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The increase in collaboration between manufacturers and retailers, along with the application of machine learning and artificial intelligence, has made a difference in the commercial results of some brands and store networks in recent years, demonstrating the need for Category Management to undergo an evolution. Collaboration is essential for the success of Category Management since it provides a better understanding of market trends, consumer behavior, and growth opportunities. Retailers and suppliers can share valuable information about market demand, product availability, and shopper preferences by working more closely together, allowing them to formulate better strategies and initiatives. Achieved benefits It has resulted in tangible benefits, including improved supply chain efficiency, greater visibility, and data analysis, more effective introduction of new product lines and categories, space optimization, and private brand development (especially for retailers). However, fundamental aspects such as personalization and segmentation, customer loyalty, improvements to the shopping experience, and omnichannel have made little or no progress depending on the market, sector, or channel. The competitive advantage But it is precisely these last aspects, where a small group of manufacturers and retailers begin to separate themselves in an important way from the rest of their competitors. Focusing fundamentally on the Shopper as opposed to an excessive focus on efficiency begins to generate critical competitive advantages. What aspects should evolve first? The speed of Category Management evolution depends on several factors, including technological advances, market trends, and changing consumer needs. Below, we mention some of the critical aspects that we think must change first in companies: Artificial Intelligence and Advanced Personalization: Adopting technologies such as artificial intelligence and machine learning can provide a deeper and more accurate understanding of Shopper behavior. This allows for more advanced store segmentation and personalization in product offerings, promotions and shopping experiences, which in turn can drive customer loyalty and satisfaction. Omnichannel: Omnichannel is a reality in today's retail world. The seamless integration of different sales channels is essential to provide a coherent and satisfactory shopping experience for Shoppers. Category management must adapt to this reality and ensure that strategies and tactics are consistent across all customer touchpoints. Collaboration and Co-Creation: Involving Shoppers (until now it has only been done with consumers) in the product design and development process is an effective way to create a deeper connection with them. This can generate valuable insights to, for example, improve packaging, size, and label design that facilitate the selection of the ideal product at the point of sale that best satisfies the customer's needs and desires. Shopping Experience: Customer experience is a key factor in retail success. Focusing on improving the shopping experience, from in-store navigation, purchase sequence, and multi-sensory stimuli beyond the traditional poster, to the checkout process, can increase customer satisfaction and foster brand loyalty. Transversal Processes: The evolution of Category Management will require an open mentality towards the adoption of new practices, processes, and shared technologies between marketing and commercial teams. The ability to quickly adapt to emerging trends and changing Shopper preferences will be crucial to staying competitive in the market. The Evolution of Category Management will continue to accelerate as companies adapt to the changing demands of Shoppers and take advantage of the opportunities provided by new technologies and approaches. Those organizations that are able to combine effective collaboration with advanced technologies and a focus on the shopper experience will be in a strong position to generate competitive advantages and long-term success. If you are interested in learning more about how we can help you strengthen your category management model, do not hesitate to contact us. Written by Juan Manuel Domínguez R., CEO of TMC Commercial Consultants. For information about our consulting or training services in this area, write to us at contacto@tmcconsultores.com and we will contact you immediately.

One of the biggest needs that I get from Directors and Commercial Managers of many companies, is how to avoid common mistakes to guarantee a successful promotional activity The main findings in this matter lead us to the conclusion that the main failures are not in the design per se of the activity (tactics, mechanics, prizes, communication, etc.), but in the first steps of the diagnostic process: from the evaluation of the current situation until the establishment of the promotional objectives. It all starts with a poor diagnosis Undoubtedly, the problem begins with a low understanding of what is the opportunity or the problem to be solved. When the objective of the promotion is to achieve sales objectives, counteract competitive actions, and/or do the activity because it is within the budget, we are already in trouble. The lack of an adequate diagnosis leads us to recommend the wrong treatment. There are several reasons why we fail to understand what is happening: Non-existence or non-observance of relevant market information related to consumption or purchase habits based on sell-out data or Shopper Behavior. Little time is available to analyze existing information (market studies, sales statistics, etc.). Weak analysis of past promotions. In general terms, we see the Managers responsible for the conceptualization of promotional activities, dedicating a lot of effort and resources to the implementation of the activity, but not enough at the beginning (Analysis) and the end ( Evaluation of results). The promotional activity has not been concluded and results evaluated when the team is already working on the following two. If you are interested in going deeper into the subject of evaluation, I recommend Mike Antonhy's post “How to evaluate activity to improve Shopper Marketing effectiveness”. Lack of definition in the Promotional Target The Brand Target defines the group or segment of consumers with common characteristics, needs, and behaviors that we want to see consuming the brand. For example: Men between 25 and 45 years of middle and upper middle socioeconomic classes who care about their health and personal appearance - fashion brand. However, when we correctly evaluate the situation of the brand in this large group, we detect that some of them do not know our brand, others know us but have not tried us, others have tried us once, and others buy from us only on promotion, others they are very loyal and others were loyal until they stopped being. In other words, their particular relationship with our brand is different, so the promotional objective and stimulus will have to be coherent and specific to the particular situation of the different subgroups of the Brand's Target to which we should be focusing the activity. This is the Promotional Target. If we do not define well how and who of these subgroups we want to influence, it will be difficult for us to select the appropriate tactics, mechanics, incentives and promotional communication. For example, if we want to encourage a group of people who know the brand but have never tried it, we will be selecting activities that are very different from those that would be chosen to retain people from the same brand target who are already loyal. That is why it is so important to talk about the Promotional Target. Now, once that Promotional Target has been defined, I must then understand it better. Why haven't you tried the brand? What limits them or distances them from the brand? where do they live or what kind of stores do they usually frequent? Do they have particular consumption and purchasing habits? In short, these and other questions help us select the most appropriate