How Does Product Assortment Impact Revenue?

The variety of products offered by a store as well as their tagging or categorisation has an impact on the final sales and revenue figures. Let’s learn more about this aspect in the video below.

The importance of granular tagging of products:

Apart from product selection, granular tagging of products is also important in MMM. When you calculate the KPIs that represent pricing and promotion, you can’t do granular tagging at each SKU level, neither can you do so at an overall store or broad category level. At an SKU level, it will become too noisy. Also, strategic planning doesn’t really happen at that granularity. So, you have to get the right kind of tagging for each SKU to capture some thematic values for them.

Apart from these, there are some additional factors that can impact the sales or revenue figures. Therefore, these too need to be taken into account for MMM.

This brings you to the end of this introductory session on MMM. You started with understanding the meaning and necessity of MMM. Then you saw the accountability framework in marketing, which identified the key stakeholder at each step of marketing.

Then you moved on to the seven key effects that advertising can have on the sales or revenue figures. These were:

1. The current effect of an advertisement, which is the effect on sales or any other outcome parameters at the same time as it is aired or exposed.
2. The carry-over effect of an advertisement, which is the effect on sales or other outcome parameters that follows even after the day of the advert exposure.
3. The shape effect of an advertisement, which is the effect on sales with increase in the intensity of the advertising.
4. The competitive effect of an advertisement, which is the effect on sales or any other outcome parameters when your competitors advertise similar products or services.

5. The dynamic effect of an advertisement, which is the effect on sales or any other outcome parameters that changes with time.

6. The content effect of an advertisement, which is the effect on sales or any other outcome parameters due to a change in the content of the advertisement.

7. The media effect of an advertisement, which is the effect on sales or any other outcome parameters due to a change in media channels, e.g., TV, radio, newspapers, magazines, digital, social network, etc.

Then you saw the different forms of pricing and promotion, and their impacts. You learnt that the selection of products as well as the granular tagging of products has an impact on the sales and revenue figures. Finally, the session ended with a brief look at some of the other factors that can impact the final sales/revenue.