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1、,CATEGORY MANAGEMENT,CATEGORY MANAGEMENT,Session Objectives:,Define Category Management (CM)Describe Category Management as a Business ProcessDiscuss Critical Issues Related to Successfully Developing a Category Management System,Category Management Process,Category Management Issues,Define Category
2、 Management,Session Objectives:Define Cate,Definition,Bringing Better Value to the Consumer is thePrimary Focus of Category Management.,“A Retailer-Supplier process of managing categories as Strategic Business Units, producing improved sales and profit results by focusing on satisfying consumer need
3、s and delivering consumer value.”,Source: ECR Best Practices Report,DefinitionBringing Better Valu,Category Management has expanding into durable goods and services.,Is Category Management just for the grocer?Durable GoodsAuto Industry - GM Pontiac & FordService IndustryPhone ServiceFinancial Servic
4、es/Banks,Definition,Category Management has expand,The ECR System,Timely, accurate, paperless information flow,Supplier,Distributor,RetailStore,ConsumerHousehold,Smooth, continual product flow matched to consumption,Definition,The ECR SystemTimely, accurate,Efficient Promotion,Efficient Store Assort
5、ment,Definition,Category Management is at the at the core of ECR. CM provides a process & framework for collaboration.,Efficient New Product Development,Efficient Replenishment,CATEGORYMANAGEMENT,Efficient PromotionEfficient S,Category Management as a Business Process is comprised of interrelated co
6、mponents both within and outside of the organization.,What is Category Management?,Definition,InformationTechnology,Strategy&Business Process,Scorecard,CollaborativeRelationships,OrganizationCapabilities,Core,Enablers,Enablers,Category Management as a Busin,CATEGORY MANAGEMENT: HOW IS IT DIFFERENT?,
7、Category/Brand/SKU Management under one Decision MakerConsumer-Focused StrategiesData-based Decision MakingProactive Business PlanningCollaborative Work ProcessManage Category As Business UnitFocused on Category ROI - NOT Sales or Gross Margin,Definition,CATEGORY MANAGEMENT: HOW IS,SKILLS NEEDED TO
8、BUILD BUSINESS THROUGH CATEGORY MANAGEMENT,Data analysis and technical masteryShopper and consumer understandingStrategy developmentFinancial and logistics expertiseInnovationTotal Systems Focus,Definition,SKILLS NEEDED TO BUILD BUSINES,Definition,Why is it beneficial for Retailers and Manufacturers
9、 to Invest in Category Management?,Helps Retailers - Define customer needs Determine strategic issues Enhance category and store profits,DefinitionWhy is it beneficial,Definition,Why is it beneficial for Retailers and Manufacturers to Invest in Category Management?,Helps Retailers - Define customer
10、needs Determine strategic issues Enhance category and store profitsHelps Manufacturers - Position themselves as category captains for retailers Become an indispensable resource for the retailer Enhance brand profits,DefinitionWhy is it beneficial,Road Map,Category Management as a Business Process,Ca
11、tegory Management Issues,Define Category Management,Road MapCategory Management as,Process,Category Management as a Business Process.,Category Definition,Category Role,Category Assessment,Category Scorecard,Category Strategies,Category Tactics,Plan Implementation,Category Review,Source: The Partneri
12、ng Group,ProcessCategory Management as,What is a Category?A distinct, manageable group of products/services that CONSUMERS perceive to be interrelated and/or substitutable in satisfying their need(s).,Process,Category Definition - critical in determining the products that make up the category and in
13、 establishing the segmentation strategy.,What is a Category?ProcessCate,What is a Category?A distinct, manageable group of products/services that CONSUMERS perceive to be interrelated and/or substitutable in satisfying their need(s).,Process,Category Definition - critical in determining the products
14、 that make up the category and in establishing the segmentation strategy.,How does defining a category help?Produces better retailer/manufacturer alignment with the consumerCreates better manufacturer-retailer alignmentGives new perspectives on how to view a product and/or category,What is a Categor
15、y?ProcessCate,Process,Juices & drinks,Shelf stable,Refrigerated,Frozen,Glass/Plastic,Aseptic,Ready to Serve,Concentrate,Category Sub-Category Segment Sub-Segment,Defining a Category by Usage Segment,Lemon Juice Segmentation:,Source: Borden, Inc.,ProcessJuices & drinksShelf st,Process,Category Role (
16、or purpose) defines how the consumer views the category.,Possible Category Roles:,Destination Convenience Routine Seasonal/Occasional,ProcessCategory Role (or purpo,Process,Category Assessment,Category Assessment involves conducting a complete analysis of the category by investigating its sub-catego
17、ries, user-segments, brands, and SKUs. Such an analysis must be based on current consumer, distributor, supplier and market information.,ProcessCategory AssessmentCate,Process,One example might be identifying the gap between the current sales and the potential sales of a category.,Source: Borden, In
18、c.,ProcessOne example might be id,Process,Key Questions in Conducting a Category Assessment,Who is my target customer? How important is this category to that customer? What are the category trends?volume, share, profits? What are the key product segments? What are the least and most important SKUs?,
