Discuss Critical Issues Related to Successfully Developing a Category Management System
Bringing Better Value to the Consumer is the Primary Focus of Category Management.
What is Category Management?
Definition
Information Technology
Enablers
Scorecard
Core
Strategy &
Business Process
Organization Capabilities
Enablers
Collaborative Relationships
15%
Gap (%) Gap ($)
5% $50,000
Source: Borden, Inc.
Process
Key Questions in Conducting a Category Assessment
Who is my target customer? How important is this
How does defining a category help? Produces better retailer/manufacturer alignment with the consumer Creates better manufacturer-retailer alignment Gives new perspectives on how to view a product and/or category
Auto Industry - GM Pontiac & Ford
Service Industry Phone Service Financial Services/Banks
The ECR System
Definition
Timely, accurate, paperless information flow
Definition
“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.”
Define Category Management
Category Management as a Business
Process
Category Management
Issues
Category Management as a Business Process.
Process
Category Review
Category Definition Category Role
Category Assessment Category Scorecard Category Strategies
Category Tactics
Plan Implementation
Source: The Partnering Group
Destination Convenience Routine Seasonal/Occasional
Category Assessment
Process
Category Assessment involves conducting a complete analysis of the category by investigating it’s sub-categories, user-segments, brands, and SKUs. Such an analysis must be based on current consumer, distributor, supplier and market information.
Why is it beneficial for Retailers and
Definition
Manufacturers to Invest in Category Management?
Helps Retailers Define customer needs Determine strategic issues Enhance category and store profits
CATEGORY MANAGEMENT
Session Objectives: Define Category Management
Category Management
Process
Category Management
Issues
Define Category Management (CM)
Describe Category Management as a Business Process
Total Dollar Sales - Columbus Market $1,000,000
Total Dollar Sales - Kroger Columbus
$150,000
Kroger Market Share - Total Groceries
20%
Kroger Market Share - Candy
A distinct, manageable group of products/services that CONSUMERS perceive to be interrelated and/or substitutable in satisfying their need(s).
Category Definition - critical in determining the products that make up the category and in establishing the segmentation strategy.
Process
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).
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?
Helps Manufacturers Position themselves as category captains for retailers Become an indispensable resource for the retailer Enhance brand profits
Road Map
- NOT Sales or Gross Margin
SKILLS NEEDED TO BUILD BUSIORY MANAGEMENT
Data analysis and technical mastery Shopper and consumer understanding Strategy development Financial and logistics expertise Innovation Total Systems Focus
Definition
Efficient New Product Development
Efficient
CATEGORY Efficient
Replenishment MANAGEMENT Promotion
Efficient Stor e Assortment
Category Management as a Business Process is comprised of interrelated components both within and outside of the organization.
CATEGORY MANAGEMENT: HOW IS IT DIFFERENT?
Definition
Category/Brand/SKU Management under one Decision Maker
Consumer-Focused Strategies Data-based Decision Making Proactive Business Planning Collaborative Work Process Manage Category As Business Unit Focused on Category ROI
Why is it beneficial for Retailers and
Definition
Manufacturers to Invest in Category Management?
Helps Retailers Define customer needs Determine strategic issues Enhance category and store profits
Defining a Category by Usage Segment
Process
Lemon Juice Segmentation: