category mgmt-session 11 part 1
TRANSCRIPT
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 1/71
CATEGORY
MANAGEMENTPROCESS
Session : 11
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 2/71
The Category Management business process is a structured,measured set of activities designed to develop and implement awritten category business plan.
It is a specific ordering of work activities across time and place, witha beginning, an end, and clearly identified inputs and outputs. As
such, it is a structure for action.
The category management business process adopts theconsumer's point of view.
Using this structure, supplier and distributor collaborate to producevalue for consumers in the most efficient and effective manner.
Clearly defined processes are needed for ensuring that consumer,supplier, and distributor needs are satisfied.
The Category ManagementBusiness Process
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 3/71
The Category ManagementBusiness Process
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 4/71
The Category ManagementBusiness Process
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 5/71
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 6/71
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 7/71
Best Practices Category Management consists of six components.
Two of these are considered essential without which CategoryManagement cannot be started and are therefore called corecomponents.
The other four are considered enabling, since without these CategoryManagement can be started but not institutionalized on an on-going basis.
The two core components are strategy and business process.
The four enabling components are scorecard, organization capabilities,information technology, and collaborative relationships between tradingpartners.
Components of CategoryManagement
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 8/71
Components of CategoryManagement
•While these six components apply to both distributors and suppliers, thereare areas of overlap and differentiation.
•Some components-strategy, scorecard, information technology andorganization capabilities-have major differences in their developmentand execution between the different participants in the value chain.
•On the other hand, business process and collaborative relationships havesignificant overlap, since Category Management requires the alignment
of business processes in the distributor/supplier organizations.
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 9/71
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 10/71
Category Development Index (CDI) – The level of developmentof a category for a specific region, market or retailer, comparedwith total development (e.g., TTL U.S.). Similarly, a BrandDevelopment Index compares a brand's development within aregion or market to its total development.
CDI = % of Category $ Sales in Market "X" * 100% of TTL U.S. Category $ Sales
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 11/71
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 12/71
CONSUMER
CENTRICCATEGORYMANAGEMENT
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 13/71
•Segmenting and targeting consumers to get the right products in
front of the right shoppers in the right stores
• Clustering stores based on the sales potential of brands or
Categories
• Demand gapping, or determining the difference between existing
sales and potential sales in a category
• Developing a marketing plan for each significant customer group
The Process
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 14/71
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 15/71
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 16/71
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 17/71
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 18/71
Clustering – A geodemographic (lifestyle/lifestage) approach togrouping stores based on similarities of trading area profiles, or"clusters.“
Clustering reveals shopper composition for each store and
percent of each type of shopper living in a store's trading area,and it may be useful to align retail strategies and operations.
Clustering is also known as "Micromarketing."
Clustering
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 19/71
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 20/71
A Case inPoint
A C i P i t
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 21/71
A Case in Point
A C i P i t
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 22/71
A Case in Point
A C i P i t
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 23/71
A Case in Point
A Case in Point
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 24/71
A Case in Point
A Case in Point
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 25/71
A Case in Point
A Case in Point
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 26/71
A Case in Point
A Case in Point
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 27/71
A Case in Point
A Case in Point
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 28/71
A Case in Point
A Case in Point
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 29/71
Tips and Tricks – Assessment
Assessment is “Business Question Driven”
● Why do Consumers buy the category?
● Who buys the category?
● When do Consumers buy the category?
● How do Consumers buy the category?
● Where do Consumers buy the category?
A Case in Point
A Case in Point
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 30/71
A Case in Point
A Case in Point
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 31/71
A Case in Point
A Case in Point
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 32/71
Scorecarding enables progress
against goals to be measured for
each of the targeted consumer
Groups.
Implementation stage adds another
dimension of keeping track of
which strategies are to be applied
at which stores.
A Case in Point
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 33/71
Role of the
Playersin
Category
Management
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 34/71
Role of the Retailer
•The retailer mustcommunicatecorporate goalsand categorystrategy to thevendor partners.
Sets Strategy
•What version ofcategory
managementshould befollowed?
• How many stepsto the process?
DeterminesProcess
•POS data,
•financial data,
•shopper data gathered
from their own loyalty cardprograms.
•Household panels run bymarketing informationcompanies like ACNielsen.
•In some cases, themanufacturer plays thelead role in gathering data.
•Mining this data yieldssignificant insights aboutconsumers and their
buying preferences.
Gathers Data
Ensures RetailCompliance
• What does the datareveal?
• Does it match up withthe retailer’s goal inthe marketplace? Ifnot, what happens?
UltimateDecisionMaker
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 35/71
Role of the Manufacturer
•The manufacturerneeds to understandwhat the retailer is
trying to accomplishand what strategy isused to reach thatobjective.
Understandthe retailer’s
strategy
•Programs andpromotions thatbenefit only the brandand not the categoryand store shouldn’t beconsidered.
• The rule is: categoryfirst and brand second
Support retailstrategy
•To determine if theirstrategy meshes withthat of the retailer toconflict and abreakdown of thetrading partnership
Share theirown strategy
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 36/71
The Concept ofCategoryCaptain
Category Captain
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 37/71
When category management first started in the early 1990s, a retailer
would have four or five manufacturers in the same category rushing in
with their programs. Each presentation had a different context, rationale,
and recommendation.
