Range Rationalisation: An Attempt to Promote Drinks
Tesco has approximately 170 brands, and they are not equally profitable and important for the company, so range rationalization is necessary to determine what should be discounted/receive an additional push. Generally, the issue is that the drinks are not evenly distributed in stores, which affects both the top-performing items and the least profitable ones. Another glaring problem lies in some products’ absence of appeal: none of the families buy them, and their popularity among all age groups combined is non-existent. Even being enticing for at least one lifestyle would justify a drink’s production due to being a niche, but they do not appear to draw any groups.
Those issues can be resolved by expanding the product scope in stores, which may help address the second point, too, and working towards making zero-appeal drinks marketable to a certain demographic. As those are challenging tasks, discontinuity through rationalization might be an appropriate alternative.
Besides the general evaluation, it is essential to consider the best- and worst-performing groups individually, starting with the former. The top three drinks (based on such factors as sales value, repeat rate, and category share) are Old Speckled Henpale, Greene King Abbot, and McEwans Champion. Although Hobgoblin is more profitable than the last product, its repeat rate is worse, which makes its potential less realized. The first two brands could benefit from more stores selling them, although it is probably complicated by their package in tens. Perhaps, a smaller one should be implemented while doubling the number of outlets to analyze whether it will have a positive effect on sales.
Old Speckled Henpale does not appear to interest young adults and families much (38/40), which can be improved by modern forms of promotion. It also struggles with Roshni and the Wicks (38/52), although the latter seems to prefer the mini version, which justifies changing the package. Greene King Abbot shares the same problem (33/32 and 33/46), while McEwans needs more young family appeal (46), which also can be achieved through online marketing, collaboration with influencers, and special offers.
The bottom three drinks, following the same criteria, appear to be Foxes Rock Irish Craft Stout, Yardsman Lager, and St Austell West Country Abbey Ale (due to its extremely low repeat rate). The first product performs badly among pensioners (61) and does not have a traditional appeal (42), and other groups, despite the high values, cannot advance it. The issue could be attributed to the limited number of stores and the competition with other items. Attempting to market the drink to the older demographics may be wasteful as they do not have nostalgia associated with Foxes Rock Irish Craft Stout, so discontinuing the product appears beneficial.
Yardsman Lager is also unpopular among pensioners (45), despite having some traditional value (123); the problem could be pricing-related (the most expensive in the bottom group characterized and the only one not experiencing a decrease). Thus, equalizing the prices may be a potential resolution. Meanwhile, St Austell is the most affordable drink, but it lacks young family appeal (45) and has the worst repeat rate, which can theoretically be tackled with the same strategy as the leading products.
The general recommendation is to attempt to promote drinks while using online marketing and making them youth-friendly. If the initiative fails to yield results, discontinuing the products from the bottom and changing the packaging for the top-sellers might be the appropriate solution. Most brands not belonging to either group should be considered routine according to the Kraljic matrix due to low risk and product impact, although some may become bottleneck once the worst-performing items are discontinued.