Hot beverages ranging & segmentation

The project followed four key stages:

1. Understand who shops the category
2. Understand how they shop the category
3. Implement changes
4. Review the impact

The starting point was an in-depth understanding of six hot beverage customer types: premium taste, economy drinkers, sweet-toothed convenience, brand traditionalists, healthy herbal drinkers and, last but not least, tea and coffee connoisseurs. Analysis of Nectar data – plus a market research questionnaire – gave us a detailed idea of each shopper type. Which one are you?

Part of the objective of the ranging work was to reduce range by around 20% to make hot beverages easier to shop and to create space for more distinctive products to grow the category. Here’s what we found: 

• Using the shopper segmentation, we were able to overlay and identify the customer appeal at SKU level.
• Customer decision hierarchies were built to understand how the aisle was currently being shopped, as well as adjacency opportunities.
• Sales and customer performance data allowed the optimisation of SKUs in the decision. We were able to identify the ‘tail’ of SKUs that underperform and don’t have any unique attributes.
• Our ‘unique customer coverage’ methodology helped identify a minimum credible range, while protecting SKUs with high uniqueness.