promotional activities to encourage the desired behavior in the promotional target, reduce inefficiencies (cannibalization, advance purchases, etc.), and obtain a higher promotional ROI. Unclear and specific objectives The promotional objectives should focus on changes in consumer behavior - the most strategic - and/or purchases we want to influence. Increasing sales volumes or making noise (trust me, I've seen it more than once and in the best families) are not good promotional goals. Putting 4 or 5 objectives, such as: increasing sales, improving product displays, rewarding our loyal consumers, and improving relations with the channel only shows one thing: we are lost. It is essential to have a single Primary Objective, which aims to change or reinforce certain purchasing behaviors. If we want to be tested, that should be the primary objective. If what we want is to generate or consolidate loyalty, that must be the primary objective. If what we want is to expand consumption opportunities, that should be the primary objective. In other words, the previously diagnosed opportunity or problem defines the central objective that the promotional activity seeks to solve. We may have one or two additional objectives that seek to address other areas of opportunity and/or problems. However, if these are reached and not the Primary, we can say that the promotion did not work. The same solution for all In the past we tended to do national promotions and if possible in all channels and types of business simultaneously. A greater understanding of the Shopper has led us to greater targeting. However, having to implement a greater number of activities at the same time in different groups of stores in a channel represents an internal operational challenge for companies. As we explained in the post "What is Shopper Marketing", the Shopper has different expectations, habits, and behaviors depending on the sales channel, such as in a supermarket, a convenience store, or a cafeteria, and the purchase mission. (stocking, restocking, tonight's dinner, etc.) you are doing. From a promotional point of view, there are promotional tactics and mechanics that work better than others when used in certain channels and for specific buying missions. For example: If a young couple is shopping in a supermarket on a Saturday morning to stock up for the next two weeks (possibly accompanied by a list), their mental state and willingness will be to buy more products at relatively good prices. . This then begins to better define what type of tactic to use. A tactic associated with volume with a good price incentive would be very coherent; extra content, 3x2, Price off, etc. On the other hand, if the young husband goes to the same supermarket mid-week to buy a ready-to-go Japanese dinner, a cross-promotion with our soy brand (probably a medium or small size to be in line with his willingness to buy). , could generate the test levels we are looking for. The understanding of the channel-purchase missions relationship, aligned with the particular situation of the Promotional Target, plays a central role in the possibilities of increasing the effectiveness of promotional initiatives. In conclusion… To design a successful promotional activity you will have to: Make an adequate and exhaustive evaluation of the current market situation, Have a clear understanding of your promotional target audience Define the best mechanic and incentives to the expected behavior by channel. Define clear promotional objectives If you are interested in learning more about this topic, I recommend our Design Effective Promotions Course. Written by Juan Manuel Domínguez R. CEO of TMC Commercial Consultants. If you are interested in finding out about TMC products in this area, write to us at contacto@tmcconsultores.com If we are not yet connected on LinkedIn it will be a pleasure to have you in my network of contacts

Thanks to TMC Consultores' Intelligent Store Segmentation model, a client who is the leader in the food sector in Mexico, increased its sales and profitability in the traditional channel by 12%, generating a net sales increase of more than US$ 2MM in just one year, without alteration of any other variable. Considering the complexity of this channel in a critical year in México, this result is considered a a resounding success Background: About two years ago, one of our clients expressed frustration with the lack of growth in the traditional channel, beyond historical trends. Although various initiatives had been implemented, such as new execution guidelines by store, adjustments in the route-to-market strategy, and a large number of promotions, they were not able to deliver the same results as in other channels. The main problem lay in the lack of differentiation in channel management, which was based on basic and imprecise segmentation, focused on store physical characteristics, sales volumes, and location. Shopper behavior omission: segmentation models used up to that point completely ignored the Shopper's profile, mission and behavior by store. A generalized successful execution strategy was generated, without discriminating what was really happening in each store. Key questions to understand the need for different segmentation: In this situation, it is important to ask some questions to better understand the importance of buyer-based segmentation: Would a store near a large school sell the same products as one near a hospital? Is purchasing behavior similar in a store in a lower-class residential neighborhood compared to one in an industrial area? Does the buyer buy the same when their main mission is to stock up, as when they are looking for products for immediate consumption? Clearly, the answers to these questions are negative. Buyers adapt their purchasing behavior based on various factors, many of which are unknown to companies. Each store has different profiles of buyers with predominant behaviors. It is essential to identify these profiles to better understand the needs and preferences of each segment. Implemented solution: Using the sell-in information by store from the last 12-24 months, we built a segmentation of stores by clustering using machine learning, with the aim of identifying groups of similar stores based on the mix of best-selling products over time. The generated segments group stores that at first glance are difficult to understand their similarities or differences. Examples: The model classified traditional channel stores that were in the same residential neighborhood into different segments. When field validation was carried out, we observed that stores with a high share of individual-sized products ideal for immediate consumption tended to have work areas, educational institutes, hospitals, or others closer to them. However, stores with predominantly family-sized volumes were basically surrounded by residences. The same dynamics were observed between stores with significant differences in the price segments of products sold. It was possible to determine its correlation with the demographic characteristics of the shoppers who buy in the store. We insisted this could happen within the same residential neighborhood. Benefits Increase your sales in the Traditional channel. The implementation of this segmentation based on the buyer allows a better definition of the route to market strategies, success picture (especially assortment and planograms), allocation of equipment (refrigerators, displays, etc.), and promotions, by specifically targeting the buyer objective and its predominant buying mission. In addition, it provides a deeper understanding of the needs and preferences of shoppers in different stores, which translates into continuous and sustainable growth. On the other hand, it allows us to better understand the needs of our commercial channel partners, support them in improving the shopping experience, and finally in increasing their own sales volumes and business profitability. Conclusion: At TMC Consultores we make available to sales teams, Machine Learning technologies that allow them to make the most of the information available to segment stores and focus their initiatives and strategies on the target buyer and your buying mission. This generates rapid and continuous increases in sales. The data provided leaves no doubt: annual growth of 12% in sales volume and profitability. It is a real case that generated more than US$2MM in net sales in one year. In a future article, we will talk about the challenges in the implementation of this type of segmentation model. If you are interested in learning more about our store segmentation model and how to increase your sales, do not hesitate to contact us. Written by Juan Manuel Domínguez R., CEO of TMC Commercial Consultants. For information about our consulting or training services in this area, write to us at contacto@tmcconsultores.com

