Assortment decisions, ATL and BTL
Assortment management is the main decision module for managing the products characteristics. We are to use a couple of concepts here, and understanding their meaning is critical to proceed:
- brand, is a mark/signage of a product/group of products/business, and in the game it's represented by a name, which is to be associated by the shoppers and customers with very specific values offered. The brand strength is built by sustained reliability and quality, but it is supported by marketing investments. Each company in the game has a name, which is also its default brand. For business customers (other players) you build the brand strength by consequence, stability, and predictability in the business cooperation. To build the awareness and desired image among shoppers and consumers you'd use marketing investment. Technically each business has a default brand named the same as the business, and might manufacture (or order for manufacturing) products marked with this brand. Moreover, every business (apart from independent retailers) might define new brand or brands for their products by giving a name.
- product from the manufacturer's point of view is characterized by a couple of parameters:
- brand = what common name or signage we use for it
- subbrand = what variant/flavor/taste we gave to the product
- subcategory = what we'd like to manufacture and sell, and what production cost profile is allocated to it
- unit volume = how big the single product is
- quality rate = how premium or superior in quality the product is. The quality rate influences the reception of the product among consumers, so the higher the quality, the higher intent to buy a product., especially among the demographic groups with higher disposable income. At the same time this quantity affects strongly the manufacturing cost - the base production cost is multiplied by the quality rate. Manufacturers for their products do not specify this quantity directly. Instead, they define a range of product characteristics influencing its quality (and cost). Only for own brand products od distributors and retailers the parameter is defined explicitly by the brand owner.
- selling price = base selling price, common to all customers
- own product, or requested by different business. Every manufacturer might define its own brand and launch production of new product (provided it has the right production line for the subcategory). Other business forms usually focus on trading the products, but they can also create their own brand, and send request to manufacturers to produce products signed with their brand, and in agreement with their specification, and after the selling/buying price is agreed.
The main panel for managing the production and products characteristics contains a couple of elements:
- Add new brand: allows defining new brand in the portfolio. At this stage it is simply giving the new brand a name.
- Add new product: for each of the brand from the portfolio, and each subcategory (for which you have production line) you might launch new product by specifying the parameters according to the above description. Adding new product requires spending 100000 Ŋ for R&D (one-time cost). The product once defined and launched will be included in the reports as of the next period.
- Managing own products. All the products currently manufactured are listed in the table visible in the Assortment Management page. You can vary the products parameters as price and quality rate (pencil symbol on the right side of the assortment table). You can also pause production (if there is no enough capacity and we'd like to temporarily pause, or even terminate given product manufacturing).
- Resuming the product manufacturing. If you used the previously described option of switching off a product manufacturing, under the main table you'll see additional selection list with products you do not manufacture, but you might resume their manufacturing. This operation does not generate costs as you used the same recipe as you paid for previously. After resuming the products would have the same parameters as when you switched it off.
- Manufacturing products of brand of other businesses (own brands). The products you manufacture on request (if you agreed to do so) are listed at the bottom of the main assortment table. You cannot edit their parameters, as they are part of the contract you signed with the ordering business. Before you stop production you need to signal this to the brand owner first, and after three periods you would be able to stop production. Below the main table you can see the list of requests for own brand products manufacturing you've received from other businesses. The own brand product ordering cycle is explained in more details in the Interactions section.
ATL (Above The Line) is a group of marketing expenses. These are the "brand image" expenses, that are to improve brand awareness and reception, and increase the intent to buy by the shoppers. Usually TV/radio/outdoor and internet as to most common media for ATL communication.
In this module you invest in this king of communication. As a producer you should primarily focus on investing in brand-specific ATL, as they influence the shoppers' decisions. PR or general price communication marketing is not really influencing your business, and they matter more to the higher distribution levels.
BTL (Below The Line) - marketing activities at the point of sales, addressed directly to shoppers, and intended to influence their shopping decisions there. In practice Point of Sales materials (POSM) are used to improve product visibility and appeal at store.
In the game the BTL investment is to increase the shelf space occupied by the products in the market. It is to be the case for distributors/retailers who decided to use automatic shelf space allocation. If they decided to manually allocate the investment does not have to make any difference. However, since it is a fee that directly feeds the customer profit, it's good to use it in negotiating the trade terms, including the guaranteed shelf space.