The retailer rightly wondered, “Who’s right and who’s wrong?”.
Retailers eventually selected one manufacturer as a trusted partner
that could be relied on. It was a company they believed had the
resources, wherewithal, and commitment to grow the category.
That company came to be called the category captain.
The other three or four manufacturers competing in the same category
were excluded from the process.
They became category advisors or validators. They cross-checked
the category captain’s recommendation.
If the captain was doing a good job, the advisor merely provided a little
twist or added something that perhaps was missed.
Category Captain
Category Captain
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 38/71
Category Captain
Category Captain
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 39/71
The choice of this trusted partner should take into account the following:
•Ab il i ty to think strategical ly•Abi l i ty to be un biased
•Ab il i ty to access relevant inform at ion
To be effective in meeting the needs of retail category managers,
the top characteristics of an effective supplier are:
• Accuracy,•Timeliness of the information,
•Responsiveness, and
•Creativity
The best suppliers have an intense focus on supporting the initiatives of their
own company while working within the retailer’s strategic framework
to drive sales and profit dollars in the stores.
Suppliers must bring a category perspective and not solely a brand outlook.
Category Captain
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 40/71
ROLE
OFA CATEGORY
WITHINA
RETAILER’S
TOTAL
ASSORTMENT
Role of Category within a
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 41/71
Retailer’s Assortment
Role of Category within a
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 42/71
RETAIL BRAND REINFORCER New Categories
High fashion and symbolic categories
High technology product categoriesIncludes strong (retailer or manufacturer) brands
Create excitement and theatre in store
CASH-FLOW CONTRIBUTOR Established categories
Non-symbolic categories
Consistent value provision
PROFIT GENERATOR Growing categories
Fashion categoriesSymbolic categories
High profit margins
SERVICE PROVIDER Stagnant or declining categories
Staple product categories
Well established market leading brands
Competitive with other category providers - low profit margins
DESTINATION Growing or well established category
Contains leading brands
Deep and wide assortment
Considered the best retail offer by target customer
Retailer’s Assortment
Role of Category within ai
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 43/71
Consumer-based category roles are defined according to:
•the percentage of households that buy the category and
•the frequency with which it is purchased
Consumer motivation is likely to be quite different depending on whethermost households buy the category every week and spend a large part oftheir shopping budget on it (e.g., bread, carbonated beverages), or if only
a few interested consumers make infrequent purchases in the category(e.g., vinegar, yeast).
Categories can be classified into one of four types:
(1) staples (high penetration/high frequency);
(2) niches (low penetration/high frequency);
(3) variety enhancers (high penetration/low frequency); and
(4) fill-ins (low penetration/low frequency).
Retailer’s Assortment
Role of Category within aR t il ’ A t t
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 44/71
VARIETYENHANCERS
STAPLES
FILL-INS NICHES P E N E T R A
T I O N O F
H O U S E H O L D S
H I G H
HIGH
L O W
LOW
FREQUENCY OF
PURCHASE
Retailer’s Assortment
Role of Category within aR t il ’ A t t
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 45/71
Retailer’s Assortment On the basis of Profits Vs Sales
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 46/71
EfficientConsumerResponse
ORIGIN
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 47/71
The Concept
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 48/71
WHAT IS ECR? ECR is about, "Working together to fulfil consumer
wishes better, faster and at less cost"
p
The Concept
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 49/71
Embedded in this simple statement are two fundamentalprinciples that guide all ECR efforts,
•Focus on Consumers: A commitment to the belief that sustainedbusiness success stems only from providing consumers withproducts and services that consistently meet or surpass their
demands and expectations;
•Working together: Recognition that the greatest consumervalue can be offered only when organisations work together,work internally and with their trading partners, to overcomebarriers that erode efficiency and effectiveness.
p
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 50/71
ECR implies a complete integration of information and supplychain with the implementation of new processes for commerceand industry.
This means for example that orders will be generated withmodern information techniques from sales data of individualproducts. These orders are adapted to the consumption of theproducts ("selling to the scanner").
A fundamental change of view is necessary for the successfulrealization of ECR. The confidence between the cooperationpartners is the main prerequisite for an implementation of ECR.
ECR requires department-spreading responsibilities for the
control of the flow of goods and implies organizational changeson the supplier side and the commerce side.
ECR secures a continuous flow of goods and information,creates an optimal assortment with a simultaneous stockreduction and avoids supply gaps.
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 51/71
Traditional channel problems Forward buying and diverting
Excessive inventories
Damages and unsaleable goods
Complex deals and deductions
Too many promotions and coupons
Too many new products
Efficient Consumer Response
Category management
“Value” pricing replaces promotions
Continuous replenishment and cross-docking
Electronic data interchange New performance measures
New organizational processes and structures
Internet-based network for supplier-buyertrading
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 52/71
Efficient consumer response
Key issue
1How can collaboration be extended
across the supply chain to focus
on meeting consumer demand?