You better know the story of Justin, the man who sold his little brand at 286 million dollars. Thousands of products, be they new brands or just line extensions, are launched on the market every year, but only a few manage to survive more than a few months. The high level of failure can be associated with different causes; lack of a clear differential with competitive brands, low level of marketing investment, or simply the product not liked. In this article, we describe the critical reasons why Trade and Shopper Marketing must play an important role in product innovation in your company. INNOVATE SO THEY SEE YOU Some new market studies show that most new products with low initial sales and consequently very low levels of space participation at the point of sale fail to take off simply because shoppers do not see them. We can say that they are invisible. HOW SHOPPER WILL BUY YOU IF THEY CAN'T SEE YOUR PRODUCT? The points of sale are saturated with thousands of SKUs. The brands and presentations with the highest sales participation will always have a greater opportunity to be seen and therefore considered and ultimately purchased. Even new brands that have been bought by shoppers before, possibly motivated by some type of activation (sampling, tasting, impulse, etc.), are not remembered in the next purchase. The only chance to at least be considered again is to be seen. But we insist that shoppers do not browse through all product alternatives on every visit. They mostly repeat with products that fulfill their expectations, mission, and needs. The same market studies mentioned above show us that the only way to increase the levels of consideration is by significantly increasing the levels of ATTENTION and SURPRISE. Yes, I know it sounds obvious, but it is the reality. But also, although it is easy to say, it is for most companies, quite difficult to achieve. A SUCCESS STORY: LEARNING FROM JUSTIN. Justin Gold, Founder of Justin's Peanut Butter, quickly understood the problem he was having with his new brand of peanut butter, from the first weeks after its launch in mid-2003 in the state of Colorado (United States). Despite being a product of the highest quality and the first artisanal and organic brand in the category, nobody was aware of its existence at the points of sale (which is normal, as we said before). Justin Peanut Butter was released in a 28-ounce jar like the ones the rest of the relevant players in the category had (Jif, Skippy, Peter Pan, etc.). PACKAGING INNOVATION TO BE SEEN Perhaps without having much information on consumption habits or purchasing behavior in the category, Justin ventured into the market by introducing new packaging. The first thing he launched were individual sachet-type packages, initially designed for campers, people on diets, or simply those looking for an energy boost. However, he proved to get a lot of interest (especially because they generated a lot of ATTENTION AND SURPRISE) from mothers concerned about family health. In a short time and without having thought about it initially, the sachets became an excellent alternative for children's snacks at school. This success helped them grow in the category, both with the sachets and the 28oz bottle, and achieve higher levels of space in the POS. WINNING SPACE IN THE CATEGORY Justin quickly knew how to get ATTENTION and SURPRISE in the category, and while competitors continued to gloss over Justin's Peanut Butter, Snacks and Protein Bars were introduced allowing him to not only widen his space in the category but also enter premium locations, expanding towards cash registers (impulse) and the gourmet section. He additionally began introducing disruptive variants to peanuts, such as hazelnuts and almonds, giving the brand a new impetus and clear leadership in the organic (premium) segment of the category. While he was introducing these innovations, the product was gaining brand awareness and also growing in the 28 OZ “mainstream” presentation. That irrelevant presentation which was hardly seen at the beginning of this story, began to obtain between 15% and 20% of the space in important supermarket chains, such as Whole Foods, in a short time, despite being a high-priced brand. BUSINESS EXPANSION TO NEW CHANNELS (ON-PREMISE & SPECIALIZED) The individual presentations also showed great strength, penetrating the convenience channel, specialized stores (organic products, campervan stores), and even the HORECA channel (Consumption channel: Hotel, Restaurants, Bars, Coffee Shops, etc) with tailor-made presentations for Starbucks. Being the only Peanut butter brand in these stores, at least for a short period, especially with individual presentations, generated significant levels of brand awareness and trial levels, increasing market share and obtaining the consequent greater share of space and visibility in the channels. In May 2016, Justin's was sold to Hormel Foods for $286 million. CONCLUSION New or even not-so-new brands, but with low levels of market share and consequently irrelevant to retailers, have a major problem with visibility and ensuring availability in the market. Consumers and/or shoppers simply do not see them…and if they do not see them, they cannot be considered to be finally purchased. The development and design of brands and packaging continue to be a practically exclusive function of Consumer Marketing, where in many cases they demonstrate a good understanding of the consumer and his behavior, but little knowledge about the points of sale and the shoppers who visit them. Trade Marketing must play an important role in product innovation processes, bringing to the design table, opportunities beyond those of consumption (consumer). Deep knowledge of the characteristics of the channels, performance of own and competitive brands, measurement and control of the picture of success, the behavior of the shoppers in each of the channels and store formats, and a lot of common sense (such as what seems to be applied by Justin Gold) are essential to increase the results of our brands in the market. If you need help to improve attention and surprise and therefore visibility of the brand, write to us and we will talk about it. You may also be interested in learning about TMC's consulting or training products in this area. Please get in touch with us and we will contact you immediately. Written by Juan Manuel Domínguez R. CEO of TMC Commercial Consultants. If you are interested in learning about TMC's consulting or training products in this matter, write to us at contacto@tmcconsultores.com and we will immediately contact you. If we are not yet connected on LinkedIn, it will be a pleasure to have you in my network of contacts https://es.linkedin.com/in/juanmanueldominguezr

Most of the companies we work with usually define the target Shopper or Buyer, whom they intend to persuade to make a different decision, with demographic variables such as age, gender, social class and place of residence. In this video we explain the reason why it is necessary to include some additional variables that will help increase the effectiveness of the Persuasion argument and thereby increase sales by reducing your costs. If you have any questions about which variables to use to describe the person who will make the purchase decision, and those who will influence it, do not hesitate to contact us.

