schizophrenia, offering beach umbrellas on the shores of the Arctic Ocean.

If a subgroup for some reason does not match the market, it follows the group with the Kill strategy. We remove it from the range, and give the other subgroups the green light.

Step 3. In the third step we distribute goods by Categories, build Category cards and compare them to market category cards. And this is where our paths diverge. For a group with a strategy to Develop and a strategy to Hold is black and white, the yin and yang of our range.

The point is that product groups with a strategy DEVELOP there should be few, because within them you are obliged to form the widest and deepest assortment possible. It is very important. Starting to develop a product group, we actually declare to our clients that we are not sickly specialists in it. And if you position yourself as a specialist in a product group, be kind, do everything according to Feng Shui. Satisfy all possible needs of your customers in it to the maximum!

Therefore, the principles of forming the Assortment matrix for groups for Development will be radically different from the principles for groups with the Keep strategy.

If you work with a Developing Group and see an assortment hole on its category map, then please, find a supplier, puzzle the technologist and enter the missing item in the price list, because it must be there.

In groups with a strategy KEEP everything is upside down. For these categories, we must carry out a very strict selection and enter only TOP categories into our price list.

TOP CATEGORIES OF GOODS

TOP CATEGORIES — these are the categories that, according to the results of the ABC analysis, were assigned group A according to two indicators "Sales volume in rubles" and "Number of knocked out documents"

In this case, the ABC analysis should be done within each specific group. Below is an example of ABC analysis for the Power Supply Group, in which the TOP categories of this group are highlighted.

If we keep a group, then we are obliged to work only with the TOP categories from this group, with its assortment fat and nothing more.

In my example, I DO NOT declare myself to be a specialist in this group, which means that my client will forgive the absence of camping lanterns or spotlights in my price list, but if there are no 100 watt bulbs or batteries, it will definitely strain.

Naturally, our main question is:
“How do I know which categories are TOP?”

To be honest, there are few methods and they are all on the verge of a foul.

Well, if it doesn't work, then do it.

1. Collect as much information as possible about the products of this group, build a hierarchy of all its subgroups, draw up a market category map.
2. Then turn on your head, brainstorm with your fighters and select the top categories according to your taste and color.
3. Enter them into the assortment, and then, using the "Assortment Management" module of the TopControl system, automatically rotate them until the best-selling ones are calculated.

Here are a few words about how ROBOTS will save us in managing the assortment matrix.

The fact is that every night our merchandising robot independently analyzes commercial indicators for each category in the context of each product and assigns statuses to them - Archive, No sales, Losers, Under the order, Worker, Matrix .

And if you have a desire to have an effective assortment matrix, then once a week or once a month, it depends on the turnover of your goods, generate such a report on the Status of the goods. And apply three standard solutions to them.

With goods Matrix, Working, Under the order we continue Work .

It is a little more difficult with the goods to which the commodity robot has assigned the status - No sales or losers .

If the product USP Minimum price or Wow-product , We continue Work with him, if the product has USP Functionality or Feature we Change its to analog.

If the USP of the goods - Brand, image, fashion or For assortment boldly Kill and as quickly as possible we clear the warehouse from its remains.

It is clear that if your assortment is 10 positions, in which you understand better than Kasparov in chess, or you do not care about your business, because last week they found oil in your yard, forget everything that I just told you and do not fool around with assortment matrices.

But if you have a decent price list, do not have your own well and have a burning desire and ambition to have more than Hyundai Solaris at the entrance and fries from McDonald's, ...

Learn to Manage Goods Effectively.

Because the first PI of marketing is not sales, promotion and all that stuff. The first pi of marketing is PRODUCT ! Thank you for your attention, good luck to everyone and great sales.

To be continued…VideoVersion of the post

There is no consensus in the literature on the definition of the "assortment matrix". Taking into account the accumulated ideas and experience, I propose the following definition of the concept of an assortment matrix (AM) - this is a document that is a tabular form, in which, according to the hierarchical principle (from category to inventory unit), the company's assortment is reflected and information with certain characteristics of the assortment in a specific period of time.

The creation of an assortment matrix under the traditional work scheme is carried out by employees of the purchasing, sales, marketing departments, but if the enterprise has a system of category management, then this is done by category managers.

In practice, there are various approaches to the creation of such matrices; however, no deep theoretical studies on this issue have been found in the literature. Each company develops its own algorithms, which subsequently constitute its competitive advantage and trade secret.

The procedure for forming an assortment matrix

There is no single standard for composition or structure for any of the matrices. The composition and structure of each depends on many factors, primarily on the tasks solved with its help, the format of the trade division and the product range management system.

The author does not claim the completeness of the structure of the assortment matrix (Table 1) and the algorithm for its formation. Each can be modified in accordance with the requests of end users, as well as taking into account the main factors affecting the process of forming the assortment: demand, pricing policy, production of goods and the capabilities of existing suppliers, strategic goals and objectives of the company, level of competition, product life cycle, STP, material and technical base of the enterprise, regulatory and technological documents, etc.

Table 1. Abbreviated version of the assortment matrix of the trade division

Range

Item name

Internal classification code

Feature 1

Feature N

unit of measurement

Manufacturer / supplier

Country of Origin

Cost price

Selling price

Competitor price 1

Competitor's price N

Availability in the sales department

Condition (see table 4)

Role (see table 2)

Economic indicator 1 (eg: margin)

Economic indicator 1 (e.g. turnover)

Segment 1.1.1

Subsegment 1.1.1.1

Article 1

Article I

Segment 1.1.2

The AM formation procedure, in my opinion, is a sequential implementation of the following stages - see Fig. 1. Each stage performs its own specific functions, which will be discussed below.