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 53/71
Efficient consumer responseCategory management
Establishinfrastructure
Optimizeintroductions
Optimizeassortments
Optimizepromotions
Integratedsuppliers
Synchronizedproduction
Continuousreplenishment
Automated storeordering
Category
management
Product
replenishment
Reliableoperations
Cross-docking
EDI EFTItem coding
and databasemaintenance
ABCEnabling
technologies
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 54/71
Efficient consumer response
Categorymanagement
Continuousreplenishment
Enablingtechnologies
Required
capability
Accountmanagement
Demandmanagement
Multifunctionalselling teams
Price listrestructuring
Effective andcustomized
promotions
Joint inventorymanagement
Cross-dockoperations
Continuousreplenishment
Effectivelogistics andproduct flows
Quick response
Effectiveinformation
sharing
Automatedordergeneration
Bar-codingand the use ofother scanningtechnology
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 55/71
Enabling technologies
Scanning data
Data warehousing
Data mining
The data include
Demand / consumption / sales information
Cash flow
Stocks of finished goods / work in progress
Delivery and output status
Efficient consumer response
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 56/71
These advantages will be reached through the following basicstrategies:
Efficient ReplenishmentOptimization of the logistics chain by replacing the push strategies bypull strategies. It is also called Continuous Replenishment (CR).
Efficient Assortment
Revision of categories for an increase of customer satisfaction andoptimization of product profitability. Essential art of EfficientAssortment is the Category Management (CM).
Efficient PromotionReplacement of the stock-up system with large quantities and
campaign prices by an efficient common purchase policy.
Efficient Product IntroductionCooperation of commerce and industry for a common developmentand introduction of new products.
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 57/71
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 58/71
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 59/71
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 60/71
Efficient Consumer Response
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 61/71
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 62/71
CATEGORYMANAGEMENTBENEFITS
BENEFITS
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 63/71
Reduce excess inventory
Improve return on investment (ROI)
Improve comparable store sales
Enhance knowledge of the consumer
Improve the speed to market on new productsReduce out-of-stocks
Maximize shelf efficiencies
Increase turns
Identify problem brands
Identify procurement opportunities
Improve return on marketing funds invested for suppliersMaximize vendor relationships
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 64/71
CATEGORYMANAGEMENTLIMITATIONS
LIMITATIONS
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 65/71
Considerable Re-organization required by the Retailers andtherefore has been met by inhibiting factors like:
i. Skill required
ii. Change in perspective to view suppliers as partners andshare information
iii. Reluctance to change in-appropriate organization structure
iv. Lack of clear strategic plans for product ranges
v. Concentrating on efficient merchandising and logisticsmight result in lower priority to customer experience
vi. Category managed product ranges are safer and offermajority of the customers in majority of purchase decisions“efficient” selection of market leading products, however,they may try to look boring or over-managed
LIMITATIONS
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 66/71
vii. Retailers who focus solely on the profitability of thecategory lead to “banalisation of retailing” where ranges areubiquitous and uninspiring.
viii. Threat to Smaller suppliers – establishing CategoryCaptains to strengthen a particular Product Category leads to
the larger suppliers exploiting the smaller suppliers whoincrease their market share at the cost of smaller suppliers.
ix. Most successful in large categories with dominant andorganized suppliers not for smaller suppliers.
x. The integrated ECR systems are expensive to implement.
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 67/71
CATEGORYMANAGEMENTFUTURE
FUTURE
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 68/71
There are any number of poignant questions to which we do not know the
answers:
• Are retailers being more efficient and better able to meet the needs of
their shoppers with category management?
• Is the retailer more efficient after adopting category managementprinciples, and does that efficiency lead to greater profitability?
• Are manufacturers actually making money at the category management
process, after we consider all the costs they incur to be a part of the
retailers’ “team”?
• Are consumers any happier with their set of stores when the stores are
subject to category management initiatives? Are they spending more?
FUTURE
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 69/71
The future, then, suggests a re-tooling of the proces,a more partnership-like
approach may be what’s needed to make category management work for all
parties.
We can get there by:
• Understanding what it is we want to achieve with category management.
• Understanding what resources make sense to allocate to category
management (personnel, research funds, etc.).
• Agreeing what is each partner’s responsibilities (and the limits on those
responsibilities).
•Doing the research necessary to improve brand and category performance,
where possible, with an eye toward a solution that is compatible with the
retailer’s strategy.
• Being unafraid to say that there is no basis for improving a category.
• Using research tools that pass reliability tests and represent sound
methodological practices.
BIBLIOGRAPHY
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 70/71
Retail Product Management: Buying and Merchandising
by David Gillooley, Rosemary Varley
ACNielsen Consumer 360, “Simplifying Complexity”
Samir Bhaloo, International Business Consulting Manager
http://www.youtube.com/watch?v=Ss8Dn8_BZu0&feature=related
http://www.categorymanagement.com/articles1-cmi.html
8/12/2019 Category Mgmt-session 11 Part 1
http://slidepdf.com/reader/full/category-mgmt-session-11-part-1 71/71
TH NK YOU
for being a
WONDERFUL
UDIENCE…