Perfect Store, Perfect Point of Sale, Success Photo, or any other of the many terms used by companies to define excellent in-store execution, is an extremely complex topic, where only a small number of organizations consistently achieve exceptional levels of performance. From the point of view of execution at the point of sale, there are two types or levels of implementation activities. The continuous work of the commercial field team (day-to-day) to ensure high levels of performance (availability, visibility, correct price, etc.) consistently, and that carried out for a particular commercial initiative (a launch, a consumer promotion, etc.). Your company must address these two different realities of execution in stores. Why do you need to create a Perfect Store? “70% of strategies fail due to poor execution” (John P. Kotter. Emeritus Professor of Leadership at Harvard Business School). There are countless studies of different companies where it is shown that the differences between an average execution and an exceptional one can mean differences in sales and market share between 10 and 20%. In a client of TMC Consultores from the food industry, who implemented a promotion to the Shopper for 6 weeks, totally different results were achieved concerning the level of execution. Execution considered between good and excellent managed to triple sales over poor and average executions. Even stores were obtained where the promotion was not executed. All well-developed efforts in this area tend to achieve very high returns on investment. There is no doubt that investing in Execution is a very good business. And how can you get the Perfect Store? In addition to the external factors (market, channels, customers, etc.) that must be carefully considered in the route-to-market model, there are a large number of internal requirements of a strategic, organizational, and technological nature, which need to be designed and implemented to be able to coordinate the plans and strategies of categories and brands to achieve a perfect implementation consistently. To achieve the Perfect Store we must work in the following 5 steps. Let's take a look at each one of them: Conclusions: Achieving the Perfect Store will require much more than a good presentation to the sales force and an induction to the support staff. It is a complex process that goes from the phases of analysis and understanding of Shoppers and Channels to the creation of a solid organization that can carry out all the necessary tasks. However, all the evidence points to the fact that there is no better business investment for a company than to strengthen the execution of its point-of-sale activities. Need help? Just dedicate 30 minutes of your time to explain your need and thus be able to propose a job offer.

The success of any trade marketing campaign relies on understanding shopper needs and behaviors, client objectives and requirements, and commercial goals of the brand and category. Many of the Executives or Commercial Directors with whom we talk about different projects have many doubts about the results they are obtaining in the different Trade Marketing initiatives. In recent years, the money invested in these areas by most consumer companies has skyrocketed, putting enormous pressure on marketing budgets and obviously on the executives responsible for them. In our evaluations of programs or activities carried out (both in consultancy cases and in training programs), we achieve a certain common denominator, in which those responsible for their development systematically ignore in the initial phases of analysis and design, one or more of the players involved: Any activity carried out at the Point of Sales inevitably involves three interrelated players: The Brand, The Client and The Buyer. A kind of commercial ménage à trois. Let's look at each one separately and then try to do the integration. The brand For the manufacturer, Brand considerations are often the starting point in the development of commercial programs or initiatives. What are we trying to solve? What is the opportunity or problem of the Brand? If the situation is associated with the consumer, what do we want to happen? Who knows us; let us try; to buy us back or not leave us? The answers to these questions begin to give us clarity and narrow the possible commercial actions focused on the stated objectives. The Consumer Disposition Funnel (CDF) that we present below is a very good tool for this. The Customer The key to effective Trade Marketing is a deep understanding of the customer and the specific channel they participate in. It is important to note that each client and channel has its own characteristics, needs, objectives, and barriers that limit its performance. The understanding of these factors allows us to develop activities that seek to somehow satisfy the client's situation. Some questions that help us understand the client's situation: What are you looking for; increase store traffic or increase the purchase receipt? Need to improve cash flow or profitability? Are you looking to set a certain role for the category? Which? Do you need to strengthen the "shopping experience" of the category? To the extent that our actions are in some way aligned with the client's requirements and expectations, to that same extent, the possibilities will increase, first of carrying them out and second of maximizing their success. The shopper Any in-store activity is or should be designed to change or reinforce buyer behavior in a given way. In other words, everything we do at the Point of Sale must be focused on the Shopper. Not considering it in the process of conceiving the initiative is almost insane (but believe me, very frequent). Some questions to make sure we don't forget about the Shopper: What are the main Shopper Insights related to the Category and/or Brand that we have? What is the Target Shopper we want to reach? How is your purchasing behavior in this Client and/or Channel? What buying mission are we looking to fulfill? What do we want the Target Shopper to do; buy us more, more frequently, or more expensive? This obviously must be aligned with the brand's relationship level (Consumer Disposition Funnel previously mentioned). What is their behavior towards the category and our brand? The Shopper Behavior Funnel (CDF) is an excellent tool for understanding the situation of the category or brand in the Client and/or Channel. Conclusions The Trade Marketing Investment Optimization goes through the conjunction of the three players that participate in the Point of Sales: Brand, Client, and Shopper. When we look at successful campaigns from different organizations and brands, the common denominator is a clear alignment between the needs and goals of the three key elements. It should be noted that these same organizations tend to invest more resources both to better understand the particular situations of each of the players and to measure the results. Thanks to this, they maximize the possibilities of carrying out commercial initiatives of any kind, possibly less but more effective and profitable. If you need any help calculating the historic effectiveness of your promotions or investment at retail, please let us know when is a good time to talk about it.

There is no doubt that in order to maintain and/or accelerate the growth of a retail business in the coming years, it will be necessary to implement a deep digital transformation, which goes far beyond the launch of an e-commerce store and increase the presence on networks. social. What until now many understood as Digital Transformation, has been insufficient. As proof of this, we continue to see a large number of traditional store networks that year after year close their physical operation, despite having invested a large amount of money in opening their e-commerce and advertising in digital media. The growing trend of digital retail continues a solid growth trend. Source: Census.gov Many large retail chains continue to close physical stores that fail to meet corporate goals or pay their debts. Some of them explain this trend by alluding to their corporate strategy of migrating their operation to the digital world, while others have simply not been able to retain their customers, who continue to decide to buy in other stores. Among the most representative in the USA in the last 2 years we have: American Eagle: will close up to 250 stores in Shopping Centers (Malls) until 2024. Banana Republic / GAP: will close 350 stores until 2023. CVS: closes about 300 stores per year Macy's: 10 stores closed in January 2022. Starbucks: closure of 400 stores. Victoria's Secret: closure of 50 stores. As a result, more and more people are losing their jobs. Concerned entrepreneurs have begun to understand that to survive and continue to grow, a Digital Transformation is not only necessary, but rather a Commercial Transformation. The most frequently asked questions from our RETAILERS clients: What category, brands and products should I sell per store? Where to locate them in the store? How much space to allocate per category, brand and product? How to organize the planogram or product display? What to communicate from the external side of the store? What to communicate by internal sector of the store? What kind of mechanics and promotional incentives should be used? How to guarantee an excellent omnichannel shopping experience? All of the above, considering three additional critical elements: Throughout the year there are important seasons and dates that affect customer demand and therefore, the execution in the store must allow space for adaptations by season. Some stores are located in geographical areas with different consumption habits and therefore, the execution guide must consider the characteristics of local demand. Manufacturing companies have their own category and brand strategies, which are sometimes not aligned with the Store's strategy. The good news is that there is a solution and it is never too late to implement it. To answer all of the above, we always recommend starting with the definition of the Shopper profile of each store: Get to know the Shopper of your physical store in detail as well as the online store knows them. By knowing in detail the Profile and the Purchase Mission of your client by store, you will be able to