Are you a dot or a dash

Today, I was struck by the significance of how one lists his/her phone number. I have the rare fortune to work with "traditional" businesses (consumer goods/retail) and "new economy" firms (i.e. Internet/software/people with no money but a great dream). As a result, I have noticed a trend that is spectacular in its psychological significance while completely insignificant in any other context. I call it "Morse's Choice" in honor of Morse code, which uses only dots and dashes to communicate a message (and which is analogous to all binary forms of communication including all software).

What is interesting is that among e-people (anything related to bits and bites), employees of ad agencies, and designers, the long adopted "-" between a phone number's digits [555-555-5555] has been unceremoniously displaced by the period "." [555.555.5555] Really! Go to just about any design firm's website on the planet and note that their contact information has a profusion of dots.

Why do I care? I'm not sure. But, it's fascinating that what probably started as one Internet company's plaintive plea to be different has slowly been adopted by the "creative elite." [Just for the record, when I founded my first Internet company, CMplan.net, not only did I use a period in our contact information, I included another in the name.] So, what's the underlying message? Being different, particularly in the most mundane ways, can create interest, allure, and even envy. We all have in our nature a visceral response when something taken for granted is suddenly changed....

"What's with that?....Why did they do that?...It was obviously intentional!....So, is that better?!? Am I missing something?" At that moment, chic is born.

I recently read an article in the WSJ about the popularity of handbags made of transparent plastic. If that is not the best example of the ability of this phenomenon to suspend better judgement, I don't know what is. I can't imagine my [male] wallet being revealed to all, let alone the content of a lady's purse (having rummaged through my wife's on occasion in search of the car keys). I assure you, no woman would choose to "edit" her handbag's contents for the world to view, unless her insecurity about missing "what's in" had not invaded her psychy.

Change makes us notice. If we don't understand it, but have no basis for disputing it, we usually assume that those that made the change know something we don't. Therefore, they must be smarter and the change is something (someone) to which we should aspire.

In the end, we are not particularly complex creatures. We all want to matter and we all want to be different...but, not too different. Perhaps substituting a dot for a line is the perfect solution. Tell me what you think at 602.952-8181.

TECH TIP: Sync files easily!

Ever been caught with your pants down (metaphorically speaking) when you discovered that the file you urgently needed was is still on your other computer!? If you have files in more than one location you have got to get Save-N-Sync. I have been happily using this inexpensive utility for two years to keep the files I need synced up across various machines. I even use it to make backup copies of important directories on flash cards. You can learn more on the company's website and even download a free trial. I've tried several utilities of this type and found this one to be very simple to use and intuitive.

Make meetings fun again!

If you hate meetings (and who doesn't?) you'll love this. While I can't verify its source, this sardonic meeting tip was titled "Kroger Team Conf. Call". I am sure you will find it all to familiar regardless of the company with which you work.
----------------------
Subject: FW: Kroger Team Conf. Call

Do you keep falling asleep in meetings and seminars?
What about those long and boring conference calls?
Here's a way to change all that.

1. Before (or during) your next meeting, seminar, or conference call, prepare
yourself by drawing a square. (I find that 5" x 5" is a good size.)

2. Divide the square into columns - five across and five down. That will give
you 25 one-inch blocks.

3. Write one of the following words/phrases in each block:
* synergy
* strategic fit
* core competencies
* best practice
* bottom line
* revisit
* expeditious
* to tell you the truth (or "the truth is")
* 24/7
* out of the loop
* benchmark
* value-added
* proactive
* win-win
* think outside the box
* fast track
* result-driven
* knowledge based
* at the end of the day
* touch base
* mindset
* client focused
* paradigm
* game plan
* leverage

4. Check off the appropriate block when you hear one of those words/phrases.

5. When you get five blocks horizontally, vertically, or diagonally, stand up
and shout "BULLSHIT!"

Testimonials from satisfied "Bullshit Bingo" players:

"I had been in the meeting for only five minutes when I won."
- Adam, Atlanta

"My attention span at meetings has improved dramatically."
- David, Florida

"What a gas! Meetings will never be the same for me after my first win."
- Dan, New York City

