The story of the sweet shop

In difficult economic times there are two main targets for cuts - marketing and stock. One drives enquiries and the other provides goods customers want, now.

We have previously commented on the dangers of cutting marketing investment during tough times and allowing competitors to gain market share while advertising space costs are lower. But attracting customers then failing to deliver the product is not going to create loyalty and repeat business. So the temptation is to review product sales and delete the less popular from the range as a stock reduction strategy. This in itself in some manufacturing business models will  cause their contribution to factory overheads to be transferred to the more popular products, in turn increasing their cost and reducing margin.

However there is an important marketing issue here as well - one of presenting choice. The chairman of a company I worked for some years ago had a cautionary tale about the owner of a sweet shop of the old fashioned type that displayed sweets in a range of jars arranged on shelves behind the counter - a merchandising method for confectionary that appears to be enjoying a revival incidentally.  Each week the shop owner decided he would delete the least popular confectionary item and remove that jar from the shelves. After a few weeks he was able to clear a whole shelf, but as he worked to delete jars from the next shelf he began to notice that sales of the popular lines were declining and so was footfall. In short he was loosing business.  Customers, especially young children actually enjoyed the opportunity to have a big choice, but as stock rationalisation proceeded the choice reduced inversely to a point where customers perceived that there were only the most common and popular types on display and they could get those anywhere.  Although they usually purchased their favourites, part of the shopping experience was savouring what else was on offer and when that went, so did their custom.

A direct b-2-b analogy was with the marketing of floodlighting products. The main sellers were floodlights that lit wide areas, rather than narrower beam spotlights that could illuminate a small defined feature. In particular a very tight beam model that could illuminate a clock on a church tower which not surprisingly sold in small numbers. But of course the thing was that having that 'tool' in the range demonstrated that the company understood the challenges facing lighting designers and in doing so helped create specification for the more common products as part of the package. A purely accounting analysis would simply eliminate the specialist product whereas a marketing analysis would look at package sales and understand that volume alone was not the whole story.