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1、,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 Management,Definitio
2、n,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 needs and delivering consumer value.”,Source:ECR Best Pra
3、ctices Report,Category Management has expanding into durable goods and services.,Is Category Management just for the grocer?Durable GoodsAuto Industry-GM Pontiac&FordService IndustryPhone ServiceFinancial Services/Banks,Definition,The ECR System,Timely,accurate,paperless information flow,Supplier,Di
4、stributor,RetailStore,ConsumerHousehold,Smooth,continual product flow matched to consumption,Definition,Efficient Promotion,Efficient Store Assortment,Definition,Category Management is at the at the core of ECR.CM provides a process&framework for collaboration.,Efficient New Product Development,Effi
5、cient Replenishment,CATEGORYMANAGEMENT,Category Management as a Business Process is comprised of interrelated components both within and outside of the organization.,What is Category Management?,Definition,InformationTechnology,Strategy&Business Process,Scorecard,CollaborativeRelationships,Organizat
6、ionCapabilities,Core,Enablers,Enablers,CATEGORY MANAGEMENT:HOW IS IT DIFFERENT?,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
7、Sales or Gross Margin,Definition,SKILLS NEEDED TO BUILD BUSINESS THROUGH CATEGORY MANAGEMENT,Data analysis and technical masteryShopper and consumer understandingStrategy developmentFinancial and logistics expertiseInnovationTotal Systems Focus,Definition,Definition,Why is it beneficial for Retailer
8、s and Manufacturers to Invest in Category Management?,Helps Retailers-Define customer needs Determine strategic issues Enhance category and store profits,Definition,Why is it beneficial for Retailers and Manufacturers to Invest in Category Management?,Helps Retailers-Define customer needs Determine
9、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,Road Map,Category Management as a Business Process,Category Management Issues,Define Category Manageme
10、nt,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 Partnering Group,What is a Category?A distinct,manageable group of products/services that
11、 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 establishing the segmentation strategy.,What is a Category?A distinct,manageable group of products/services that
12、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 establishing the segmentation strategy.,How does defining a category help?Produces better retailer/manufacturer al
13、ignment with the consumerCreates better manufacturer-retailer alignmentGives new perspectives on how to view a product and/or category,Process,Juices&drinks,Shelf stable,Refrigerated,Frozen,Glass/Plastic,Aseptic,Ready to Serve,Concentrate,Category Sub-Category Segment Sub-Segment,Defining a Category
14、 by Usage Segment,Lemon Juice Segmentation:,Source:Borden,Inc.,Process,Category Role(or purpose)defines how the consumer views the category.,Possible Category Roles:,Destination Convenience Routine Seasonal/Occasional,Process,Category Assessment,Category Assessment involves conducting a complete ana
15、lysis of the category by investigating its sub-categories,user-segments,brands,and SKUs.Such an analysis must be based on current consumer,distributor,supplier and market information.,Process,One example might be identifying the gap between the current sales and the potential sales of a category.,So
16、urce:Borden,Inc.,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?,Process,Key Questions i
17、n 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 pricing compare to the rest of the store?,Process,Key Ques
18、tions 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 and sizes“define”and/or build the category?,Process,The Category Scorecard measures and monit
19、ors 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,Profit,Target Consumer Share,ROI,Process,Category Strategies define the marketing,product supply,and in store service required t
20、o meet targets or hurdle rates.,Transaction Efficiency/Traffic Builder Shopping/Information Entertainment,Types of strategies:,Source:Robert C.Blattberg,1996,Process,Category Tactics are the actions taken to implement the category strategies.,Transaction efficiency/Traffic Builder Low price/convenie
21、nce Category shop-ability,Source:Robert C.Blattberg,1996,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 i
22、nformation,Source:Robert C.Blattberg,1996,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 Ente
23、rtainment Stimulation/excitement Creative marketing/broad assortment Changing variety of products,Source:Robert C.Blattberg,1996,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
24、 levels Clear Approval Process Clear Assignment of Responsibilities Implementation Schedule Predetermined Indicators of Success,Process,Category Review is the ongoing measurement of the progress of the plan and modification where necessary.,Stages of Category Review:,Opportunity and discovery proces
25、s Input,analysis&implementation Measurement,adjustment&learning,CATEGORY MANAGEMENT,Reviewing the Category,Targeting Consumers,Planning Merchandising,Implementing Strategy,Evaluating Results,Process,Road Map,Category Management Process,Category Management Issues,Category Management Definition,Catego
26、ry 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.The quality of the implementation and execution will determine the degree of competitive advantage gained.,Issues,Category Managem
27、ent is a dynamic,evolving practice.,Is there one approach?no.Fundamental principles and processes.Implementation depends upon the capabilities and current practices of the organizations.Todays practices are tomorrows foundations for improvement.,Issues,Successful Category Management helps to define
28、a partnership.,Ability and commitment to develop the categoryA vision of the potential of the categoryAdequate information technology capability andsharing informationMultifunctional team support capabilitiesBuy-in from top managementClearly defines the role of the manufacturer with regard to Catego
29、ry ManagementTrust,Issues,How to develop a successful Category Management relationship.,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 su
30、ppliers,on the approach being taken for growing the category.Develop fact-based presentations representing the entire category.Develop a system of regular reports and monitoring for catching category trends and opportunities.IRI 1995,Issues,Common Obstacles to Successful Category Management.,Mistake
31、n belief that the organization is already doing 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 abilit
32、ies.Non-standard product or pricing for the category.,Issues,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: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,CATEGORY MANAGEMENTQuestions?,
