Trading matrix. Encyclopedia of Marketing

List of goods

Assortment tree

Construction of the matrix

Product views

Technology for creating an assortment matrix for a trading division.

The concept and essence of the BCG matrix

Matrix quadrants

Objects of analysis

BCG matrix: example of construction and analysis in Excel

Graphic display

Changing the Axes Format

Signatures

Analysis of assortment units

Strategies

BCG matrix: example of construction in Word

GROUP DESCRIPTION OF GOODS

TOP PRODUCT CATEGORIES

Definition and types

The procedure for forming an assortment matrix

Defining the concept and format of the sales division

Defining the target customer/target segment

Determining price ranges

Formation of an assortment classifier

Determining the breadth and depth of assortment by product category

Determining the number of brands/suppliers represented

Determining the role of product categories/articles

Determining the articles that will be included in AM

Assigning required values to articles

Analysis and assessment of assortment

The procedure for forming an assortment matrix.

This article discusses one of the most important tools necessary for the implementation of a successful assortment policy - the methodology for compiling an assortment matrix.

An assortment matrix is a list of goods (product items) to be sold in a retail company, compared according to one indicator important for the store - for example, depending on the supplier or price.

The most common types of assortment matrices are found.

The key factor is the list of goods to be sold by the retail company. That's where we need to start. How to determine it? We need to go from the general to the details.

First we answer the question: Who are the customers who are guaranteed to come to our store? Who are they, where do they live, how much do they earn, where do they prefer to buy jewelry, where else do they go to buy it, how much do they spend on jewelry and how often do they buy it, what styles and types of products do they prefer, etc. It is important to understand exactly the image of a typical (target) buyer and present it in as much detail as possible. There may be not just one type of such typical buyer, but two or three (but not five or ten). It is important that you are sure that they are guaranteed to come to your store because:

They already go to it;
. live or work nearby;
. there are no other shops nearby;
. we have something that others don’t have and that our target customers need;
. Everyone already knows us (a well-known store or a well-known chain).

Then we select (specify) the store format: in what area, in what location do we work for our target customers?

The format is a specification of the company's strategy. Their number is limited; for jewelry retail it is usually:

Jewelry shop,
. jewelry salon,
. jewelry boutique,
. jewelry section.

Next, based on the target groups of buyers and the selected (suitable for target buyers) format, we determine the product groups that, in our opinion, must be in the store, because these are the types of goods that our target buyer wants to buy. For example, our buyers are low-income residents of residential areas, and to a lesser extent – buyers with an average level of income, mainly housewives with children; format - a small jewelry store (20-30 sq. m) in a class “C” shopping center. Therefore, we determine that our store should present silver products and gold products. In this case, gold products should be represented by the following groups:

Products made of red, yellow and mixed gold 585;
. rings, earrings, pendants, chains, bracelets, watches, necklaces;
. each type of product (except chains): without inserts, with zircons, with semi-precious stones, with pearls, with precious stones (including diamonds).

Thus, the first step is to determine which product groups we will trade.

The next step is to compile a multi-level product classifier, the so-called assortment tree, from the generated list. As a rule, the classifier contains five levels, although three to five are acceptable. Using less than three levels does not allow the assortment structure to be fully reflected and, accordingly, makes management more difficult.

The product classifier must also have lists of product characteristics - those that are not reflected in the classifier itself, but are important and necessary for analyzing sales, income, turnover and for purchasing planning. For example, the characteristics of gold products are: gold purity and color; any ring - size; diamonds - size of stone, number of stones (one or scattered), type of setting, type of cut, characteristics of the diamond; jewelry in general - design (type of style - classic, geometric, floral, fantasy, etc.), etc. You need to compile, firstly, a list of characteristics for your assortment, and secondly, all the options within each characteristic (library of characteristics).

Then it is necessary to determine how many of which types of products there should be, that is, to indicate the capacity of product categories and product groups. If you already have a store, you need to use the updated list of product groups/product categories to analyze the shares in income, turnover and occupied retail space (area of counters and display cases). And bring the retail space of product categories into line with the categories’ shares in income based on the principle “the amount of space for a product should correspond to the amount of profit generated; The more revenue a product brings in, the more space it should take up.”

After this, knowing how much space is allocated for each product category, determine the number of products that can be placed there, taking into account the specifics of the format - the boutique displays fewer products on the counter, more decor and free space; in a store - the goods are placed tightly together, usually on palettes, with little free space. The result of this stage is exact knowledge of how many products of each type should be in the store.

