Hello Class,
The article I chose this week is titled "SKU Proliferation,
Rationalization, and Prioritization - September 2023", the
article's main point is the how companies offer many variants
to a product and how this affects marketing, production, and
profitability. For example, the author states that when looking
to purchase a coffee maker, each one offered something
different than the other and the price point varied from $10.99
to $229.99 (Ford, 2023). Each company offers products to
consumers to meet their needs, in the case of the author they
only wanted to purchase a basic coffee maker with a low cost.
Other consumers might be interested in a coffee maker that
offered a bean grinder and milk frothier, but for the author
that was not their requirement. Companies offer variants of
products to give consumers a choice, whether it is GMC and
their 6 automotive brands, or 10 variations of the color green
companies want to maximize customer service while gaining
market share from the competition (Ford, 2023).
The Pareto Analysis is the statistical analysis of SKU
management, or 80-20 rule. This means that a company
would expect that 20% of products sold would generate 80%
of sales revenue (Ford, 2023). This means that some products
that have variants might sell better than others all depending
on cost, variants, and the consumer's needs. This can lead to
a process that is not proactive as there can be too many
variables, but there is still the opportunity to continually
improve the product over time. The problems that companies
can face in SKU management is stockouts, where a product
sells good but is difficult to keep in stock, or deadstock, which
are product that do not sell well at all.
Forecasting through marketing and sales to focus on trends
can help avoid some of the problems that come with offering
different variations of products. Market research, if done
correctly can develop the total number of products that meet
the demographics of the consumer.
