Make More Profits From a Static Product Line

One of the most common merchandising questions from business-to-business (b-to-b) catalogers is how to increase sales (or profits) from static product lines. Often, b-to-b merchandising teams are at the mercy of a manufacturer’s research and development budgets, as well as the timely release of new product introductions.

How can you keep revenues from becoming just as static as the product line? Following are some answers to that question:

1. Modify the packaging.

When the product itself remains constant, change the packaging. For example, try stackable boxes with preprinted labels so that when placed on shelves, the information is easily seen. Perhaps the box lid converts to a display, or when emptied can be used as a storage container.

Some b-to-b catalogers review all the assumptions for the packaging, from the type of plastic used to the hangers, stickers, adhesive strips, labeling and folding tabs. Talk to customers to determine if your packaging potentially can solve their dilemmas. If packaging isn’t worth changing, maybe the merchandise exterior is.

From environmental issues to convenience, identify factors that differentiate the product. Your goal is to satisfy customers’ needs by offering them solutions or presenting a new opportunity through a packaging redesign.

2. Change the price break quantities.

More and more b-to-b catalogers are revisiting the quantity price- break options.

Say you currently offer products at a cost of goods of 45 percent. You sell one item for $100 retail. And you offer a price break, charging $95 if customers buy two to 11 products, and a final price break of $90 each for 12 or more.

Revisit those ranges to try to increase purchases and overall gross margin dollars. Thus, you may find it’s best to charge $100 for one to three, $97 for four to six, $95 for seven to 11 and $90 for 12 or more.

Your analysis will dictate your own quantity breaks and how much you should shift the margin dollars.

3. Bundle products with complementary items.

For example, identify add-on items that typically would be a customer’s “next” purchase. If the product is a case of motor oil, offer the tiered rack for storage.

Bundling entails identifying complementary products and packing them together as a single product number at a lower price point than buying the items separately. If available, review a year’s worth of items per order to find the most popular item combinations.

4. Create a private-label brand.

When products are static, introduce a private-label (or house-brand) strategy that provides a price-point option for the merchandise. From a marketing and catalog creative perspective, telling the “good-better-best” story or an “economy-premium” story guides a customer through the purchase.

Keep in mind that a house brand doesn’t always mean a less expensive price point. Depending on your market position, your brand equity may command a higher price. The good news is, in either case (a higher price point or a lower one) the gross margin percentage will be greater with the private-label brand.

5. Ask customers what problems they face that you could help them resolve.

Use surveys (e.g., mailed, outbound calls, focus groups, Internet) to discover what problems or obstacles lower your customers’ productivity. Use the data to determine how you can revamp your creative to support the findings. Changing headlines, body copy, non-selling copy and other visual cues (e.g., icons, bursts, callouts) is a good start. Some b-to-b catalogers add inset photos to show the product in use, or before and after pictures to visually communicate a product’s multiple benefits.

Caveat about surveys: The answers help you identify a direction, not a guarantee.

6. Tell customers when it’s time to rebuy.

Indicate how long the steel toe boots, ink cartridges or mattress pads — whatever you sell — should last. Helping customers understand a product’s normal lifespan allows you to increase the frequency of purchases as well as ensure customers are using a quality product.

Using the basis of the product life cycle, develop an autoship program in which customers automatically get a shipment of products if they choose. Such a replenishment program helps keep customers inventoried at their requested levels and eliminates rebuying administration costs.

7. Provide value-added service.

This needn’t be expensive. What types of upgrades are available to motivate customers to buy right away? Perhaps there’s a special paint they can select, or a protection plan or extended warranty. Or maybe you can apply the customer’s logo or name to the product.

Offer additional services including free scheduled delivery as well as free set-up/assembly. Even just offering a solution such as “certified contractors available in your area” reduces the purchasing barrier, because you’ve offered a solution.

8. Use the Internet wisely.

The Internet has opportunity written all over it. If the products in your catalog don’t change much, use your Web site to push promotions, buy key words and identify affiliate programs. Utilize available technology to support your business. Always use the “recommend” feature so when a customer selects an item, there’s a pop-up box or a dynamic display box to recommend the price-break quantity, the upgrade with the special paint or whatever you’re offering as a sales hook.

9. Create a catalog of bestsellers and/or customer favorites.

When you edit the choices for customers, tell them which products are endorsed by buyers. Bestsellers are immediate winners, so there’s little risk of low response to the catalog. This type of best-seller catalog also serves as the perfect insert for outbound packages. Use the catalog page space to build your brand, tell the whole story of the value proposition, show in-use shots, provide customer testimonials and bundle the products.

Conclusion

For b-to-b catalogers, static product lines may seem limiting, but in reality these products give you many options for positioning your brand. Create custom packaging and bundles by purposefully selecting items that complement one another — and more importantly, items that customers need and use.

Gina Valentino is vice president/general manager at J. Schmid & Assoc., a catalog consulting firm based in Shawnee Mission, Kan. You can reach her at (913) 236-8988 or via e-mail at: ginav@jschmid.com.