It remains to determine the proportions of price segments (high, medium, low) for the entire assortment (this is partly duplicated with the assortment-price matrix). As a result, we must know, for example, that there should be 60 chains in the store, five types of length, 15 types of weaving. We list the quantity for each combination of length and type of weaving. For example, the Belzer weaving chain is available in sizes: 45, 40 and 35 cm. And so on for all product categories.

All. The matrix has been built.

But that is not all. Any matrix requires management - adjustments, changes, input-output of goods, their rotation depending on changes in the composition of buyers, the amount of money they have, their tastes, fashion, demand in general, depending on the number of competitors and their actions, on the general economic situation in country. The stable components in this process are the store format (it is not recommended to change), the store capacity (if the area and number of counters have not changed), the list and ratio of the main product groups.

Note: It will not be possible to change (optimize) the assortment to achieve higher results (turnover, income) without organizational changes. The assortment is created by specific people in the company, and for them to create a different assortment, they must work differently, or it must be different people. In order for them to work differently, they need different knowledge, conditions and resources: differently set tasks, a different information system, differently established business processes, a different organizational structure, finally. Therefore, it is important to be prepared for the fact that a change in the assortment entails the need for other changes in the company.

In practice, so-called product views are often used in order to carry out analysis and draw up plans not on the basis of a sufficiently large number of product categories, but on the basis of aggregated (combined by a certain characteristic) data (views). Below this will be shown with an example - see the figure.

A company can have several product angles:

Catalog (product classifier, which is usually an assortment matrix);
. customization for category management;
. customization by manufacturers (suppliers);
. other settings.

As can be seen from the diagram, settings can be made not only at the level of categories and subcategories, but also at lower levels - subgroups and even products.

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

In the traditional scheme of work, the creation of an assortment matrix is carried out by employees of the purchasing, sales, and marketing departments, but if the enterprise has an established category management system, then category managers do this.

In practice, there are various approaches to creating such matrices, but 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.

There is no single standard for either 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 trading division and the product range management system.

The author does not claim to be complete in the structure of the assortment matrix (Table 1) and the algorithm for its formation. Each can be modified in accordance with the needs of end users, as well as taking into account the main factors influencing the process of assortment formation: 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, achievements Scientific and technical progress, material and technical base of the enterprise, regulatory and technological documents, etc.

Table 1. A shortened version of the assortment matrix of the trading division

Range

Item name

Internal classification code

Characteristic 1

Characteristic N

Unit

Manufacturer / supplier

Country of Origin

Cost price

Selling price

Competitor price 1

Competitor price N

Availability in the sales department

Condition (see table 4)

Role (see Table 2)

Economic indicator 1 (eg: margin)

Economic indicator 1 (eg: turnover)

Segment 1.1.1

Sub-segment 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.

Rice. 1. Stages of formation of the assortment matrix

This document is primary in the implementation of a number of tasks. In our case, based on this document, it is necessary to determine those product categories that could potentially be included in AM, as well as the number of articles (product names). For example, the AM of a trading division engaged in the sale of precious metals and a trading division engaged in the sale of food products will clearly contain different product categories and have a different number of SKUs. In the same way, the AM of trading divisions of the “hypermarket” format and the “convenience store” format will be different (primarily in terms of the number of articles), even if the trading divisions operate in the same area.

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

As a rule, the assortment can be divided into three price corridors: economy, mass market, premium. The difference between the intervals of 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 trading 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 may be 0/20/80 (economy/mass/premium), for a hypermarket that positions itself as “constantly low prices”, this ratio may be 50/40/10.

The system proposed by the author for constructing a classifier for an assortment matrix is based on the division of the product assortment into product categories according to the functional and consumer principle (the concept of category management), although depending on the management goals, classifications corresponding to other approaches to managing the product assortment can be used.

In general, the structure of each category is formed in accordance with the nomenclature of properties and indicators that are essential for a given 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.

Assortment breadth is the total number of homogeneous and heterogeneous goods offered by a trading division in a certain 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.

A lot of research has been devoted to determining the width and depth of the assortment, and therefore there should not be any difficulties in selecting 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.

The principle of choosing brands.

Brands should be separated according to price corridors.
The presence of analogue brands should be minimized.
The supplier brand must cover its product line within its price range as completely as possible. The supplier may cover the line with several brands.

The ideal option is one brand in each of the selected price corridors. When choosing a brand, you should consider its history in the local market.

