A big brand can limit the outflow of users by setting up a planogram barrier

A big brand always has to take into account the risk of losing some of its share to smaller planogram neighbours. In such a situation, the brand becomes the defender of its volume. The producer can defend the sales volume of a big brand by placing in its immediate vicinity their own smaller brands, which separate it from the competition.

CONSEQUENCES FOR BUSINESS

When the range of a brand increases, the defence of its capital, in the form of a huge user base, should be carefully considered. The objective of the producer should be to maintain current users’ concentration on the particular brand. With a proper planogram policy it is possible to minimise the outflow and control the change in flows towards other brands in one’s own portfolio, for instance when they are characterised by higher sales margins.

CASE STUDY

Planogram barriers are very visible on the beer market. For instance, one of the major brands on the Polish beer market, Tyskie Gronie, placed a new brand/sub-brand Tyskie Klasyczne next to the main format. Tyskie Klasyczne effectively separates Tyskie Gronie from the competition and constitutes a planogram barrier which limits the customer outflow to the competition. The competitor who previously sat on the shelf right next to Tyskie Gronie could count on a substantial source of customers, while placing next to Tyskie Klasyczne, a brand with a much lower range, is no longer such an attractive positioning. Tyskie Gronie must of course take into account the possibility of the customer outflow, but in the situation where it occurs in a controlled manner, the Tyskie Klasyczne brand can gain new users.

BUSINESS RESULTS

Setting up a planogram barrier can reduce the loss of the share even by 40%.

TIPS BEFORE APPLICATION:

  • Identify the brand in the portfolio which can serve as a planogram barrier. The best choice is a brand with a lower rotation, but higher level of preference than competing products which it is supposed to separate.