Consumer Electronics Retailer Product Bundles

A large nationwide consumer electronics retailer wants to increase its Average Order Value (AOV) by including more relevant products and services in a single sale. It's looking for product bundling opportunities, i.e. what products should be bundled and purchased together?

 

This is a project that can occupy marketing, strategy, and finance department resources for months. A product marketing employee is tasked with examining their product catalog, sales information and business intelligence applications. But accessing information inside these databases can be so complex and time intensive that they need the help of IT data analysts to extract the right data. Running reports, analyzing the data, extracting more information and running more reports can take multiple resources weeks to complete.

Next they need to come to internal consensus and manually define new product up-sells and bundles. As more decision makers are included in the discussions they bring their own pet-project ideas to the table, causing internal disagreement. This usually results in analysts pulling more data from their business applications to support (or to disprove) the multitude of ideas floating around the room. Does this sound familiar yet? After spending a month and many business meetings arguing with other teams over how to bundle their products, they've finally reached the most acceptable compromise and they're ready to update their product catalogs.

Updating product catalogs typically requires finding IT resources that are familiar enough with the system to enter the new product codes. It also requires alerting all affected commerce and partner systems to the new product codes. Although this is not always an enormous bottleneck, it could become one depending on how the retailer is integrated with their partners' systems and what their engineering cycle is. Either way, in all likelihood it will take a few more weeks before the new products are launched.

When everything is done, the project has taken more than a full fiscal quarter. The retailer is a month behind their competitors and their bundled products and prices are out of date. They need to start the process all over again, which is probably for the best because chances are the market dynamics have already changed anyway. Someone mentioned including their partners' products in the bundles, but that was dropped because the process would be too difficult.

 

With Attivio AIE, there is little integration effort and the engineers complete the interfacing of their applications and data sources in little time. Unlike other systems they were looking at, they didn't need to rip and replace existing technologies, which was great on their budget. They connect AIE to their internal CRM, product catalog, images, emails, word documents, videos, and html pages. Externally, they connect AIE to relevant news feeds, blogs, weather, stock tickers, press releases, and other web sources. AIE can now tell them exactly when Panasonic made an announcement at CES and the sentiment of the news desks and bloggers. It can compare the data to their TV sales both before and after the event. The result is a new piece of intelligent information that they receive without needing to know all the various sources of supporting data.

The marketing, strategy, and finance teams are then asked to log in to AIE's default search portal and query the system with market dynamics questions that determine how products sell together (e.g. "How many HDTVs and HDTV cables were sold together?", "How did Panasonic's new TV accessory announcement at CES affect sales of my Panasonic TVs?") For some of the queries they ask AIE to repeat at regular intervals and email them with the results each time, and for others they specify boundaries and tell AIE to alert them through email when the boundaries are crossed.

During the course of the project, AIE learns that Panasonic's new TV accessory received positive press coverage and the retailer's TV sales were up slightly after the announcement, but only in the Northeast region. In response, AIE recommends a new bundle that comprises Panasonic TVs and the new accessory for the Northeast region only. AIE notifies the affected business systems and begins taking action to process the decision immediately. It updates their billing system to reflect a new price code, it alerts their Northeast distribution stores of a new marketing campaign, it places an order for the new Panasonic accessories from the manufacturer, and it updates their ecommerce site to show the new product bundle.

Their marketing, strategy, and finance teams are kept in the loop throughout the entire process so they're aware of what actions are taking place. At any time they can approve or stop an automatic action so they're always in control of the process. AIE doesn't take over the teams' core functions, but it does help them massively streamline their work while helping their company become more competitive and get to market more quickly.