Business Objective
Our client is a leading American multinational manufacturer and marketer of home appliances. The Category Management team is responsible for generating growth for new and established product portfolios/brands, maintain good relationships with the retail channel partners to get better quality products and price, develop exit plans for products with uncertain future.
The following high-priority analytic solutions were identified
• Market Cluster Analysis to identify similar markets as most of the portfolio/spend decisions are taken at the market level
• Assortment planning to recommend SKUs to be assorted on the floor of retail stores along with planogram-level insights for selected retailers
• SKU rationalization recommendations to discontinue the appropriate SKUs and reduce inventory and manufacturing costs, after factoring in lost sales versus recovery through “good cannibalization”
Challenges
- Lack of access to competitor POS data
- Lack of visibility of floor capacity for some retailers
- Convincing the retailers on the recommended assortments
- Friction from brand/product managers on SKUs recommended for elimination
Solution Methodology
- Identified key Market Differentiators from available Market Attributes (Census, Store & weather attributes)
- Developed clusters based on identified Key Market Differentiators
- Automated the process of extracting Planogram data from the website of specific retailers
- Built an Assortment Planning Engine to maximize Revenue/Margin for user-selected/recommended assortment profiles, controlling for Floor Spots & Price
- Recommendations for SKU(s) to be discontinued were generated by learning from patterns of historical SKU removals and the corresponding demand redistribution behavior
Business Impact
- ~8-10% increment in sales due to assortment optimization
- SKU rationalization has helped in reducing manufacturing and product management cost