"The atmosphere was tense in the last process meeting as 14 of us
waited for the fifth box."
- Ben, Denver

"The speaker was stunned as eight of us screamed 'BULLSHIT!' for the
third time in two hours."
- Paul, Cleveland

"When I won and yelled "BULLSHIT!" the woman sleeping next to me slid
off her chair!"
- Joseph, Los Angeles

The Kodak moment Kodak needs

Kodak has arguably lost its way in recent years and has been decimated by the rise of digital imaging. But this self-deprecating video lays out a hilarious vision of their salvation. The video was originally created for internal use, but was (intentionally?) leaked and has become a viral smash. It’s funny and a great example of the introspective honesty a lot of companies need.

7 fixes for CM in 07

After nearly 2 decades of evolution, Category Management has largely failed to live up to the grandiose expectations set for it. Here are my 7 prescriptions for 2007 that can bring a new level of results to Category Management.

1. Talk to your consumers.
   I have probably participated in thousands of Category Business planning sessions across virtually every category, and in only a handful of plans has anyone bothered to actually talk with consumers. Almost every business plan incorporates consumer panel data and manufacturer research, but these sources rarely tell us WHY consumers are buying what they buy. Consumers want to talk and its amazing how seldom we give them the opportunity. EVERY Category Business Plan should begin with a day in stores talking with category shoppers. Will this data be statistically significant? No. Might the perspectives gained bias an otherwise purely data-based analysis? Yes, and that’s exactly the point. I have witnessed dozens of erroneous assumptions drawn from data that would have been immediately questioned had the team talked with real consumers. We’ve all been brainwashed by our companies and our experiences, so we need a little reality check from the people that buy our products. The best way to get that fresh perspective is…[Warning: sales pitch coming]…by using CM Solutions’ in-store research services. We’ll talk to your customers and help you understand what’s really driving category behavior. And we can do it in a statistically significant way. But, even if you don’t want this kind of powerful insight, don’t miss the opportunity to just go into stores and talk. You’ll learn a lot and the shoppers will be thrilled to have their voices heard.
   
   
2. Let the Category Managers actually manage the category.
   I am very alarmed by the trend among many retailers to remove pricing and other tactical decisions from the control of their Category Managers. New price/promotion optimization technologies from companies like DemandTec and KhiMetrics are powerful tools, but to use them outside the category planning process (and away from the CM’s desk) is just plain nuts. It is common for a Category Manager to sub-optimize pricing in one segment or brand to achieve a broader objective. Such decisions will never make sense to a software algorithm. I’m not suggesting that Category Managers should autocratically make all decisions for the category, but they must have the power to implement the tactics they have identified as crucial to achieving their objectives. Otherwise, why bother giving them the objectives in the first place.

3. Stop worrying about fair share and be different.
   Category Management was never about copying the tactics of others in the market, but all too often, that’s what it has become. The overdependence on “fair-share” and averages has produced ineffective homogenous strategies. Just because Kroger or Safeway promotes Pepsi 12 packs 24 times a year doesn’t mean that’s the right answer. Looking at fair share is fine, but only when it is used as a tool to be different. If you have your fair share in every category, guess what, you’re average (and you’re not going to last in the long run). Power lies in deciding where to have MORE than your fair share and where to have LESS (and you must have both). Consider one of my favorite aphorisms; “Different isn’t always better, but better is always different.”

4. Spend 20% of your time planning and 80% executing and measuring.
   I’ll begin with some Category Management blasphemy…most of the time you spend analyzing a category is a waste. That doesn’t mean you shouldn’t analyze, but you should be acutely aware that no historical analysis can be perfectly predictable. The power of CM lies not in its predictive power, but rather in its production of a plan that can be used to evaluate performance on an ongoing basis. Even the best Category Business Plans are nothing more than a best guess of what might happen. They can only create value when the planned activities are executed and measured versus expectations. Consequently, the most effective Category Management processes emphasize implementation and review, not assessment. Assess quickly, create a good plan, and get on with implementing and reviewing. That’s where you make money.
   