Figure: 1. Stages of assortment matrix formation

Defining the concept and format of the sales unit

This document is primary in the implementation of a number of tasks. In our case, on the basis of this document, it is necessary to determine those product categories that can potentially be part of AM, as well as the number of articles (product names). For example, the AM of a trading unit dealing with the sale of precious metals and a trading unit dealing with the sale of food products will definitely contain different product categories and have a different number of articles. In the same way, the AM of the hypermarket and convenience store format will be different (primarily in terms of the number of articles), even if the trading units operate in the same area.

Determining the target customer / target segment

This marketing research should make it clear to whom the assortment should be targeted, who is a potential buyer, and make it clear the algorithm for making a decision by the consumer when choosing a product. Based on this information, it is determined whether the assortment of domestic or foreign production should be in the assortment only the latest models of goods, products with what combination of price / quality indicators should dominate in AM, what auxiliary assortment of goods must be present, etc.

Determination of price ranges

As a rule, the assortment can be divided into three price bands: economy, mass market, and premium. The difference between the intervals of the price corridors should be significant. Again, there are no standards for such division for any category. However, when dividing the assortment, it is necessary to take into account not only the cost of the product itself, but also the cost of commissioning, additional services, and operation of the product.

The result of this stage should be a document that will indicate in which price ranges the sales division operates, as well as the ratio of these ranges for each product category. For example, for an elite boutique as a whole, this ratio can be 0/20/80 (economy / mass / premium), for a hypermarket positioning itself as “constantly low prices”, this ratio can be 50/40/10.

Formation of the assortment classifier

The author's proposed system for constructing a classifier for an assortment matrix is \u200b\u200bbased on the division of the product range into product categories according to the functional-consumer principle (the concept of category management), although, depending on the management objectives, classifications corresponding to other approaches to managing the product range can be applied.

In general, the structure of each category is formed in accordance with the nomenclature of properties and indicators that are essential for this category of goods, both from the point of view of the seller and the buyer. The category structure is a map of the consumer's decision to purchase a product.

The most common criteria for the formation of the structure are "ease of management" (process routing, product properties, product layout, suppliers, terms of sale) and "consistency for the consumer."

Determination of the breadth and depth of the assortment by product categories

Assortment breadth is the total number of similar and dissimilar products offered by a sales unit in a given period of time. The depth of the assortment is the number of types of goods, taking into account all the features within a homogeneous or heterogeneous group.

Many studies have been devoted to determining the width and depth of the assortment, and therefore there should not be any difficulties with the selection of an algorithm. The main thing is that there are no contradictions with the above aspects and there is a close connection with the next point.

Determination of the number of brands / suppliers represented

The principle of choosing brands.

• Brands should be split along price bands.
• The presence of similar brands should be minimized.
• The supplier brand must cover the assortment line as much as possible in its price range. The supplier can cover the line with several brands.

Ideally, one brand in each of the selected price corridors. When choosing a brand, consider its history in the local market.

• Brands on the market: pluses - fame; high customer awareness of the brand; cons - high competition.
• New brands: pluses - exclusivity; high profitability with proper positioning; cons - the need for promotion costs.

Defining the role of product categories / SKUs

Role - a certain state of a product relative to other positions in the assortment, characterized by the level and nature of demand for it, price, fame, functions assigned to it by the seller. Assigning different roles to products is nothing more than creating a tool for forming (at the operational level) a policy for promoting assortment and pricing in accordance with customer expectations. Products with different roles require specific marketing approaches, methods and programs.

Determination of articles that will be included in AM

Perhaps the longest stage, because it is necessary, on the basis of the principles established at the previous stages, to form an assortment, in some cases consisting of tens of thousands of articles. In the system of category management, as already noted, category managers are engaged in this. As a result, each manager composes the AM of his category, which together will form the AM of the sales division (of the entire company).

As a result of this step, a matrix is \u200b\u200bobtained with filled values \u200b\u200bat the intersection of rows and columns. Table 1 shows far from all the main columns (indicators) that should be present in AM. The purpose of this table is to illustrate the approximate structure of AM.

Assigning the required article values

This stage implies filling, as far as possible, of the AM columns, which remained empty after the previous step. I urge you to pay special attention to the column "state".

The state of the goods is selected from the directory of states (life cycle) of the goods. The directory of states, as well as its necessity, the company determines for itself.

Assortment analysis and evaluation

At this point, it is assumed that there is a formed AM and statistics for a certain period, which will allow assessing the effectiveness of the assortment in terms of its compliance with the principles of assortment formation (consistency, rationality, uniqueness, manufacturability, price principle, renewability, assortment stability, completeness), will allow for analysis economic indicators, etc.

It is recommended that the update be carried out every six months (for example, the beginning of the season, the end of the season, etc.). The update consists in the withdrawal from AM of a certain number of articles that do not correspond to the standards and principles established in the trade division, and the subsequent input of a number of articles. Working with matrix data is working with large amounts of data (especially if it is a multi-assortment enterprise), and therefore requires the availability of appropriate software and trained specialists.

 

It might be useful to read:

• What is an assortment matrix?;
• What does the word matrix mean in trading;
• Sales department development plan;
• Advertisements Testing of advertising materials;
• What is GRP (Gross Rating Point)?;
• Marketing analysis of the market: types, stages, methods;
• What is an advertising strategy;
• Marketing research;