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

Role is a certain state of a product relative to other items in the assortment, characterized by the level and nature of demand for it, price, fame, and the 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 the range and pricing in accordance with customer expectations. Products with different roles require special marketing approaches, methods and programs.

Perhaps the longest stage, because It is necessary, based on the principles established in the previous stages, to form an assortment consisting in some cases of tens of thousands of articles. In the category management system, as already noted, this is done by category managers. Each manager ultimately composes the AM of his category, which together will make up the AM of the trading division (the entire company).

The result of this step is a matrix with filled values at the intersection of rows and columns. Table 1 does not show all the main columns (indicators) that should be present in the AM. The purpose of this table is to clearly demonstrate the approximate structure of AM.

This stage involves filling, to the extent possible, the AM columns left empty after the previous step. I urge you to pay special attention to the “status” column.

The state of the product is selected from the directory of states (life cycle) of the product. The company determines the directory of conditions, as well as its necessity, independently.

At this point, it is assumed that there will be a generated 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, renewal, sustainability of the assortment, completeness), will allow for analysis economic indicators, etc.

It is recommended to update once every six months (for example, the beginning of the season, the end of the season, etc.). The update consists of removing from AM a certain number of articles that do not comply with the standards and principles established in the trading department, and the subsequent entry of a number of articles. Working with matrix data means working with large amounts of data (especially if it is a multi-product enterprise), and therefore requires the availability of appropriate software and trained specialists.

There is no consensus in the literature on the definition of the concept of assortment matrix. Taking into account the accumulated ideas and experience about the processes associated with the management of product assortments, the author proposes the following definition of the concept of assortment matrix (AM): “this is a document in tabular form, which reflects, according to a hierarchical principle (from category to inventory accounting unit), the company’s assortment and contains information with certain characteristics of the assortment in a specific period of time.”

In practice, there are various approaches to creating such matrices, but publications on this are still rare. Each company develops its own algorithms, which subsequently constitute its competitive advantage and trade secret.

There is no single standard for either composition or structure for AM. The composition and structure of each depends on many factors, primarily on the tasks solved using this matrix, the format of the trading unit, the product range management system, etc.

Each matrix can be modified in accordance with the needs of end users, as well as taking into account the main factors influencing the process of assortment formation: 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, achievements of scientific and technical progress, material and technical base of the enterprise, regulatory and technological documents, etc.

Rice. 1.1 Stages of formation of the assortment matrix

Each stage performs its own specific functions, which will be discussed below.

Defining the concept and format of the trading division;

This document is primary in the implementation of a number of tasks. In our case, based on this document, it is necessary to determine those product categories that could potentially be included in AM, as well as the number of articles (product names). For example, the AM of a trading division engaged in the sale of precious metals and a trading division engaged in the sale of food products will clearly contain different product categories and have a different number of articles. In the same way, AM trading divisions of the “hypermarket” format and the “convenience store” format will be different (primarily in the number of articles), even if the trading divisions operate in the same area.

Determining the target customer/target segment;

Determination of price ranges;

As a rule, the assortment can be divided into three price corridors: economy, mass market, premium. The difference between the intervals of price corridors should be significant. 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, the cost of additional services and goods, and the cost of operating the product.

The result of this stage should be a document that will indicate in which price ranges the trading 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 that positions itself as “constantly low prices” this ratio can be 50/40/10.

Formation of an assortment classifier;

The system proposed by the author for constructing a classifier for an assortment matrix is based on the division of the product assortment into product categories according to the functional-consumer principle (the concept of category management), although depending on management goals, classifications corresponding to other approaches to managing the product assortment can be used.

The most common criteria for forming a structure are “ease of management” (process routing, product properties, product layout, suppliers, sales conditions) and “consistency for the consumer.” An example of a classifier (category structure) is presented in the AM itself (Table 1.1).

Determining the breadth and depth of the assortment by product category;

A lot of research has been devoted to determining the width and depth of the assortment, and therefore there should not be any difficulties in selecting an algorithm. The main thing is that there are no contradictions with the above points and there is a close connection with the next point.

Determining the number of brands/suppliers represented;

Brand selection principle:

Brands should be separated according to price corridors.
The presence of analogue brands should be minimized.
The brand/supplier must cover its product line as completely as possible in its price range. The supplier may cover the line with several brands.

The ideal option is from one to three brands in each of the selected price corridors. When choosing a brand, you should consider the brand's history in the local market.

existing brands on the market: advantages - brand awareness; high customer awareness of the brand; disadvantages - high competition.
new brands: advantages - exclusivity; high profitability with proper positioning; disadvantages - the need for promotion costs.