5. Look outside, not just inside.
   Retailers are addicted to shopper card data. Why? I think it’s because it’s readily available, it’s their’s, and they understand it. It is valuable, but for goodness sake, most of a retailer’s shoppers buy from other retailers too. Knowing that the top 10% of your shoppers contribute most of your profit is WORTHLESS! It’s a mathematical truism. What’s even more frustrating is the notion that, “We need to move more of our shoppers into the “top” category.” You can’t! That group is usually defined as the top n%. You can raise the average spend among those in the top 10%, but you can’t have more than 10%. OY! What retailers really want is for more of the people that don’t spend most of their money with them to begin doing so. By definition, that means those folks are spending their money OUTSIDE the retailer. So, at best, internal data is marginally helpful in figuring out what to do. Consumers have an ever broadening set of retail options. You’re fighting for their food budget which is increasingly split across numerous outlets. Trying to convert your shoppers that buy two yogurts a year into ones that buy 20 yogurts a month, like your “tops”, may be missing the real problem. A lot of your shoppers are probably buying their yogurt at Trader Joe’s or Costco.
   

6. Think about the type of trip, not just the category.
   People go to grocery stores to buy groceries, not just peanut butter. But, when creating a Category Business Plan for peanut butter it’s all too easy to forget that this chunk of products is only a small part of why shoppers come to the retailer (or don’t). If we discover that we sell PB to only 15% of consumers in the market we panic and begin to plan more promotions. But, if the retailer has only 12% market share that may not be too bad. More importantly, can we really grow the peanut butter category effectively by trying to attract new shoppers to the retailer? I’d be more concerned about understanding why we weren’t getting more “staple” trips that include such items. Maybe the broader promotional strategy of running ridiculously cheap soda and chips is just bringing in shoppers for a “cherry-picking” trip on their way to their preferred “full-basket” store. If you don’t fully understand the types of trips and shoppers the retailer is getting across categories, you can never completely understand what’s going on in any individual category.
   

7. Train your people
   When was the last time you were trained in Category Management, or data analysis, or sales? You probably don’t remember. For most people it was when they first took a position related to CM. They were sent to a week long seminar and learned how to “do Category Management”. Unfortunately, those seminars stink. They have NOTHING to do with reality. [Warning: slipping into selling mode again] CM Solutions provides numerous seminars in Category Planning, Data Analysis, Assortment, Sales, and Marketing Strategy that can immediately boost your team’s capabilities and drive sales and profits. And don’t underestimate the value of software classes (particularly Excel, Work, PowerPoint and Outlook). Most of us spend a lot of time using these applications and stronger skills can dramatically increase productivity. Whether you exploit our courses or someone else’s, it’s probably time to freshen up the skills of your team. You won’t regret it.
   

There you have it; the 7 things to transform CM in ’07. Give us a call and we can help you leverage them to transform Category Management into a money making machine for you and your trading partners.

ASSORTMENT TIP: Get lean in '07

The winter holidays have come and gone, but the effects of our indulgences linger on. By the end of the year most of our categories have become as bloated with items as our waistlines. Every study done in the past 10 years has shown that a lean assortment increases sales, reduces consumer confusion, and improves profitability. Isn't it time you got your category and shape. Doing an efficient assortment review may be as intimidating as committing to a workout regimen, but it doesn't need to be. Here are three simple steps and a practical template that will get you to a lean assortment:

1. Review segment performance and set targets for the number of items in each segment: The primary reason efficient assortment analyses take so long is that people start with the item level data. Every item selected to be discontinued feels like lost sales, making every decision arduous. By setting an aggressive target for the total number of items to be included in the category, as well as specific targets by segment, a framework can be established that makes decisions easier and faster. Additionally, this approach more effectively eliminates duplication while protecting specialized niche products. For example, if you’ve determined that the category should have about 5 specialty items, you won’t feel so bad about keeping them and you’ll be more likely to pick the right ones.

How do you know where to set your targets? I like to start with the objective of cutting 20% of the items in the category. Harsh? Yep, but you’re unlikely to stick to that number in the end, so it’s better to start aggressively. So, if you started with a hundred items you should try to get to 80. Next, divvy up those 80 items across segments allocating more for important segments and fewer for secondary segments. If you know of new items that are coming, be sure to count those as well since they'll need space soon enough. (TIP: It usually makes sense to set targets by sub-segment, for example, “premium adult” instead of the broader “premium” segment. This will break your review into manageable chunks instead of huge groups of items they're hard to differentiate.) Then, and only then, start reviewing item performance to identify which items have to go.