19、ProcessKey Questions in Conduc,Process,Key Questions in Conducting a Category Assessment (continued),How well is shelf space aligned to SKU movement? How do consumers view brands?Brand names versus store brands When they make a purchase, How large is it?What else do they buy? How does the categorys
20、pricing compare to the rest of the store?,ProcessKey Questions in Conduc,Process,Key Questions in Conducting a Category Assessment (continued),How does the categorys pricing compare to the market? What percentage of volume is soldon promotion? What is the impact of featuring anddisplay? What brands
21、and sizes “define” and/or build the category?,ProcessKey Questions in Conduc,Process,The Category Scorecard measures and monitors the progress and performance of the category business plan. Targets or hurdle rates must be clearly stated.,Revenue,Market Share,Consumption (Equiv. Volume),Out-of-stocks
22、,Profit,Target Consumer Share,ROI,ProcessThe Category Scorecard,Process,Category Strategies define the marketing, product supply, and in store service required to meet targets or hurdle rates.,Transaction Efficiency/Traffic Builder Shopping/Information Entertainment,Types of strategies:,Source: Robe
23、rt C. Blattberg, 1996,ProcessCategory Strategies def,Process,Category Tactics are the actions taken to implement the category strategies.,Transaction efficiency/Traffic Builder Low price/convenience Category shop-ability,Source: Robert C. Blattberg, 1996,ProcessCategory Tactics are th,Process,Catego
24、ry Tactics are the actions taken to implement the category strategies.,Transaction efficiency/Traffic Builder Low price/convenience Category shop-ability Shopping/information Unique offerings/high service Easy access to product information,Source: Robert C. Blattberg, 1996,ProcessCategory Tactics ar
25、e th,Process,Category Tactics are the actions taken to implement the category strategies.,Transaction efficiency/Traffic Builder Low price/convenience Category shop-ability Shopping/information Unique offerings/high service Easy access to product information Entertainment Stimulation/excitement Crea
26、tive marketing/broad assortment Changing variety of products,Source: Robert C. Blattberg, 1996,ProcessCategory Tactics are th,Process,Category management plans are of little value unless they receive high quality implementation.,Key Components of Plan Implementation:,Common Language Buy-in at ALL le
27、vels Clear Approval Process Clear Assignment of Responsibilities Implementation Schedule Predetermined Indicators of Success,ProcessCategory management pla,Process,Category Review is the ongoing measurement of the progress of the plan and modification where necessary.,Stages of Category Review:,Oppo
28、rtunity and discovery process Input, analysis & implementation Measurement, adjustment & learning,ProcessCategory Review is the,CATEGORY MANAGEMENT,Reviewing the Category,Targeting Consumers,Planning Merchandising,Implementing Strategy,Evaluating Results,Process,CATEGORY MANAGEMENTReviewing t,Road M
29、ap,Category Management Process,Category Management Issues,Category Management Definition,Road MapCategory Management Pr,Category Management is a source of competitive advantage.,If it is so easy to do and everyone is doing it, where is the advantage?Category Management is about strategic choices. Th
30、e quality of the implementation and execution will determine the degree of competitive advantage gained.,Issues,Category Management is a sourc,Category Management is a dynamic, evolving practice.,Is there one approach? no.Fundamental principles and processes.Implementation depends upon the capabilit
31、ies and current practices of the organizations.Todays practices are tomorrows foundations for improvement.,Issues,Category Management is a dynam,Successful Category Management helps to define a partnership.,Ability and commitment to develop the categoryA vision of the potential of the categoryAdequa
32、te information technology capability andsharing informationMultifunctional team support capabilitiesBuy-in from top managementClearly defines the role of the manufacturer with regard to Category ManagementTrust,Issues,Successful Category Managemen,How to develop a successful Category Management rela
33、tionship.,Develop a common language for Category ManagementTranslate the goals of the partnership into a usable and measurable plan the utilizes fact-based CM decisions and practices.Educate everyone involved, buyers and suppliers, on the approach being taken for growing the category.Develop fact-ba
34、sed presentations representing the entire category.Develop a system of regular reports and monitoring for catching category trends and opportunities. IRI 1995,Issues,How to develop a successful C,Common Obstacles to Successful Category Management.,Mistaken belief that the organization is already doi
35、ng Category Management.Lack of management commitment.Lack of timely and easy to use information for category assessment.Inadequate knowledge or misinformation about the consumer characteristics/demand for the category.Managerial lack of training or abilities.Non-standard product or pricing for the c
36、ategory.,Issues,Common Obstacles to Successful,The Manufacturer should keep their Category Management analysis honest.,Manufacturer often does the initial analysis.Financial resourcesPotential benefitInitial indicators may bode poorly for the manufacturers product - but must accept losses.Solution:
37、Get Marketing and others involved.Talk with your distributor and buy some time.Fix the product. If the analysis is right, something needs to change to address the shortcomings perceived by the consumers.,Issues,The Manufacturer should keep t,CATEGORY MANAGEMENTQuestions?,CATEGORY MANAGEMENTQuestions,
