The New Catalog Product Process
by Donald R. Libey

In a drawer somewhere is the manuscript of a yet-to-be-published book I wrote a few years ago on the art and science of product development and management for catalogers. As I remember, it wasn't until chapter nine or ten that I got to the discussion of the actual product features, benefits and attributes. The process of managing product selection for a new catalog is one that demands a great deal of preliminary thought and decisions before the actual products are chosen. Unfortunately, most senior managers skip right to the excitement of the new products themselves and bypass all the stuff that is really important which, in most cases, assures that the catalog launch is fatal.

Where do you start?

I like to start at the end. When conceiving a new catalog or multi-channel on-line or retail venture, I try to envision the successful company twenty years in the future. Perhaps I see several spin-off catalogs or a vastly expanded definition of the market and product space the catalog dominates. As an example, if I were to create a catalog selling ice-cream making supplies to ice cream shops, I would ultimately have a collection of catalogs selling a variety of food preparation supplies to the ice cream, sno-cone, popcorn, nut, pizza, deep-fried Snicker, cotton candy and corn-dog and hot dog markets. In fact, I would see a catalog that dominated the state/county fair, festivals and concession stands fast-food preparation supplies business. If you looked at the history of the Huber restaurant supply catalog, as an example, it probably started as a kitchen knife supplier or something like that. When I see the end, I then have some idea of what kind of questions to ask at the beginning.

Positioning

How is the business to be positioned? The word position has no specificity. To pin-down position we need to talk about specific components of catalog and product positioning.

Product Economic Position. Will the catalog be the high price leader, the low price leader, a discounter, a mid-price follower, a sale price promoter, or any of another five choices, or so? Product economic position generally depends on competition and an assessment of the probable barrier to entry. Where no competition exists, a choice is made between staking out the high price position or the low price position. The high price position is safe if the barrier to entry is high, and it is an opportunistic strategy; the low price position acts as a barrier to entry when the barrier to entry is low, and is a protective strategy.

Product economic position also includes margin. High margin product positioning is often found with value-added printed products, even those that are commodities. Low margin product positioning is often found with non-valued-added, distribution products, such as computer peripherals and office furniture. A further element of economic positioning involves the ratio of internally manufactured products to externally sourced products. Similarly, economic positioning includes the ratio of inventoried products to drop shipped products and the resultant inventory turns versus inventory value ratio. For example, a low margin product costing $450 and selling for $600 may require a quantity of 100 in stock and do only two turns a year. This may not be the best use of capital for the overall product strategy and the product should be drop shipped.

Inherent in product economic positioning is universe. Generally, a low-price, commodity product has a larger universe of buyers than a high-price, specialized product. The top-line revenue expectation must be in synch with the potential universe size for the product and the potential response rate of that universe. If you are selling $2,500 Italian leather desk sets, your universe is fairly small. If, on the other hand, you are selling $8.00 t-shirts that say "Jerry Springer Rocks" the drooling, mindless universe of lobotomized TV zombies is quite sufficient to assure revenue projections, provided you can limit the sales copy to one syllable words.

Product Choice Position. Will the products in the new catalog have a high number of choices or a limited number? Again, a high-price product strategy often offers fewer choices because of inventory cost. The $2,500 Italian leather desk set may only come in black or burgundy, not in a dozen color choices. The t-shirt, however, will likely have eight color choices and twelve sizes. The number of choices, in part, dictates space requirements and, therefore, sales projections. As you can see, the ideal product strategy fits a large universe, high demand, high price, high margin, low choice product line. Kind of like health insurance and prescription drugs.

Product Style Position. If the products have a style "look" to them, what will be the dominant product style you wish to present. For example, if you are selling home office furniture and accessories, will the style be retro, art deco, modern, contemporary, traditional or European? All products have a style quotient, even restaurant supplies. The continuity of product presentation demands some thought be given to the overall stylistic components. A great example of style consideration in product development and design is found in the Levenger catalog where continuity exists from product to product and the product selection is never reduced to a noisy hodge-podge of dissonant styles.

Product Gender Position. What gender appeal will exist with the products? If your catalog has 80 percent female buyers, the products should replicate that gender positioning. Gender, in all likelihood, determines a great deal of the positioning of style. The most difficult catalogs to mix relative to product are those that are evenly split between male and female buyers. In business-to-business products, female buyers will accept products that are utilitarian and more male in style, but males will seldom accept utilitarian, female styled products. This, of course, points up the underlying female capacity for intelligence and getting the job done without the debilitating male concern for ego. Not only are products influenced by gender, but the overall design elements surrounding the product presentation tend to be very different, as well. If you think of the Northern Tool and Equipment catalog, there is a decided male design bent; however, the Anthony's medical uniform catalog is decidedly female in its design elements.

Product Quality Position. Will the products be positioned at the apex of quality or at quality nether regions? If one is selling commodity products versus exclusive, proprietary products, this may be a relevant positioning component of the product strategy. Here, the economic and choice positions have to be in synch with the quality position, otherwise the customer will immediately see through the inconsistencies. Other factors influence quality position, such as gross margins, service, exclusivity, and product life. If you sell a top-of-the-line quality Schlessinger briefcase, you will only sell one in that customer's lifetime, but if you sell the low-end import knock-off, you might sell the customer several provided you can retain that customer with lower quality product. In other words: Price becomes the offset.

Product Attribute Position. In some instances, products have a characteristic attribute, such as "easy to use," "compact," "goes anywhere," or "repels salsa drips." If, in fact, your products are known for their unique attributes, you have an obligation to continue those attributes that your customers have come to expect. One product attribute for Ultimate Office is leading-edge file storage design. To introduce filing products that are of a mundane, commodity design would not be in keeping with the attribute niche Ultimate Office has carved out for their products. When it comes to filing, there is only one catalog to go to: Ultimate Office. While other attributes may be important, the ethos of most product lines will have a primary attribute thread that runs completely through the line(s). It is well to honor that attribute and to keep the thread in hand. From time to time, there are opportunities to further exploit the primary product attribute position. For example, proprietary tools designed and sold by Northern Tool and Equipment feature repair and maintenance part kits so that they can be serviced on the job site without downtime. This extends the "high reliability/low downtime" product attribute that customers of Northern have learned to rely upon when they purchase products. Attribute positioning goes far beyond merchandising. In the mind of the customer-in addition to price, quality, choice, and other elements-attributes are the characteristics they expect the product to possess. Few business to business catalogers ever fully understand the concept of product attributes and fewer still ever optimize it in their overall product merchandising and positioning tactics and strategies.

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