offer them an offer and a better shopping experience than the competition. Start analyzing your sales tickets from the last 12 months: Each customer purchase generates a ticket with valuable information about that individual's purchasing habits. The ticket contains data that can make a big difference in the total sales volume of the store and also in profitability: TIME: time analysis identifies the periods of the day and week in which the store is being visited by current customers. In the same way, it shows empty or inefficient periods, which must be reduced or eliminated. It is especially important for manufacturers who want to carry out "tasting" activities of their product in stores, so as not to spend money on days and hours when no one enters the store. FORMAT: A store located in a residential area does not sell the same product format as another located in an area with high pedestrian traffic in an office area, due to the Shopper's purchasing mission. If the objective is to consume a product immediately, you will look for it in an individual format, unlike when you go to the store to buy the product to consume it at home throughout the week. The tickets store this information and can be used to identify stores where it is necessary to expand the space of the larger formats and vice versa. QUANTITY: we know how many products of each product are purchased in the same visit, which allows us to design more convenient packaging offers for the Shopper or design more effective promotions with the number of units that they are normally willing to buy. CORRELATED: we also know the different products that are purchased in the same visit, and that will be used not only to optimize the secondary locations of key products in the store but also to design promotions that seek to increase the value of the ticket in the store. (For more details on the 4 most common ticket analyzes we carry out, we recommend reading our article). Our Machine Learning algorithm was designed to receive unlimited data, such as that of more than 1,000 stores in a network of convenience stores in Brazil, allowing complex analyzes to be carried out considering the sales of several years and a large number of establishments in just seconds. The algorithm identifies purchasing patterns, considering not only the mix of products per ticket, but also: The day of the week and hours of purchase, The number of purchased units of each product, The total value of the ticket, The form of payment (credit or debit card, cash, etc.) and Store characteristics: size, location, store model, etc. Analysis of external variables that can explain the purchase profiles by store. We know that umbrellas are sold in the rainy season and that in areas with a high nighttime crime rate, purchases are made in the morning. Nothing surprising, right? Well, those who use this information to prepare in advance, bill on average 1.5 times more than those who do not, because they avoid running out of product in peak periods of demand. The magic appears when our algorithm is able to determine a close correlation between variables external to the store and significant changes in purchasing patterns within it. This service will allow you to increase the quality of your demand estimates and adjust the execution guidelines of the stores: from the assortment, the prices, the space assigned by category, brand and product format, to the display or planogram of products in the store. When we put the algorithm to work with your data, it will allow you to identify external variables that could have a direct correlation with key categories for your business, such as: Vacations, holidays, and general seasonality. Weather forecast COVID 19 cases or pandemics Crime rate Urban developments: schools, buildings or residences, universities, parks, shops, etc. Vehicular or pedestrian traffic These changes in the demand for products in the store will require adjustments in the execution guides of the main categories such as the location and space allocated, the order of display of products in the planogram, their prices, and even store promotions. Example: if the sale of juices is concentrated in more than 70% in the morning hours, why not use that refrigerator space in other more demanded drinks in the afternoon or evening? This algorithm has managed to increase the sales of manufacturing companies in connected stores by at least 10% sustainably over a year. Imagine the impact that can have when totaling this increase in the main categories of your store. And why isn't everyone already doing it? The difficulty or barrier that many physical retailers present to grow more and take advantage of this tool is their ability to adjust the execution guide by store in an agile and frequent way. For this reason, our service always culminates with a concrete implementation plan based on the available resources. Implementation plan of the execution guide by store It's not just an execution limitation at the store level. It is necessary to develop the capabilities of the Retailer throughout the entire organization, starting from the central office, where corporate, category and brand strategies are designed and approved. Digital stores are better prepared to adjust their offer more quickly and frequently than physical stores: It is very easy to ensure that a digital store reduces the visibility of the juice category at night, and instead increases the space used by other beverage categories that are more in demand at that time. However, in order to change the dynamics of a physical store, the organization must be transformed from its heart, considering the following variables: If you need help throughout this process or have any questions, do not hesitate to contact us. It will be a pleasure to talk with you

We often hear comments about allegedly excessive prices charged at convenience stores. The word “Excessive” normally appears when the comparison is made against Supermarkets or Minimarkets. Regardless of the size of the price gap, this perception is now widespread and is confirmed by most studies of Shoppers, which increasingly limit large purchases to emergency occasions, leaving the store simply to cover small routine purchases. or impulse. In real life, the dynamics of the Convenience Store and Supermarket business, its function for the buyer and the products-formats purchased are totally different, which makes this comparison unfair and we end up comparing apples to apples. Now, some questions deserve to be answered: What are the main reasons that justify the high price of convenience? Is there a practical limit to the convenience price? It is often wrongly thought that high prices mean high profitability. We think that the owners of these stores are profiteers who must be swimming in a pool of money. In reality, while we cannot rule out a cultural element in the business practice of high pricing, to determine the size of a business's profitability we must carefully review trading margins and operating costs. After analyzing the operation of a selection of convenience stores in various cities in Brazil, we found some interesting things: On average, the marketing margin is around 40% Those stores that maintained a detailed control of expenses below 21% of turnover managed to be profitable. The average profitability of independent stores is 17% and 10% in the case of Franchises. In general, the main cost centers of a convenience store are: Staff: salaries, bonuses, and benefits of the entire team. Before looking for other efficiencies, we must first focus our energies on this item, which is almost double the sum of all the other costs of the store. Space rental: cost per m2 in central and easily accessible areas in cities. Electricity: actual consumption of refrigerators, lighting, ovens, air conditioning, etc. Other administrative costs: Cleaning, Accountant, Equipment rental, Administrative system, Maintenance, etc. So, what are the main reasons that justify a higher price in convenience stores? To begin with, you have to consider that these stores usually work extended hours and are often 24 hours a day. This convenience generates an increase in the costs of Personnel and Electricity since it is necessary to hire 3 shifts, lighting, higher consumption of air conditioning (essential in the summer), etc. Next, it must be taken into account that the number of SKUs sold in a convenience store (<1,500) is much lower than in a Mini-market (>3,000) and with that, the proportion of fixed costs that is allocated to each one is greater. The third variable is related to the cost of the space occupied by the store. Although it is true that Minimarkets are on average 2.5 times larger than Convenience stores, the latter are located in the most expensive points of the city, with very high visibility and access. This is reflected in the rental costs of m2, but also in the value of taxes. In convenience stores, more than 95% of the non-alcoholic beverage category is sold COLD (immediate consumption) and therefore the cost of electricity in refrigeration is higher than in Supermarkets and Minimarkets, where the proportion of beverage sales at climate temperature is higher. In these cases, the consumption of energy to cool the drink is the responsibility of the consumer. Most of the mass consumption companies practice the same price table for Convenience Stores, Minimarkets, and Supermarkets of up to 4 cash registers (in line with Nielsen), which means that the starting point is the same, but with costs of a major operation that are not recognized by the industries. Finally, there is a component of lack of strategy in the definition of marketing margins by product, in line with the strategic role in the portfolio of each store. In this way, not all products should always be more expensive than in Minimarkets to be used as Traffic Generators and, on the other hand, a higher price could be justified for those unique and differentiated products that would serve to generate Profitability. There is a popular saying that Comfort is Expensive, but there is a natural limit to the prices charged in the Convenience Channel, which is always set by the Buyer, who ultimately has all the decision-making power. Need help? Just dedicate an hour of your time to explain your need and thus be able to propose a job offer.