2. Review items in one file on the computer (preferably using our best-in-class template):
   No matter what report you use, never make assortment decisions working off of paper. Printing out a hard copy of a report necessitates a fixed sorting. There is simply no way to sort the data effectively to answer every question that you will have in your analysis. The best approach is to bring all the metrics you will need together in a single file and review it with all the key decision-makers in the same room, looking at the same data using a projector. Everyone will literally be on the same page and the data can be dynamically resorted to answer any questions that come up. Additionally, items can be marked for discontinuation before a final decision has been made, allowing the group to quickly see if the item count targets are being met.
   
   So what metrics are most important? That depends, but I'm pretty partial to dollar sales. It's not the only factor to consider, but it's hard to disagree with cold hard cash. My recommendation is to build a robust report that includes numerous metrics, sorted by segment, in descending order of sales. That way, you can quickly see what is selling best and you have the context of the additional measures. I also like to include a notation of which accounts in a market carry a given item. This helps quickly identify if an item is true variety or simply duplication of a similar item at another account.

A sample of the report I have described is available here. You may prefer different measures, but I have found this to be the most effective layout for assortment decisions on the planet. It may take a little extra time to create an advance, but I guarantee the time invested will be saved many times over in the analysis process.

3. Monitor item counts quarterly to keep the fat off: Efficient assortment really is a lot like dieting; it's not just about getting lean but also staying lean. Every category needs new items just like we all need that occasional piece of chocolate cake. The key to maintaining a lean assortment is to stay true to your segment item targets. Once a quarter, simply review each segment’s share of sales and share of items versus the targets you originally set. You'll never match your targets perfectly, and it's okay to put on a few extra items, but you need to ensure that your bottom is not getting too big. (TIP: If you're really smart, you'll insist that new items build sales in excess of the segment average when they were added. If they don't, cut them since they're pulling your segment down.)

If you just take a few hours each quarter to monitor your assortment, you won't need to go on a painful crash diet again. If you'd like to learn more about how CM solutions can help grow your business with efficient assortment tools and training, give us a call. I'm off to the gym.

The iPhone: Will it change your brand?

Yesterday, to much acclaim, Steve Jobs announced Apple's latest consumer electronics innovation, the iPhone. Its features are incredible. It’s a phone, personal digital assistant, email client, web browser, music/movie player, and camera. But, what’s really significant is the example it sets for every consumer product on the market.

There are already numerous consumer electronic devices that offer the same features as the iPhone. I own one, a Palm Treo. The problem has been that most products offer features, but few offer solutions. I want all of these nifty wiz-bang capabilities, but only if they’re easy to use!

The value of any solution (or brand) is factored by the effort required to get that value. The perfect example of this was demonstrated in a frozen food study we conducted. The overwhelming majority of consumers said they preferred items prepared in the oven, but they usually prepared them in the microwave. They were willing to give up product performance for the value of simplicity. When you can achieve both, you have a mega-hit. The iPod delivers superior performance AND is fantastically easy to use throughout the entire usage experience. That’s why it has forever changed the music industry. The iPhone may do the same in the wireless industry according to many. (See Larry Dignan's blog on ZDnet for more on that.)

The bigger question is what is your product’s solution and how can you make the total usage experience better. If you don’t think this opportunity exists with your products, just look at the innovations on supermarket shelves. From re-sealable plastic coffee “cans” with handles to yogurt in tubes, the incremental value resided in making the consumer’s process of using the product simpler.

Have you thought about how your "solution" makes your customers' lives easier from shelf to trash can? Can you make it easier to carry, prepare, pore, or store? Are you focused on the features of your products or the solutions they provide? Give CM Solutions a call and we’ll help you discover the complete value of your brand.

Easier solutions are worth more than hard ones. That’s why Apple will probably get lots of consumers like me that are willing to shell out big-bucks for the iPhone. Their solution is worth it even if the components aren’t.