A role is a certain state of a product relative to other items in the assortment, characterized by the level and nature of demand for it, price, fame, and the 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 the assortment and pricing in accordance with customer expectations. Products with different roles require special marketing approaches, methods and programs.

This section, as well as the basics of the concept of category management, were reviewed by the author in the article “Category Management as a Modern Approach to Product Assortment Management” published in the fifth issue of the magazine “Management in Russia and Abroad” in 2006.

Determining the articles that will be included in AM;

Perhaps the longest stage because It is necessary, based on the principles established at the previous stages, to form an assortment, consisting in some cases of tens of thousands of articles. In the category management system, as already noted, this is done by category managers. Each manager ultimately composes the AM of his category, which together will make up the AM of the trading division (the entire company).

Table 1.1

A shortened version of the assortment matrix of a trading division

Range

Item name

Internal classification code

Characteristic 1

Characteristic N

Unit

Manufacturer / supplier

Country of Origin

Cost price

Selling price

Competitor price 1

Competitor price N

Availability in the sales department

ABC analysis results for revenue

Role assigned to the product

Economic indicator 1 (eg: margin)

Economic indicator 1 (eg: turnover)

Segment 1.1.1

Sub-segment 1.1.1.1

Article 1

Article N

Segment 1.1.2

The result of this step is a matrix with filled values at the intersection of rows and columns. Table 1.1 does not show all the main columns (indicators) that should be present in the AM. The number of such indicators can reach six or more dozen. The purpose of this table is to clearly demonstrate the approximate structure of AM, the relationship of columns and rows. It is not possible to present in more detail the indicators/characteristics that, in the author’s opinion, should be present in AM when published in this format.

Assigning all necessary values to articles in accordance with the AM structure;

This stage involves filling, as information becomes available, the AM columns left empty after the previous step. In fact, all departments of the company involved in managing the product range are involved in this work. The marketing department should set prices and calculate economic indicators; both logisticians and category managers, etc. can prescribe requirements for the product and its characteristics.

Analysis and assessment of the assortment;

At this point, it is assumed that there will be a generated AM and statistics for a certain period, which will make it possible to assess the effectiveness of the assortment from the point of view. its compliance with the principles of assortment formation (consistency, rationality, uniqueness, manufacturability, price principle, renewal, stability of the assortment, completeness), will allow for analysis of economic indicators, etc.

It is recommended to update AM once every six months (for example, the beginning of the season, the end of the season, etc.). The update consists of removing from AM a certain number of articles that do not comply with the standards and principles established in the trading department and the subsequent entry of a number of articles. Working with matrix data means working with large amounts of data, especially if it is a multi-product enterprise, and therefore requires the availability of appropriate software and trained specialists.

Summary;

In this article, the author step by step describes the developed algorithm for forming an assortment matrix taking into account the concept of category management, proposes a clear structure of it, and formulates a definition of the concept. The proposed algorithm allows you to structure the available information about products in accordance with the requirements of the main services of the enterprise and, in general, increase the efficiency of the system for generating the final assortment list, increase the speed of working with information and making decisions.

Enterprises that produce goods or provide services in a large assortment are forced to conduct a comparative analysis of the company's business units to make decisions on the allocation of investment resources. Maximum financial investments are received by the priority area of the company's activity that brings maximum profit. A tool for managing product assortments is the BCG matrix, an example of the construction and analysis of which helps marketers make decisions on the development or liquidation of a company’s business units.

The formation of the company's long-term plans and the correct distribution of financial resources between 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 its growth rate.

The market share is expressed and plotted on the X-axis. An indicator whose value is greater than one is considered high.

The attractiveness and maturity of the market is characterized by the value of its growth rate. Data for this parameter are 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 the system will be discussed below).

When product groups are distributed according to the BCG model, each assortment unit falls into one of the four quadrants of the matrix. Each quadrant has its own name and recommendations for making decisions. 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 knowledge of the features of each zone.

Wild cats

New products area.
High level of sales.
Need for investment for further development.
In the short term, low profit margins.

Leaders of a growing market.
High level of sales.
Growing profits.
Making a significant investment.

An unpromising group that has failed or products from an unattractive (declining) market.
Low income.
It is desirable to get rid of them or stop investing.

Cash cows

Market products with falling sales levels.
Stable profit.
Lack of growth.
Minimum costs for holding positions.
for promising product groups.

An example of constructing and analyzing the BCG matrix is impossible without identifying the goods that can be considered in the projection of this system.