Trade Digital Marketing is fundamentally the technological use of the different digital platforms and tools. These allow us to adequately reach and know both the target shoppers and the different customers and channels, and this helps us speed up the Selling Out of our products in online and physical stores, through the appropriate omnichannel approach. Uffff how many things in four lines!!! Let's see this in detail. Competitive pressure is growing significantly for both manufacturers and retailers. To the brands, apart from the eternal pressure of margins and other commercial conditions demanded by retail, there is now a less loyal, more informed, and empowered consumer. The resurgence of private brands in many markets and the rise of new players: very agile entrepreneurs called “digitally native vertical brands” (DNVB), and as if that were not enough, international competitors with excess productive capacities and very low-cost products flooding new markets, among others. On the retail side, the situation does not look very flattering either. The different purchase options are significantly fragmenting the possibilities of acquiring the same product. Fragmentation essentially means that the Shopper is dividing their purchases into more channels and journeys (both physical and online). The entry of disruptive channels and ecosystems; Marketplaces, Dropshipping, E-commerce DTC (Direct to Consumer), and even Social Networks, become alternatives, but also serious threats for Retailers. Trade Digital Marketing to the rescue! Properly and agilely managing new technologies and integrating them with the new business models that are emerging will, to a great extent, be the only option to compete in the continuously changing scenarios. Digital transformation must go hand in hand with commercial transformation (agile structures, skills, processes, practices, etc.) so that commercial teams can carry out their management in this new reality. We are annoyed to see large technological investments wasted or underutilized due to the lack of human capacities, processes and current and standardized practices, among others. Let’s see what aspects the concept of Digital Trade Marketing includes: Knowledge of the Omnichannel Shopper The purchase becomes omnichannel in the sense that the different purchasing processes are integrated and combined through showrooming (see/evaluate in a physical store and buy online) and webrooming (see/evaluate online and buy in a physical store). The different segments of Shoppers in their different missions are rapidly learning and changing their purchasing methods and practices. This is just beginning, so knowing it will be an ongoing job, preferably collaborative between manufacturers and retailers. This collaboration allows us to increase the understanding of the new behaviors and purchase missions associated with each profile by category and brand. Good execution in a physical store does not bring you a millimeter closer to the digital one. Machine Learning and Artificial Intelligence in Digital Trade Marketing In order to be competitive and stay ahead of these changing buying behaviors and missions, maximizing the use of Machine Learning (ML) and Artificial Intelligence (AI) will be of paramount importance. Once again, collaborative strategies between Retailers and Manufacturers make it possible to enhance the available technology. Retailers and Manufacturers are seeing the applicability of Machine Learning (ML) to drive Shopper Experience (SX) improvements and operational efficiencies. For example, we now have data that allows us to predictively improve the shopping experience by ensuring that the product is always available when, where, and how the Shopper wants to buy it. Powerful machine learning algorithms and data analytics platforms detect patterns and correlations that we can leverage in price optimization, inventory management, customer satisfaction, dynamic planimetry, personalized offers, and more. Shopper and POS segmentation with Digital Trade Marketing One of the main uses of Machine Learning and Artificial Intelligence will be to implement Shopper segmentation models based on profile, purchasing habits, and online and physical behaviors. The fundamentals of Trade Marketing throughout its history have been based on its successful strategy of segmenting Shoppers and subsequently associating them with the predominant points of sale visited by them. Understanding, for example, how each segment is associated by purchasing mission, by point of sale (online and/or physical) will from now on be an important competitive advantage for those who know how to take advantage of technology. As we said before, the fragmentation of the purchase could be a threat or a possible advantage…it will depend on who knows how to take advantage of it or not. That is why we say that developing Trade Marketing Digital is an urgent task. Route to Market Digital…The new frontier to conquer The diversity, convenience, and speed with which buyers and consumers can purchase different products and services have grown exponentially. Thanks to the Internet. The development of different business models, leveraging the Internet and digital technologies, is rapidly changing how products and services are reaching shoppers and final consumers. Here are some interesting examples beyond Amazon, Alibaba, Mercado Libre, and Walmart: Vertiginous growth of shopping and delivery platforms and applications, such as Uber Eats or Glovo, are radically changing the way of buying and consuming certain categories and services. From the largest to the very small retailers can leverage these platforms. Ecosystems (specialized or general marketplaces) are allowing small businesses to leverage online platforms without having to carry out digital transformations to reach their customers. The Coral or Deca Store in Brazil or the Nearby Little Store of Grupo Modelo in Mexico are good examples of these advances. Super specialized marketplaces by industry or category and excellent shopping experiences. Net-A-Porter and Zalando have revolutionized the Online Fashion Market. But we can see them grow in almost any industry. Solo Artesanas (Beers) is one of my favorites in Spain. The breadth and depth of their assortment and offer make them very appealing to shoppers. Manufacturers creating or acquiring Marketplaces to increase market coverage and influence over the shopper and/or final consumer. All this leverage in the existing Retail. Pernod Ricard's DrinksCo (formerly Uvinum) is an excellent example of this model in Europe. New Online distributors, whether via Marketplace or Dropshipping (without inventory management or delivery) with digital platforms that allow small businesses to purchase products directly from the manufacturer and/or distributor. In LATAM, platforms like Chiper are making rapid progress with these models. Already more than 4 million traditional stores are operating on this platform. Recognized manufacturers establishing Direct to Consumer (DTC) models, where the physical store and the online store are combined, such as Nespresso or Apple. Additionally, hundreds of thousands of new ventures (the so-called vertical digital natives) are advancing rapidly with models combined between Marketplaces and DTC. Manufacturers, Distributors, and Retailers will have to understand and evaluate the different possibilities, available options, and challenges of each one in their Route to Market designs or rethinks. The rapid and changing evolution of new business models will require a continuous review of the RTM to maintain competitiveness. A challenge of Digital Trade Marketing. Omnichannel Shopper Experience (SX) and Excellent Execution. Today we get up and see on our tablet a product that interests us. We go on the subway and continue to inform ourselves about the product on our smartphone through the RRSS or the E-commerce of the brand, then we go to the physical store and experiment with the product. We return home at the end of the day and conclude the purchase in a Marketplace where we get the best prices. This is the Omnichannel Path to Purchase (OPP). The OPP, whether you are a Retailer or a Manufacturer, has to be continuously designed, managed, and optimized to ensure a smooth and exceptional execution and experience. The integration between Marketing, Trade Marketing, Sales, Operations, and Supply, supported by the available data (of which there is a lot), predictive analytics, and support technology platforms, will be the only way to ensure that the omnichannel buyer experiences the same sensations and possibilities at every step of the buying journey. New tools such as Augmented Reality, Virtual Reality, Beacons, Retail Apps, and Retargeting, among others, emerge and breakthrough to improve, on the one hand, the Experience (SX), and on the other, to influence the buyer in their different purchasing processes. All fundamental in the Management of Digital Trade Marketing. The New Business Organization The omnichannel conceptualization, design, and execution will require more than ever the proper integration of agile and technically and managerially enabled multifunctional teams. As we mentioned before, the Digital Transformation, so that they do not become large underutilized investments, indisputably goes through a previous or a parallel Commercial Transformation. Commercial structures, occupant profiles, skills, and operational and managerial processes incorporating best practices will have to be reviewed and updated in order to carry out the Digital Transformation. As we have mentioned in other articles, a deep and lasting Commercial Transformation can be a great challenge that will require a lot of leadership and courage from the company's management, but it could be the only way not only to generate business growth in the future but also to simple survival in some of the cases. Is your Sales Team ready to tackle the Digital World? If you think that your Marketing, Trade Marketing, or Sales team needs to strengthen any of the topics covered in this article, we recommend our Digital Trade Marketing course. On the other hand, if you think you need support in your Commercial and/or Digital Transformation processes, at TMC Comercial Consultants we have accompanied a large number of companies in Latin America to carry out their projects successfully. We have a portfolio of success stories that we are very proud of. Need help? Just write to us contacto@tmcconsultores.com

Why do we go into a Starbucks coffee shop and pay 4 euros for a coffee?, and Why is it that ten minutes later we are happy that we got a nice saving of 0.50 cents buying ½ kilo of private label coffee in our regular supermarket? We recently had a friend over for dinner and at some point in the evening he asked me why we had decided to buy that particular house. First I began to give him a whole series of very analytical and convincing arguments. What if the price, location, ideal size, etc. etc. However, at a certain point I stopped, paused and thinking about it for a few moments I remembered the moment when my wife and I first walked in and looked at the view; It was love at first sight, forgive the redundancy. I think the decision was made… But since that sounds so crazy, we ended up rationalizing it to ourselves and others. From a traditional Marketing perspective, I think that a disproportionate part of our efforts have focused on influencing purchase decisions through persuasion, using a series of arguments based on rational behavior: characteristics, advantages, comparisons, etc. price etc. This stems from the traditional economic view of human nature; people are rational, they seek to maximize utility, to save and for individuals to have relatively stable preferences. However, when we analyze them in the real world, we understand that human beings live in the here and now; their decisions are strongly influenced by the context – which vary in time and space – and are subject to emotions, social influences and prejudices. We observe Shoppers behaving inconsistently, irrationally, and with sudden changes in their preferences, despite what they might think or say. There is a consensus among neuro-scientific authorities (eg Goleman, Bechara, Damasio, etc.) that emotions help us learn and make decisions. The underlying reasoning is that in a world as complex as the one we live in, it is simply not possible to carry out a rational cost-benefit analysis alone; this would be too time consuming and tremendously tiring as there are too many variables to consider. In the book The Error of Descartes. Emotion, Reason and the Human Brain by Antonio R. Damasio begins to analyze in depth the relationship between reason and feelings, emotions and social behavior. Damasio demonstrates that it is extremely difficult to fully separate reason from emotion, making it impossible for a person incapable of feeling emotions, no matter how rational, to continue making the right decisions adapted to his environment. Damasio further argues that emotion, consciously and unconsciously, is necessary in all decisions and that emotional reactions to past situations can influence our current decisions, especially in the retail sector. Unlike the previous study, Donovan, Rossiter, Marcoolyn, and Nesdale (1994) measured emotions during the buying process and the effects on actual buying behavior. They found that a pleasant environment in the store was a predictor of extra time spent in the store, and consequently, higher spending. This study has had tremendous implications for retail, since it concluded without a doubt that the store environment can produce emotional states, which in general affect the time and money that consumers will spend. Here the concept of the Shopping Experience began to be generated. On the other hand, Daniel Kahneman (Thinking Fast and Slow) outlines a model that can help us understand the two types of thoughts that we all use in our purchasing processes. Type 1: automatic, unconscious, instinctive, implicit, quick, and driven by emotions and associations. It is typical in regular purchases. Type 2: reflective, conscious, reasoned and explicit, slow and sequential, deliberate and rule-based, and uses calculation to reach decisions. It is normally the type of behavior that we observe when we try to buy something new and different. Kahneman expresses that the two types work in parallel, but also insists that Type 2 is very hard work. We have a tendency to avoid it; for both evolutionary and practical reasons. The reality is that the decisions are in his opinion, guided by some rational considerations of Type 2 (those of high relevance) but taking important "mental shortcuts" of an automatic, unconscious and instinctive nature of Type 1: thus, it is a combination of the two types of thoughts. 60% of Purchases in brick & mortar stores have a high EMOTIONAL content. The world of online shopping is not very different either. In fact, 66% of the time Online shopping behaviors include an emotional component, according to a recent study by AOL Research. For example, people shop online because it makes them feel happy, makes them feel good about themselves, or helps them relax, escape, and unwind. Some, on the contrary, buy with fear of leaving home and getting COVID-19 by interacting with other people in physical stores or simply because they are used to buying online. 