Businesses which source from the Far East, particularly those in fashion or seasonal goods, don’t typically have the luxury of placing an initial order and then reordering when they know how sales are going. Instead, they have to make their best estimate of what they can sell and then do their best to shift the quantity ordered. Good historical data and analytics can help build an accurate estimate, but once the business has committed to a quantity, it is up to Marketing to sell the goods at the best possible margin.
At the start of the season, new products will typically be launched at full price with a fair amount of marketing support. By the end of the season, anything remaining in the warehouse will be sold off at a deep discount, significantly eroding the overall achieved margin for those products. It is what happens in the few months between that is key to driving the overall profitability of the product.
Identifying underperforming products early is crucial to maximising overall achieved margin.
In a catalogue-based business, the key tools in the marketer’s armoury are page layout and pricing. Space and position in the catalogue are limited resources, which marketers and merchandisers need to allocate between products and categories to optimise overall profitability. Price, however, is a more flexible tool with much greater scope to provide a targeted boost to sales at certain times. Nobody wants to reduce their margin if they can avoid it, but nor do they want to end up with piles of unsold stock at the end of the season. The production cycle of printed catalogues frequently means that catalogues are being designed and printed before the previous campaign has even dropped. This makes it hard to respond to underperforming products until several months after launch. The earlier a price cut is implemented, the shallower it can be as it has longer to take effect. Identifying underperforming products early is therefore crucial to maximising overall achieved margin.
Our marketing management system,Compas, provides early indications of how products and categories have been performing in individual campaigns. It can generate a forecast of final demand after a few days, which can be highly accurate. This information provides a powerful additional tool in the marketer’s armoury.
Compas is an integrated, cloud-based tool that lets businesses plan, monitor and evaluate all of their marketing activities in one environment. It helps users to plan a range of marketing activities, from which it builds detailed financial and operational forecasts. By integrating with sales systems, it gives immediate visibility of marketing performance, and makes it easy to update forecasts with a click of a button. Changes to the marketing forecast feed automatically into the forecasts for all affected departments. A suite of sophisticated analytics and modelling tools delivers a powerful advantage over the competition in the quest to attract and maintain the best customers as profitably as possible.
Click here to arrange a demo, or to discuss how Compas could help streamline your marketing.