Lines of business that are not related to each other. This could be: hairdressing services and the production of electric kettles.
Assortment groups of a company sold in one market. For example, selling apartments, renting apartments, selling houses, and the like. That is, the real estate market is being considered.
Products classified into one group. For example, the production of tableware products made of glass, metal or ceramics.

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

The first stage is the collection and tabulation of data on the analyzed goods. This operation is simple; you need to create a table in Excel and enter the company data into it.

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

In cell E3, which will contain the value of the market growth rate, this formula looks like this: =C3/B3. If you get a lot of decimal places, then you need to reduce the bit depth to two.
The procedure is similar for each product.
In cell F9, which is responsible for relative market share, the formula looks like this: = C3/D3.

The result is a completed table.

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

Based on the table data, a BCG matrix is constructed, an example of which in Excel is based on choosing a “Bubble” type chart.

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

By 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:

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

This is how the BCG matrix is created (for all four goods), the example of constructing the remaining goods is similar to the first.

When all the products are displayed, you have to divide it into quadrants. This distinction is made by the X and Y axes. You only need to change the automatic settings of the axes. By clicking the mouse on the vertical scale, the “Format” tab is selected and the “Format Selection” window is called up on the left side 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=0.92; 0.92*2=1.84.
The main and intermediate divisions are the average ODR.
The intersection with the X axis is the average ODR.

Changing the horizontal axis:

The minimum value is assumed to be “0”.
The maximum value is assumed to be “2”.
The remaining parameters are "1".

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

To finally complete the construction of the BCG system, it remains to create the signatures of the axes and quadrants. You need to select the diagram and go to the “Layout” section of the program. Using the “Inscription” icon, move the cursor to the first quadrant and write its name. This procedure is repeated in the next three zones of the matrix.

To create a title for the diagram, which is located in the center of the BCG model, select the icon of the same name, next to the “Inscription”.

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

Constructing a diagram of the dependence of market share on its growth rate is half of the solution to the problem. The crucial point 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 of analysis:

Product No. 1 is located in the area of low market growth and relative share. This product item has already passed its life cycle and 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 direct the released resources to the development of promising goods.

Product No. 2 is in a growing market, but requires investment to increase competitiveness. It is a promising product.

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

Product No. 4 is a profit generator. It is recommended to direct the funds received by the company from the sale of this category of assortment unit to the development of goods No. 2, 3.

An example of the construction and analysis of the BCG matrix helps to highlight the following four strategies.

Increasing market share. Such a development plan is acceptable for products located in the “Wild Cats” zone, with the goal of moving them to the “Stars” quadrant.
Maintaining market share. To obtain a stable income from Cash Cows, it is recommended to use this strategy.
Decrease in market share. Let's apply the plan to weak "Cash Cows", "Dogs" and unpromising "Wildcats".
Elimination is the strategy for the Dogs and the hopeless Wildcats.

The method of building a model in Word is more labor-intensive and not entirely clear. An example will be considered based on the data that was used to construct the matrix in Excel.

The “Market Growth Rate” column appears, the values of which are calculated as follows: (1-growth rate data)*100%.

A table of four rows and columns is built. The first column is combined into one cell and labeled “Market Growth Rate”. In the remaining columns, you need to combine rows in pairs so that you get two large cells at the top of the table and two rows left at the bottom. As in the picture.

In the lowest line there will be a coordinate “Relative market share”, above it - values: less or more than 1. Referring to the table data (its last two columns), the definition of goods by quadrant begins. For example, for the first product, ODR = 0.53, which is less than one, means its location will be either in the first or fourth quadrant. The market growth rate is negative, equal to -37%. Since the growth rate in the matrix is divided by a value of 10%, then clearly product number 1 falls into the fourth quadrant. The same distribution occurs with the remaining assortment units. The result should match the Excel diagram.

The BCG matrix: an example of construction and analysis determines the strategic positions of the company’s assortment units and participates in decision-making on the distribution of enterprise resources.

Hello, Ladies and Gentlemen! The topic of our lesson is "ASSORTED MATRIX" .

“Assortment matrix - what is it?”

Let's start by answering this question:

ASSORTMENT MATRIX - this is the optimal set of product items in your product catalog that you are currently trading, broken down by product levels, categories and characteristics.

An effective assortment matrix is a MUST :

Maximize sales, profit, battery, market share— depending on what goals your business has;
Fully meet customer expectations, and for product groups with the “Develop” strategy exceeds these desires;
Maintain optimal production cycle and inventory within the given standards, minimizing illiquid, excess and zero balances of goods.

