Trade Marketing Flashcards

Shopper Centric Category Management

• Principles and benefits: understand principles and benefits of Category Management.
• Prerequisites: examine prerequisites for successful Category Management.
• Process: analyze the Category Management process step by step.
• Tools and techniques: demonstrate specific decision-making tools.
• Case studies: combine theory and practice.

Category Management Definition

• Introduced in the US by Dr. Brian Harris.
• Effective collaboration is critical.
• Manufacturers and retailers should partner to manage a consumer-defined category.
• Coined by Dr. Brian Harris in the early 1980s.

Category Management: Definition

• Joint retailer/supplier process.
• Managing categories as strategic business units.
• Producing enhanced business results.
• Focusing on delivering consumer value.
• Definition approved and used by ECR (Efficient Consumer Response) Int´l Organization.

Benefits of Category Management

• For Consumers:
  • Evaluate category mix according to their needs.
  • Enhance shopping experience.
  • High levels of satisfaction and value.
• For Retailers:
  • Improve store image.
  • Increase existing consumer loyalty.
  • Attract new consumers.
  • Increase financial results.
• For Suppliers:
  • Become category captains / advisors.
  • Build strong relationships with retailers.
  • Increase financial results.

Category Management Evolution

• 1995: ECR Category Management Best Practices Report.
• 2000: The Essential Guide to Day-to-Day Category Management (ECR Report).
• 2006: Consumer Centric Category Management (Nielsen).
• It has largely evolved since the mid-80’s

Category Management: Main methodology milestones

• The process has been streamlined.
• It has become more open and creative.
• The inclusion of consumer and shopper insights.
• The attention to implementation at store level.

Category Management: Process Improvements

• Reduce time and effort to find and address key opportunities.
• Shift focus to a question-and-analysis approach.
• Business plans based on a deeper understanding of shopper behavior.
• Increased availability of shopper loyalty information.
• Dramatic increase in spending on shopper research by manufacturers.
• Clearer roles and responsibilities for implementation.
• Involving store management in the development of plans.
• Focus shifted to modifying the process to find and implement more sustainable initiatives.

Category Management: The 8 steps of the process.

1. Category Definition
2. Category Roles
3. Category Assessment
4. Performance Measurement
5. Category Strategies
6. Category Tactics
7. Plan Implementation
8. Reiterate continuously to adapt to changes like competition, new products, etc.

Category Management: Key Steps

1. Define product category and segmentation from consumer's perspective.
2. Develop and assign a category role based on cross-category comparisons.
3. Analyze the category sub-categories and segments.
4. Establish performance measures and targets.
5. Develop marketing and product supply strategies.
6. Determine optimal assortment, pricing, shelf presentation & promotion tactics.
7. Implement the category business plan.
8. Continuously reiterate the process to adapt to environmental changes.

Category Management: The six key pillars inside the company

• STRATEGY
• BUSINESS PROCESS
• PERFORMANCE MEASUREMENT
• INFORMATION TECHNOLOGY
• COLLABORATIVE TRADING PARTNER RELATIONSHIPS
• ORGANIZATION CAPABILITIES

Factors Preventing CatMan

• Weak coordination between retailer and suppliers.
• Communication issues between HQ and stores.
• Lack of time and human resources.
• Difficulty in in-store maintenance of agreements.
• Non-applicable results.
• Frequent changes in commercial agreements.
• Difficulty in data and information exchange.

Category Management: Pillars & Problems

• Organizational Capabilities
  • Problems in communication between HQ and stores.
  • Difficulty of in-store compliance and maintenance of agreements.
  • Lack of resources (personnel / time / cost).
• Performance Measurement
  • No applicable results.
  • Lack of project evaluation and fine-tunings.
• Information Technology
  • Difficulty in exchanging store / category / SKU level data.
  • Paralysis of Analysis.
• Collaborative Trading Partner Relationships
  • Weakness of coordination and understanding.
  • Frequent change of commercial agreements.
  • No continuity of category management.

Category Management: Organizational Capabilities

• Process, not just a project methodology.
• Internal adoption of Category Management.
• May require a change in company culture.
• Creates new roles and responsibilities.
• Requires close cooperation of different departments.
• Strategic decision with Top Management support.

Category Management: Cooperative Trading Partner Relationships

• Ability to think strategically.
• Agree on a common process.
• Willingness to share information and expertise.
• Mutual investment of resources and time.
• Clear action plan with detailed timings and responsibilities.
• Commitment to agreed procedures.

Cooperative Trading Partner Relationships

• Why Retailer’s and Manufacturer’s Work Together?
• Retailer: Chain Store Category Sub Categories
• Manufacturer: Brand

Cooperative Trading Partner Relationships

• Choose approach based on commitment and capabilities.

Category Management: Information Technology

• Fuel and engine for productive Category Management.
• Complexity reduction.
• Process must lead design.
• Consistency in data format and quality.

Category Management: Performance Measurement

• Mutual agreed scorecards.
• Clear predefined quantitative & qualitative KPIs.
• Performance review checkpoints throughout the project.
• Ability to be unbiased and use both positive & negative results for further improvement.

Performance Measurement - Scorecards Example

• Consumer Behavior:
  • Household Penetration
  • Average Category Transaction
  • Consumer Satisfaction
• Retailer:
  • Category Turnover
  • Category Gross Profit
  • Turnover / allocated space
• Market:
  • Category Market Share
• Productivity:
  • Days of inventory
  • GMROI