Post on 28-Dec-2015
Where to Category Management?Evolution and Best Practice
7 August, 2007
Norrelle Goldring, Moxie Market StrategyPeter Huskins, Market Concepts
Session Objectives+Heads above the ‘water line’ –
discuss the nature and potential scope of category management and shopper marketing
+Stimulate thought on how to better add value to the category/shopper marketing discipline, and thus your organisation
+Get you to share different viewpoints and best practices.
Thinking caps on … we will be provocative!
Agenda
+Category management – When did it start and why? What was it?
+What is it now? How is it ‘working’ in Australia?
+Where to – how is it evolving?
+Examples of overseas trends
+Discussion
Then … how did category management start?
Range and space management was local and fragmented for hundreds of years
Local suppliers understood local retailer needs Retailers could observe first hand what their local
shoppers bought
PAST
The ‘Father’ of modern category management
+‘Category Management’ coined by Brian Harris and Larry Hernandez of The Partnering Group (USA) in the mid-late ‘80s as part of the notion of looking at categories as SBUs
A discipline that’s less than 20 years old in its current form!
PAST
Category Management
“A supplier-distributor process of managing categories as strategic
business units, producing enhanced business results by focusing on
delivering Consumer value. By emphasizing business results for entire product groups rather than
individual items or brands Category Management encourages a longer-term,
joint distributor-supplier focus in marketing and product supply.”
Consolidating market necessitated efficiencies
Bigger/national suppliers and bigger retailers with more products and floor space meant need for space and profit efficiencies
PAST
The 1990s: The original 8-Step CM Process
Category Role
Category Assessment
Category Scorecard
Category Strategies
Category Tactics
Plan Implementation
Category Definition
Category Review
PricePromotionsAssortment
LayoutsPrivate Label
PricePromotionsAssortment
LayoutsPrivate Label
A version of the traditional strategic planning process, applied to FMCG
Fairly product/numbers based. Looks at the category as it is, not necessarily where it’s going.
Category Management
+Formal, continuous process of fine tuning elements such as:
+last year’s activities+opportunity gaps+better promotions+range management+space provisions+cost reduction through
ECR disciplines+competitive analysis. Time
Perf
orm
ance
Key Issues+Category Management often seen as ‘cost’
reduction ECR = Efficient Cost Reduction?
+Over-riding need to hit the internal numbers
+Retailers struggle:+Supply vs demand?+Culture for collaboration?+Skills and resources?+Internal silos?+Information and what to do with it?
No wonder we’re struggling …
Retail buyer
Sales
Marketing
Trade Marketing/Category
Supply/Operations
Key Issues+Manufacturers struggle:
+Trust?+Benefit or cost?+Brand vs category?+Internal silos?+Skills and resources?
+Losing track of the market as we focus more and more on reports, analysis, research and lose the feel for the Shopper and Consumer
And the Shopper and Consumer just keeps moving …
The Shopper and Consumer
+Growing channel promiscuity+Smaller baskets more often+Give me Solutions+Time poor+Educated+Health and well being+Impatient+Judgemental
Either way …
+Purpose was mostly about efficiencies for retailers and manufacturers, based on what sells
+Tweaking of ‘yesterday’ for a better today
… Not oriented toward the shopper
PAST
Now … modifications to the original 8 step process
Spectra Marketing Systems process, 2006. Assumes greater shopper focus.
CategoryDefinition
Consumer Decision Tree
Demand Clustering
Category Assessment
ItemStrategies
Category Role
Tactics/ Initiatives
Scorecard Implementation
CURRENT
Where are we now? Depends on who it reports toNobody ‘owns’ the shopper
Makes it difficult to cover all instore marketing drivers:Range, Space, Visibility/merchandising/theatre, Price,
Promotion, Persuasion/service/incentives/training
Marketing Based+Retail presence+POS development+Consumer promotions
= brand not category focussed
Sales Based+Sales decision support & analysis +Category analysis and reviews+Range & space analysis+Price promotion analysis+Space management = Customer not shopper focus
CURRENT
What else is happening?+ Increasing shopper focus -
growth of shopper insights departments. Retailers increasingly requesting shopper insights from suppliers
+ Shifting of above-the-line marketing dollars into instore
+ Some category management has gone too far – too much range rationalisation can mean shoppers seek smaller brands in non-grocery
+ Mundane shopping experience in grocery, based on numbers and clean store policies, no theatre
BUT …Shift to shopper behaviour emphasis not yet reflected in storeDifference between ‘behaviour’ and providing an experience!
