Today I’m going to share a valuable business lesson with you about diversifying your product ranges, and rather than giving you a general lesson I’m going to give you a specific one based on actual events I learned about recently.
The industry is the vinyl flooring industry and relates to a sudden necessary change for retailers stocking Amtico flooring, and the need to have a back up range of products like, in this case:
Firstly from a business owners perspective you can fully understand that if there is one brand that leads the market, and you stock it and sell lots of it (in fact suppose it makes up a large percentage of your business), then there is a natural urge to focus your efforts, branding, stock, and sales efforts at pushing that brand.
Often what happens is that retailers or businesses become cheer leaders for a specific brand for exactly this reason – it is easy to sell because it is what the consumers want, it make good margins, and it has a good stock turnover.
It’s easy in this situation to end up forgetting about competing brands, or maybe even not to bother stocking them at all, after all why spend lots more time and effort (which all costs money) to build up sales of a less popular brand, when that same time and effort could reap much more in sales and margins if you applied it to the popular brand instead.
Its human nature to take the easiest route, and often that is the right course of action to take.
But in business as in life you can never be 100% sure what’s around the corner, and what happens if something totally unexpected happens and suddenly you can’t sell your main brand that you’ve spent years building your business around?
Maybe the consumers still want to buy the brand but the manufacturer has gone bust, or has had a fire at their manufacturing plant, or they can’t get hold of the raw materials to make the product.
On the other hand what if there’s a scandal or concern that stops the consumers from wanting to buy it – think of the problems that Hasbro and Character Group had when it was reported that some of the toys they had manufactured in China could contain dangerous chemicals or be coated in lead based paint.
You just never know what might happen
In this instance what happened was that Amtico seem to have had a change of corporate policy that coincided with a new state of the art sales platform that they wanted stores to buy (at a huge cost).
Suddenly stores could no longer own domains that had the word “Amtico” in them, nor could they promote on their websites ranges of Amtico flooring unless they held quite substantial stocks (which again would cost substantial amounts of money), plus a range of other requirements that basically stopped many retailers from selling the Amtico brand, or at least drastically reduced their capability to sell it.
Clearly this would have been impossible to predict, and the same thing could happen in any industry whether you’re selling shoes or spaceships, you need to diversify for your own protection just in case some unforeseen event occurs.
In this case many retailers have put all of their eggs into the Amtico basket because it is the best known brand and sells the easiest, and have not built up a solid following for other brands for this reason.
And as you can clearly see when something does suddenly happen to halt the sales of your main brand you have a gaping big hole in your sales figures, and need to do something quick to rectify it.
However, as we all know it takes a lot of time and a lot of effort (not to mention costs) to build up that customer base, or to educate your existing customer base about alternative products, and so leaving it until a situation has become desperate leaves you in a very precarious position.
It is therefore essential that you always look to find alternative products that offer the customer a truly alternative option, whether that be price, quality, style, design, application, or whatever other unique selling point another product may have.
In the flooring world for example there is a great product that is in most retailers’ opinion every bit as good as Amtico, and that brand is Karndean.
Karndean flooring is a very similar product made from the same kinds of material, and comes in a range of diverse styles meaning that you could find something for a customer no matter what kind of look they are trying to achieve.
The product is also in many cases quite substantially cheaper than Amtico, but at the same time is of comparable or even maybe in some cases superior quality based on the durability of the product.
[The durability or how hard wearing any given range of vinyl flooring is, is the key measure of quality often defined by the “wear layer” or the thickness of the top coating of vinyl applied over the pattern to stop the design from wearing over time].
Giving Customers More Choice
Is it then not just a good idea to promote these kinds of alternate brands, but a strange decision not to if these products offer the consumer:
- More choice
- Better prices
- Comparable or superior quality
For the consumer it ticks all of their boxes and becomes something of a “no brainer” to at least consider alternative products like Karndean flooring, or another brand that is similarly high in quality and low in price like Polyflor.
Maybe Karndean and Polyflor are not so well known as the other brand (they have for a long time both concentrated their product at commercial applications before moving into domestic flooring), but that does not mean that it is not a good alternative.
Often the best known brand of any given product will carry a premium price just because of its standing in the marketplace, but the highest price does not always equate to the highest quality, and in this case that is definitely the case.
But although this is the situation in terms of these different brands and the benefits they offer to the consumer, they have not been as widely promoted as the best known brand and now those retailers who have had their ability to sell the main brand seriously hindered need to rapidly build up their sales numbers by selling brands which, although of great quality and price, their customers know nothing about.
Not diversifying your product ranges enough and putting all of your eggs into the main brands basket can leave you with a big hole in your sales figures and a major headache in terms of trying to plug it, so you should start to offer your customers more choice now rather than when something forces you to do it.
Because the problem then is that everything that you do is a race against time, and you could end up shutting the stable door after the horse has well and truly bolted.