Because product selection is complex and risky, there are many product selection strategies circulating in the industry, most of which are summaries of merchants’ practical experience and have certain reference value. It is precisely because product selection strategies are very rich that we need to summarize them.
(I) Product Selection Strategy Matrix
The competition between suppliers and downstream customers (as well as past and future selves) is called vertical competition. According to this definition method, product selection strategies that mainly consider horizontal competition are collectively referred to as horizontal product selection strategies, and product selection strategies that mainly consider vertical competition are collectively referred to as vertical product selection strategies. There are two “movement” directions for product selection: expansion and contraction (which are consistent with the “movement” direction of market strategy). In this way, we can derive the “product selection strategy matrix”. In theory, all product selection strategies can be included in the product selection strategy matrix. Therefore, we can guide product selection practice by analyzing the general rules of the four product selection strategies.
1. Horizontal expansion product selection strategy
Product selection inspiration may come from a certain hot product. At this time, you can adopt a horizontal expansion product selection strategy, and find the peer competitive products, potential competitive products and main products of potential competitors of the corresponding store through search and other methods, and get a product collection, which becomes a product group that can be deeply investigated and studied. The role of this strategy is to expand the product pool available for horizontal comparison and selection, which can of course be categories or varieties under subcategories. Using this strategy, the “follow-selling” strategy can be expanded, and you can follow the hot products or the substitutes of the hot products. For the hot products of this store, you can actively supplement substitutes through the horizontal expansion product selection strategy, enrich the product categories of this store, and meet the segmented needs of similar customers (horizontal product selection builds horizontal competition barriers); you can also supplement different suppliers of the same product, thereby optimizing the contribution of suppliers’ horizontal product selection to vertical competition).
2. Vertical expansion product selection strategy
Product selection inspiration may also come from segmented demand feedback or complaints from loyal customers. For example, a golf training simulator originally only collects the left and right angles of the ball when it flies out, but customer feedback also requires the collection of up and down angles. At this time, the seller will reflect on how to improve the product, or find new suppliers according to the needs, so as to supplement and upgrade the product (vertical selection enhances vertical competitiveness), and at the same time enhance horizontal competitiveness (vertical selection contributes to horizontal competition).
3. Horizontal contraction selection strategy
After horizontal expansion selection, the horizontal contraction selection strategy is generally applied immediately, that is, by horizontally comparing multiple similar products in the product pool, find the “most favorite” product. Many people have questioned this step, saying why it is necessary to select the “most favorite” product instead of a batch of products? Because after the selection, a trial sale test will be carried out, and a batch of products is indeed needed. However, it is still recommended to select one by one. After selecting one, the product pool can be updated (such as adding several similar products), and then another one can be selected until the selection needs are met. The specific reasons are not analyzed, and readers are requested to experience it in practice. The horizontal contraction selection strategy is mainly to select the “best” one by one, the best product and the best supplier. This strategy is conducive to finding product competitiveness (selling points).
4. Vertical contraction product selection strategy
The concept of winning by category has been deeply rooted in people’s minds. Many merchants will continue to use vertical expansion product selection strategies to supplement products in the process of operating stores. The categories are indeed richer, but some products are not very effective, so they need to shrink appropriately. Contraction is also a process of market segmentation, which is conducive to improving the competitiveness of stores in the segmented market. The industry usually advocates the use of horizontal product selection strategies, but it is recommended that merchants should pay full attention to vertical contraction product selection strategies, that is, on the basis of understanding their own capabilities, they must first use their energy on in-depth analysis and segmentation of customer needs, and secondly on in-depth analysis of suppliers.
Obviously, the above product selection strategies do not take into account all scenarios, but are intended to illustrate the concept. Neither horizontal product selection nor vertical product selection is more important, but in fierce competition, we often forget that our opponent is actually ourselves, so we emphasize the importance of vertical product selection. In practice, the four product selection strategies often need to be applied alternately, and when to use which strategy is subject to the basic principles of product selection.