A product assortment strategy also commonly referred to as product range strategy is the smart planning and selection of a range of products provided by retailers to match its target customers' unique wants and likes. It is based on rational and analysis-based product selection, considering factors like the time of year, demographics, and market trends. A good product assortment strategy aims to maximize customer satisfaction, increase sales, and form long-lasting customer relationships in the highly competitive market of 2024.

Product assortment examples

Let's consider an example of an e-commerce clothing retailer that is implementing a product assortment strategy in winter and is trying to boost its clothing sales. They might do this by offering a mix of warm ite­ms like jackets, sweate­rs, and accessories. Apart from that, they might tailor this mix to various age groups. This enables them to simultaneously attract teenagers, adults, and se­nior customers. The strategy may also include introducing trending or seasonal items.

One more example is an in-store e­lectronics shop that follows a deep assortme­nt approach. They concentrate on a spe­cialized item category such as top-tie­r audio gear. They offer a wide range of brands, models, and extras to cater to this target customer group. While their product spe­ctrum is narrow, they offer an extensive se­lection in that class which gives them a significant competitive edge.

10 tips for a successful product assortment strategy

So how to create an effective product assortment strategy? Since supply and demand determine the market, those who design their product assortment according to customer wishes and requirements can achieve higher profits. The challenge here is to precisely identify customer needs. These depend on the season, gender, age, generation of the target group, and other circumstances. Taking deviations, changes, and transformations into account and adapting the product assortment accordingly is part of a good product assortment strategy.

If customers are not satisfied, but enthusiastic about your product assortment, your sales will also increase. This is because a convincing product assortment allows you to reach your target group more quickly and turn one-time customers into regular customers. The following tips will help you to develop a successful product assortment strategy:

Tip 1. Opt for either a deep or a broad assortment

The product assortment can be expanded in many ways to reach new target groups. The product assortment can be extended by two dimensions - depth and breadth.

The assortment width refers to the number of product groups. The more product groups you offer, the broader your assortment and the more customer groups you can appeal to. An example of this is a department store with a wide variety of product groups in its assortment, from food and health products to sportswear, cosmetics, and perfumes.

The depth of the product assortment, on the other hand, refers to the number of products within a product group. A deep assortment includes retail with several product variants, such as a flower store that sells different types of flowers (roses, tulips, sunflowers). The more products and product variants on offer, the more diverse and varied the product assortment.

An increasing expansion of the product assortment to include niche products can also be observed. This is characterized by the demand of rather special target groups that are not fully satisfied by the current assortment. Niche products are the perfect way to position yourself uniquely in a (rather small) market. There are always interesting niches to be found in which a successful product assortment strategy can be realized. Niche products include, for example, trend products (such as cassettes, records, Polaroid photos) or collector's items (comics, coins, magazines).

Tip 2. Sometimes less is more

More is more - this motto does not always prove to be profitable, especially when it comes to product assortment policy. A large variety initially positively affects consumers, but the decision-making process and comparing several products can be overwhelming. This is because human perception is structured so that it requires more attention with a large selection and tends to function selectively. As a result, a large variety of products causes additional strain and consequently stress. A huge assortment of goods delays the purchase decision and can even lead to the customer abandoning the purchase.

Tip 3. assortment strategy should reflect the positioning of the company

Which target group is your store aimed at? Do you know the wishes, needs, and problems of this customer group? The product assortment should clearly show what the company stands for. Emphasizing the quality, strengths, and characteristics of a product or service and friendly customer service will please the target group. Being one step ahead of the competition and not wanting to avoid the competition and going your own way in a targeted and planned manner - means a winning position.

Tip 4. Consider the length of stay in the product assortment

Depending on the sector, the product assortment is subject to constant change and is therefore constantly dynamic. For example, the composition of the product assortment can change depending on the seasons. A temporary assortment is sold seasonally or is offered based on a favorable purchase. Such a product assortment is therefore only available for a fixed period and is limited in quantity.

Ideally, a company should ensure that customers can also rely on a good, permanent assortment all year round.

Tip 5. Sell exclusive/own products

The company's own or exclusive products can help it to win the price war, as third-party goods can always be compared with different suppliers, which is not always the case with own brands. Selling at a lower price leads to lower margins and the price can still be undercut by competitors. Companies that focus on exclusive products are outside the competition and can set their own prices.

Tip 6. Maximize upselling

Companies want to encourage customers to make further purchases and thus turn them into regular customers. Build up the assortment with products that are always in demand and encourage repeat purchases. A simple purchasing process, good customer service, and fast delivery times ensure a positive customer experience. If a customer is satisfied with their order, there is a good chance that they will buy from your store again. Recommend products to your customers that complement their selection (e.g. through cross/up-selling). Consumer goods that customers need again and again should not be missing from the assortment. These can also be recommended and lead to additional or follow-up purchases.

Tip 7. Sell products with higher margins

Thousands of items with a low margin should be sold to thousands of customers in order to generate a noticeable profit. Sometimes you can generate a higher profit with expensive products that offer high margins, even if the products are sold to a much smaller group of customers. A successful combination of both types of products can also lead to attractive sales and profits.

Tip 8. Streamlining the product assortment

Customers love variety. This is why it is important to continuously analyze and streamline the product assortment. The assortment requires regular maintenance because the demand behavior of the target group also changes.

The aim of streamlining the product assortment is to fill it with new products and keep pace with the interests and needs of the target group. You start with a market analysis and should not miss out on current trends.

Consider implementing Product Information Management (PIM) systems to ensure order and consistency in your assortment. PIM provides centralized, accurate, and consistent product data management. It enables quick integration of new products, streamlining updates, and enriching information to align with market trends. Retailers rely on PIM to reduce errors and improve the overall shopping experience for customers.

Tip 9. Consider the product life cycle

Every product reaches the end of its product life cycle, i.e. the point at which the product is no longer in demand. The product life cycle should therefore also be taken into account when designing the product assortment strategy. In this way, you can avoid high residual quantities of products that are no longer in demand.

Tip 10. Think about increasing profits rather than sales

Most companies aim to increase turnover and assume that this will automatically lead to an increase in profits. Profit should be planned - this means not only taking turnover into account but also precisely planning expenditure. Only the profit indicates whether the chosen product assortment strategy is as successful as hoped.

Conclusion

Buying products online is easy, fast, and practical. Many companies are striving to improve the shopping experience and reach new target groups and markets. High quality, friendly service, and a wide assortment of products are the main important criteria!

For a successful product assortment strategy, it is important to recognize customer needs in good time and offer a suitable assortment at a comparatively low price. The product life cycle of a product should always be taken into account to maximize profits, not sales. Products that are no longer popular should be removed from the assortment in good time.

A well-thought-out concept and an appealing product assortment that meets customer requirements are the key factors for a successful result!