So the funniest thing is that the assortment matrix in the form of standard excel tables, which numerous textbooks suggest for us, prof. websites and miracle consultants are complete bullshit and profanity.
And why? Yes, because the Assortment Matrix is not an Egyptian pyramid that has stood in one place for four thousand years.

Once and for all you will be inspired by the following. The assortment matrix is not a constant sign, it is a symbol of infinity. It's a super dynamic thing that can change every day.
And type it into Excel, sign it with the boss, and then collect “Acquainted” signatures from buyers and sales people, a rare stupidity and a stupid waste of time.

But we immediately have a second question.

How to manage and control this very matrix if it changes every day? And what should it actually look like?

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

“How do you make your sculptures?”- asked Michelangelo.
“I take a stone and cut off everything unnecessary”- he answered.

“How to make your own Assortment Matrix?” - you ask.
“Take your list of products and cut off everything that is unnecessary... and then add what your customers are missing.”, - I will answer.

However, no. I won't just answer. I will give you my personal instrument along with instructions.

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

And the first thing we need is to divide our assortment into larger groups and subgroups. These are links to tutorials where I showed how to do this:

I won't repeat myself. The main thing is that at the end you can build a report like this with sales for each group and subgroup.

Grouping of goods for the assortment matrix

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

Step 1. For groups with a strategy KILL, we have an extremely simple plan of action. We we're taking it out of stock , we sell off the remaining goods and forget about it until the next strategic session.

Step 2. In the second step we we describe the 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 trade schizophrenia, offering beach umbrellas on the shores of the Arctic Ocean.

If a subgroup for some reason does not correspond to the market, it follows the group with the Kill strategy. We are removing it from the range, and giving the remaining subgroups the green light.

Step 3. On the third step we distribute goods by Categories, build Category Maps and compare them with market category maps. And this is where our paths diverge. Because a group with a Develop strategy and a Hold strategy is black and white, the yin and yang of our assortment.

The fact is that product groups with a strategy DEVELOP should be few, because within them you are obliged to form the widest and deepest assortment possible. It is very important. When we begin to develop a product group, we actually tell our clients that we are strong specialists in it. And if you position yourself as a specialist in a product group, be so kind as to do everything according to Feng Shui. Satisfy all possible needs of your clients to the maximum!

Therefore, the principles of forming the Assortment Matrix for groups on Development will be radically different from the principles for groups with a Hold strategy.

If you are working with a Developing Group and see an assortment hole on its category map, then be so kind as to find a supplier, puzzle the technologist and enter the missing product in the price list, because it must be there.

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

Product

Revenue, monetary units

leading competitor, monetary units

Estimated indicators

Market growth rate, %

Product

leading competitor, monetary units

Market growth rate

Relative market share

Market growth rate, %

TOP CATEGORIES — These are categories that, according to the results of ABC analysis, were assigned group A according to two indicators “Sales volume in rubles” and “Number of stamped documents”.

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

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

In my example, I DO NOT claim to be an expert in this group, which means my client will forgive the absence of camping lanterns or spotlights in my price list, but if there are no 100-watt light bulbs or batteries, he will definitely be stressed.

Naturally, our main question is:
“How do you 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 this way.

Collect as much information as possible about the products of this group, build a hierarchy of all its subgroups, and draw up a market map of the categories.
And then use your head, brainstorm with your fighters and select the top categories to suit your taste and color.
Enter them into the assortment, and then, using the “Assortment Management” module of the TopControl system, automatically rotate them until you determine the best-selling ones.

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

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

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

With goods Matrix, Worker, To order We continue Work .

It’s a little more complicated with goods that have been assigned status by a robot merchandising expert - No Sales or Losers .

If the USP of the product Minimum price or wow product , We continue Work with it if the product has a USP Functionality or Characteristics We We change it to analogue.

If the USP of the product is Brand, image, fashion or For assortment boldly We kill and clear the warehouse of its remains as quickly as possible.

It is clear that if your assortment consists of 10 positions in which you understand better than Kasparov in chess, or you stupidly don’t care about your business because oil was found in your yard last week, forget about everything I just told you and Don’t bother with Assortment matrices.

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

Learn to Manage Products Effectively.

Because the first Pi of marketing is not sales, promotion and everything else. The first Pi of marketing is PRODUCT! Thank you for your attention, good luck and great sales everyone.

To be continued…Video version of the post