Category Management

Category MGMT2

A collaborative continuous process between manufacturers and retailers to manage a product category at retail. The purpose is to optimize shopper satisfaction

category

A distinct manageable group of products that consumers perceive to be related and/or substitutable in meeting a consumer need.

Business Process

A structured, measured set of activities designed to produce a specific result for both the trading partners and the consumer. Output -- a formal category plan

Step 8 - Category Review

An appraisal of category performance Reviews should consider: Topline overview outlining the health of the overall category (look at scorecard) Assortment - is the original category definition still correct? Benchmark each item against the market Promotion assessment - evaluate its effectiveness Pricing assessment - compare to competitors in each channel Consumer behaviors and trends Scorecard - measure results against goals

Trend 3 of Category MGMT

Big Data and insight generation

Supplier

Category Consultant or Category Captain/Partner

The Business Process

Category Definition Category Role Category Assortment Scorecard Category Strategies Category tactics Plan Implementation

Step 1: Category Definition Consider

Category Definitions must start with the shopper and their need states Category Definitions will be impacted by the retailer's strategy, channels, and target market It is preferable to manage the category as the consumer perceives it, but not always possible.

Retailer

Category Manager

What does the supplier bring to the table

Category expertise Consumer knowledge Future outlook on category Analytical researches

categories to review less frequently

Convenience Seasonal

What does the retailer bring to the table

Current definition of category Who Is their target market What is feasible in their store

Step 1: Category Definition Why do that

Defines the strategic business unit Allows retailer/supplier alignment

Responsibilities of Retailer

Develop Category plans Achieve category based objectives

Category Role Process

Development of companywide category roles Assignment of category roles to each category Allocation of resources consistent with the category role

Trend 1 of Category MGMT

Growing retailer power

Components of Information Systems

Internal Reports System Marketing Intelligence System Decision Support System Marketing Research System

Disadvantages of Traditional Structure

No-one owns the category management process. No clear cut responsibility or accountability for category performance. Slow response to consumer based opportunities.

Major Categories to review regularly

Profit drivers Traffic drivers

Organizational Capability

Refers to the development of category management as a core competency through the creation of an appropriate organizational structure, roles/responsibilities, skill/knowledge development and reward systems

Enabling components of Category MGMT

Scorecard Trading Partner Relationships Organization Capabilities Information Technology

Step 1: Category Definition

Selecting the SKU's that will comprise the category's merchandise assortment and variety.

Core Components of Category MGMT

Strategy Businesses Process

Information Systems

The data and systems that support the fact-based decisions of category management and improve the business process productivity. The integrated decision support systems that extract, summarize and deliver the data from the operational systems to decision makers throughout the category management process.

Trend 2 of category mgmt

The growing importance of marketing to the shopper

Strategy

The strategic choice to organize, lead and manage the business from a foundation of category strategic business units. Category management becomes the overall framework to guide decision making in the business process.

Trading Partner Relationships

The synergy that is created when trading partners collaborate to maximize their unique resources and perspectives for a common objective - enhancing business results by delivering superior consumer value.

Step 1: Category Definition to answer...

What is it's structure/hierarchy? How does the consumer shop the category? What are the consumer's needs?

Step 4 - Category Scorecard

What? A balanced set of category measures and objectives. (Sales, profit, GMROI, Customer satisfaction, complaints) Why? A method of tracking results & progress A basis of rewards/recognition How? Set criteria Develop targets for each Seek upper-level approval Use consistent scorecard measures across company

Step 5 - Category Strategies

What? A total system "roadmap" that moves the category from the current state to the desired state. The Partnering Group Why? Provides a framework for tactic development Questions to answer... How will the category be marketed? Which strategies will best support the category role?

Step 2 -- Category Role

What? The Strategic Role a category will play within a retailer's portfolio and business. Why? Set a level of expectation for the consumer Establish basis for resource allocation Questions to answer... How important is the category to the retailer? How important is the category to the consumer?

Step 7 - Plan Implementation

What? The process of securing management approval and executing the activities called for in the Category Plan Why? Ensures follow through by all parties How? Planning calendar

Step 3 - Category Assessment

What? Review and analysis of all internal and external data, including key inputs from supplier. Important perspectives include: retailer, consumer, marketplace, and supplier Assessment should include a SWOT analysis Why? Determine gaps between current performance & desired category role Identify opportunities for improvement & strategy development Ensure category plans address the highest priority opportunity

Step 6 - Category Tactics

What? Tactics are used to implement chosen strategies. -Product Assortment, pricing, promotion, shelf presentation, and supply chain Why? -Ensure day-to-day activities will deliver the category role, strategies and scorecard -Ensure objective decision making How? -Tactics must support the category's strategy and role

Role of Supplier

charged with meeting company, category and brand strategies and objectives through the co-development of category business plans with the category manager

Problems in implementation:

communication Organizational structure Misalignment of incentives

Role of Retailer

ownership of the category and responsibility for the coordination of business process activities that flow across traditional work boundaries

Marketing Information System (MIS)

people, equipment, and procedures which gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to decision makers

Category MGMT

process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value

two types of incremental consumer buying opportunities

to attract new consumers... ...to incrementally increase purchases by existing consumers.