CURRENT
What is needed+New strategies and processes that take
you to the next level that involve:+Total store then Category+The Consumer and the Shopper+The total supply chain to the end use+Targeted responses+International trends+Experience the intimacy
Time
Perf
orm
ance
Source: Porter: Competitive Strategy
Understanding the DifferenceCategory Development
Category Management
Operational Effectiveness =“Running the same race faster.”
•measure retail performance•identify opportunity gaps•focus on retail performance.
Strategy =“Running a different race.”
•identify consumer-based opportunities•create value•focus on total supply chain.
Retailer
Supplier
Consumer
Retailer
Taking a Category Development approach encourages innovation and maximizes total supply chain value.
The future … a potential model
Customer/Sales
Consumer/Marketing
Shopper/Category & Channel
Insights
FUTURE
Shopper Marketing should own the shopper+ Shift from ‘category’ to instore or shopper marketing and
development
+ Owns the shopper experience for the category in the store, in all its locations (across channels, occasions, dayparts, missions)
+ Informed by: a) broader consumer trends (marketing), b) customer/retailer realities (sales), and c) shopper behaviour (insights)
+ Shopper Development need to synthesise marketing, sales, insights and analysis to improve shopper experience to grow overall category
+ Look to tomorrow - DEVELOPMENT, using SOME of yesterday’s info to inform it. Emphasis on shopper, consumer and retailer trends and how to leverage these – ‘what should we be doing’, not ‘how can we do yesterday better’
Purpose: mostly about improving the shopper experience, for retailer and supplier profit
FUTURE
Some examples of where the future lies+SEGMENTED EXECUTION:How brand, pack, price, display, promotion and
persuasion change by shopper occasion
+DEMAND CLUSTERING: store types, shopper types, impacts on range,
space, marketing
+THEATRE:Visibility plus ambience – sound and smell, not
just sight
FUTURE
Pharmacy example: executional priorities change by channel segment
At shelf1 5
Front of store displays
3
Gondola end displays – condition based cross-sell with related categories e.g. cold & flu, arthritis, skin care, infant care / women’s health
2 Staff recommendation
4Check out (impulse)
SEGMENTED EXECUTION
Identifying unique shopper groups by store or category
Forecasting category or brand demand at a local levelAlso applied to store marketing strategy
DEMAND CLUSTERING
From … To+ Performance based
+ A better yesterday
+ Numbers focussed
+ Range and space focus
+ One size fits all solutions
+ Subset of sales
+ Demand based
+ A new tomorrow
+ Led by shopper behaviour and needs
+ All sales drivers, plus theatre
+ Clustering and segmented execution
+ Shopper marketing division
SUMMARY
Summary+Category management is evolving into more holistic
shopper marketing based on localised demands rather than national performance
+To stay relevant and reap rewards companies and brands need to look at the entire shopper experience, not just range and space
+Retailers are looking to suppliers for insight and inspiration – provide it!
+Take the reins and synthesise sales/customer, marketing/consumer, and category/shopper.
The market is shifting toward instore focus – we’re in the right place at the right time!
SUMMARY
A final word from Brian Harris …
“ The techniques of CM are a means to an end...
not the end itself!
We need to rekindle the original spirit of CM as a consumer-focused philosophy
for creating excitement and differentiation.”
Discussion+What is your take on how category management is
evolving?
+Who would you consider best practice in any or all of the instore sales drivers? What are they doing?
+Who in your opinion has the most holistic approach to the shopper? How are they attacking it?
+What instore sales drivers do you need to focus on in order to take advantage of the evolution to shopper marketing? What would need to change in structure and capabilities in order to achieve this?