24% of online purchases are motivated by EGO: when buyers feel motivated to stay up-to-date with the latest news in the category and stand before their peers as an expert. These buyers often "invest in content" so that they can then share it with friends, family and social networks. This type of behavior feeds the ego and recognition as an authority on the subject. 14% of online purchases originate from FEAR: in the face of crises, the Shopper tends to stock up on food, drinks and products considered essential to feel safe in the face of a threat. This impact is much greater in the physical environment, since the Shopper is often not willing to wait for the delivery of the product online. 13% of everything purchased is associated with REWARDS: when Shoppers feel inspired and looking for a reward. The brain generates dopamine that triggers the sensation of pleasure during the purchase process. 11% of online purchases are made for the simple fact of being BORED: When shoppers search and buy to get out of their boredom and add a little excitement to their day. They buy impulsively, without spending planning. As we can see we are emotional animals and our decisions will always have a heart component without reason. Learning what your Target Shoppers feel when buying your category will give you a competitive advantage to explore differentiation against the competition. Need help? Just write to us contacto@tmcconsultores.com

Inadequate customer segmentation models are one of the main factors limiting the quality of the commercial strategy of manufacturers and retailers. This obviously affects the ability to formulate and develop analyzes with the quality and depth necessary to accelerate sales and increase business profitability. What is the difference between CLASSIFY and SEGMENT? From the commercial point of view, to classify is to group clients and their points of sale with common characteristics. This that seems so obvious, is not always done in the most successful way. Normally we classify based on certain variables such as type of business, sales volume, profitability, geographical characteristics, etc. At present, the incorporation of new variables such as shopper profile, typical purchase profile, and target fit, among others, are becoming relevant. An adequate classification allows us to later define store segments where we group several of the previously established classifications to carry out more focused commercial actions. For example, implementing a promotion in urban supermarkets with a predominantly medium and medium-high socio/economic profile, where in addition the main purchase mission of our target is replenishment, should establish a more specific and differentiated tactic, mechanics, and incentive. What is the utility of an adequate Customer Segmentation? The way we show our clients in the Consulting Processes is that the Classifications and subsequent Segmentations have different uses depending on the function or business process from which it is required. We can divide it into three major business functions: Sales and Distribution (Route to Market Strategy) Trade or Customer Marketing Shopper Marketing (this also applies to the retailer itself) Let's look at the opportunities for each of them: To Sales and Distribution functions (Route to Market Strategy) From the point of view of the Sales and Distribution function, an adequate Classification allows us to design or redesign our Route to Market model and formulate a more objective and quantifiable Service Strategy. In specific terms we can use the segmented classification for the following: Optimize the definition of clients for direct attention or through third parties. Optimize the definition of service models (self-sale, pre-sale, online, telephone) Adapt the commercial conditions. Optimize the frequency of visits by the sales force. Assign mandatory assortment. Track cost of serving and profitability. Additionally, Classification is the fundamental tool for organizational design or redesign – structures, number of sales representatives routes, job profiles, account teams – and to maintain control in manageable and comparable blocks of information through the different indicators. of management Recently, a new classification model allowed one of our clients to reorganize its entire sales force and reallocate its distributors, increasing both sales volumes and the organization's operating efficiencies and profitability. To the Trade Marketing function From the point of view of the Trade or Customer Marketing function, the classification of customers and their respective stores -establishing the strategic importance for the company, category and/or brand- is essential to carry out strategies aligned between our own commercial objectives with the requirements and needs of the trade. In specific terms we can use the classification, among other things, to: Trade investment optimization (exhibitions, merchandising, publications, trade promotions, assignment of merchandisers, etc.) Adequate implementation of the Pricing Strategy Focus on the Standards of Execution and Planometry. Definition of brand role and/or reference (SKU) Assignment of execution budgets In Store. Ideally, what we are looking for is to associate investment in the client with the strategic importance that the client has for one or more of our categories and brands. That is to say, the importance that it may have for a category or brand is different in relation to another…and this has to be reflected in our classification. To the Shopper Marketing role As I explained in my post on what Shopper Marketing is, the effectiveness and optimization of actions aimed at the Shopper begin with an adequate association of the store with the predominant profiles of the buyers. In other words, just as brands and even certain references of the same are directed to a specific group of consumers, in the same way, we must seek to associate the points of sale of our clients with the profiles and predominant purchase missions of said groups. This will help us in the following: Improve our ability to obtain Insights by segments. Optimize and focus actions: Activity targeting. Optimize promotional investment. Allocate resources more objectively. Improve action planning with accounts (segmented sales points). The work that we have developed in classification and segmentation of the point of sale has taught us that a correct classification helps to improve the evaluation processes of all commercial actions since it allows us to compare results between different segments and understand and learn what works best for each one of them. From my experience, the classifications associated with Shopper Marketing are the least developed despite their enormous strategic value. However, I believe that as its benefits are better known, as we have just confirmed with a large chain of C-Stores in Brazil, we will see a radical change in this matter. Companies that have understood it, both suppliers and retailers segmenting their own stores, are achieving clear competitive advantages. IN CONCLUSION There are many uses, both operational and strategic, that we can give to a good classification of points of sale. To develop a solid model, the participation of all the aforementioned functions and a broad commercial vision will be required to ensure the incorporation of the best classification practices, the appropriate research methodology, and, above all, a commercial team enabled with the skills and necessary tools to maximize results. Need help? Just dedicate 30 minutes of your time to explain your need and thus be able to propose a job offer.