The concept of a product line review (PLR) invitation can elicit many initial reactions: excitement, curiosity, fear, concern, or they may even feel dazed.  For some, it is a long-awaited opportunity to pursue business they feel they are well-positioned to compete for. For many organizations, they have been waiting for an opportunity to take the floor and make their case why they should be able to earn business. For the Paradygm team, that excitement is one of the best things we work with in a given year.  To see an organization very quickly get on the same page and develop a "Let's go!" mindset around a singular purpose is exhilarating.

On the other hand, depending on the timing and circumstance, some organizations have the opposite reaction, one of concern.  For whatever reason, a PLR does not always happen at the best of times for suppliers.  PLRs can be affected by costing, fill rate or supply chain challenges, new market entrants, competitive brand (national or private label) growth, organizational changes, customer strategic direction, and many other reasons. This is not generally the concern of a customer, however.  A PLR at its simplest level is the opportunity for a customer to ensure they are offering their owners/shareholders and their consumers the best possible program that can be put forth.  Depending on the situation, "best possible" can take on many definitions.  Over the next several articles, we will address macro and micro-level strategies within the PLR process.

As we help our clients prepare for a PLR or have discussions with clients around opportunities and/or challenges they are having with a particular customer, we often start in the same place: the role of a category. Each client's core customer is different from other customers in the market.  As such, the products they carry and the categories those products are structured within are different.  So, it goes to follow that the category intent, benefits, purpose, or role would also be different from customer to customer. Even identical products carried by different customers typically deliver different roles from customer to customer. And obviously, customers within the same channel will be closer to each other than those in completely different channels. But even with that, there are typically nuances in the roles categories play, even within the same channel. These nuances are one reason we often start the planning for a PLR at the role of a category within a customer.

Another reason we start at the role of the category is, for many of our clients, their category is the most important in the world. It is their world! This is in no way a criticism; it just is the way it is. We get it. As both account managers and business consultants, we try to help our clients understand where their product and category fit for each customer, within each department, and why.  Understanding how their product meets the needs of each customer is important in how the PLR is approached.  This is not to be confused with the role of the supplier.  For some, the role of the category and the role of the supplier can get interwoven. Some of this is driven by the reaction, as mentioned earlier, to the PLR opportunity/risk. During the process of a PLR, we often use the role of the category to help keep us grounded in the many decisions flowing out of this early discussion.

To understand a category's role within a customer, understanding the customer's target consumer is a great place to start. For an incumbent supplier, this is often easier than for a supplier that has not done prior business with the customer, simply because an incumbent typically has access to the customer's buying staff to ask detailed questions. Thinking of how to paint the picture of who the customer's target consumers are, a great place to start, if the customer is public, is with their quarterly and annual releases typically found on their website. Whether the customer is public or not, contacting other suppliers that currently do business with the customer is another great place to starts. You might also be surprised what a Google search can turn over if you are willing to research beyond the first page results. When clients approach us to have this initial discussion, we find the conversation typically starts around demographics such as gender and profession.

We try to go beyond this initial layer and paint a picture of why the consumer is shopping that planogram at that customer.  Why do consumers choose that location, park in that parking lot, walk the distance to the front door, navigate to the department, find their way to the planogram, shop the options available in the planogram, navigate their way to register, and back to the parking lot? Or why do they purchase from the customer's website or pick up at the store? Often these discussions lead to the role the customer plays in the marketplace and the consumer's decision set—topics such as convenience, price, selection, expertise, after-sale services, etc.  Ultimately, we end up discussing the needs met by that customer for their consumer. In other words, the role a customer plays in their consumers' need set and how each product category and individual planogram fits within that role and provides solutions for the customer's consumer.

Since every customer plays a role within their consumers' need set, it also makes sense that every product category being shopped also plays a role within those needs. Each product category serves two roles, one for the consumer and one for the customer. Most of this role is aligned in terms of what the eye sees when standing in front of a planogram, but it is what the consumer cannot see that we will focus on in this article. We will focus on the visible in the following article. How a role fits the customer's need is often best described in trying to understand how the customer budgets annual performance metrics (sales, margin, turn, inventory, GMROI, etc.) for the category.  Depending on which of these metrics the key decision-makers focus on helps understand the role of the category. In understanding the role of the category, companies can better understand how to position solutions and opportunities to fit the needs of their customers.

In our opinion, there are four roles of a category:

Destination

A destination category is typically top of mind for a consumer when thinking of a customer.  If you were to ask 100 consumers what that customer carries, these are the first 5-10 categories that would come up.  We will not delve into the diversity of the consumer's demographics or need set for this conversation but will focus on the generic for now. A destination category drives footsteps (draw) and tickets (close) for a customer. These are categories where customers are more willing to invest resources (space, selection, price) than other categories. A customer wants to "win" this category versus their competitors, where they expect to be first in the "turn left or right" decision for the consumer.

Core (Seasonal and Non-Seasonal)

These are categories that come and go with seasons, holidays, or calendar events such as Halloween. The categories typically involve discussions around load-ins and exits. These load-ins and exits are time-consuming for both the operational and field teams; for that reason, the customer also typically expects to win in this category. These are also geared to help drive draw and close since these often fit an urgent need for the consumer at a particular time of year. Conversations around inventory depth and how the product selection is "staying current" often happen when discussing these categories.

Convenience/Project Completer

These categories often support the products purchased in the prior two groupings. This is a category of products the retailer realizes the consumer will buy while shopping as an "oh yeah, for this I will also need…." The nature of the customer's market fit and consumer mix makes these categories change the most from customer to customer. These categories often reinforce for the consumer that a customer is a place to complete their basket of needs. These are categories a consumer would approach a customer's store staff and ask if they carry.

Fringe

A fringe category is often confused with a project completer. These are categories the retailer has found they can be successful with, either due to the geography of their locations, decisions made by leadership, or test and learns being conducted. A common example is what can often be found at points of impulse buying.

Understanding how each of these categories plays a role with the consumer and customer mindset is important in structuring the goals, objectives, and conversation on preparing for PLR. Often, great ideas for new products or configurations can come out of these initial conversations. As mentioned earlier, the target you place on the customer's metrics (such as sales, margin, turn, inventory, GMROI, etc.), depending on the role of the category, can help define the direction you take to arrive at a PLR deliverable. We will continue to discuss the PLR process in the following several articles.

If you want to discuss how Paradygm can help you prepare for your next PLR, please reach out today!