1、,CATEGORY MANAGEMENT,Session Objectives:,Define Category Management (CM) Describe Category Management as a Business Process Discuss Critical Issues Related to Successfully Developing a Category Management System,Category Management Process,Category Management Issues,Define Category Management,Defini

2、tion,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 Bes

3、t Practices Report,Category Management has expanding into durable goods and services.,Is Category Management just for the grocer? Durable Goods Auto Industry - GM Pontiac & Ford Service Industry Phone Service Financial Services/Banks,Definition,The ECR System,Timely, accurate, paperless information

4、flow,Supplier,Distributor,Retail Store,Consumer Household,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 Pr

5、oduct Development,Efficient Replenishment,CATEGORY MANAGEMENT,Category Management as a Business Process is comprised of interrelated components both within and outside of the organization.,What is Category Management?,Definition,Information Technology,Strategy & Business Process,Scorecard,Collaborat

6、ive Relationships,Organization Capabilities,Core,Enablers,Enablers,CATEGORY MANAGEMENT: HOW IS IT DIFFERENT?,Category/Brand/SKU Management under one Decision Maker Consumer-Focused Strategies Data-based Decision Making Proactive Business Planning Collaborative Work Process Manage Category As Busines

7、s Unit Focused on Category ROI - NOT Sales or Gross Margin,Definition,SKILLS NEEDED TO BUILD BUSINESS THROUGH CATEGORY MANAGEMENT,Data analysis and technical mastery Shopper and consumer understanding Strategy development Financial and logistics expertise Innovation Total Systems Focus,Definition,De

8、finition,Why is it beneficial for Retailers 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?,Help

9、s Retailers - Define customer needs Determine strategic issues Enhance category and store profits Helps 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,Ca

10、tegory Management Issues,Define Category Management,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

11、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 establishing the segmentation strategy.,What is a Category?

12、 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 establishing the segmentation strategy.,How does definin

13、g 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,Process,Juices & drinks,Shelf stable,Refrigerated,Frozen,Glass/Plastic,Aseptic,Ready to Serve,Concentrat

14、e,Category Sub-Category Segment Sub-Segment,Defining a Category 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,Categor

15、y Assessment,Category Assessment involves conducting a complete analysis 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 th

16、e gap between the current sales and the potential sales of a category.,Source: 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 pro

17、duct segments? What are the least and most important SKUs?,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

18、buy? How does the categorys pricing compare to the rest of the store?,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 and

19、 sizes “define” and/or build the category?,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,Profit,Target Consumer Share,ROI,

20、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: Robert C. Blattberg, 1996,Process,Category Tactics are the actions t

21、aken to implement the category strategies.,Transaction efficiency/Traffic Builder Low price/convenience 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/conven

22、ience Category shop-ability Shopping/information Unique offerings/high service Easy access to product information,Source: Robert C. Blattberg, 1996,Process,Category Tactics are the actions taken to implement the category strategies.,Transaction efficiency/Traffic Builder Low price/convenience Catego

23、ry shop-ability Shopping/information Unique offerings/high service Easy access to product information Entertainment Stimulation/excitement Creative marketing/broad assortment Changing variety of products,Source: Robert C. Blattberg, 1996,Process,Category management plans are of little value unless t

24、hey receive high quality implementation.,Key Components of Plan Implementation:,Common Language Buy-in at ALL levels Clear Approval Process Clear Assignment of Responsibilities Implementation Schedule Predetermined Indicators of Success,Process,Category Review is the ongoing measurement of the progr

25、ess of the plan and modification where necessary.,Stages of Category Review:,Opportunity and discovery process Input, analysis & implementation Measurement, adjustment & learning,CATEGORY MANAGEMENT,Reviewing the Category,Targeting Consumers,Planning Merchandising,Implementing Strategy,Evaluating Re

26、sults,Process,Road Map,Category Management Process,Category Management Issues,Category Management Definition,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. The quality

27、of the implementation and execution will determine the degree of competitive advantage gained.,Issues,Category Management is a dynamic, evolving practice.,Is there one approach? no. Fundamental principles and processes. Implementation depends upon the capabilities and current practices of the organi

28、zations. Todays practices are tomorrows foundations for improvement.,Issues,Successful Category Management helps to define a partnership.,Ability and commitment to develop the category A vision of the potential of the category Adequate information technology capability andsharing information Multifu

29、nctional team support capabilities Buy-in from top management Clearly defines the role of the manufacturer with regard to Category Management Trust,Issues,How to develop a successful Category Management relationship.,Develop a common language for Category Management Translate the goals of the partne

30、rship 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-based presentations representing the entire category. Develop a system of regular reports and