What To Expect
From Suppliers
The Category Management Association
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Category Management Definition
A Retailer-Supplier process of
managing categories as Strategic
Business Units, producing enhanced
business results by focusing on
delivering consumer value
The Intent of Category
Management
• Separates and focuses
• Aligns around consumers
• Analyzes the facts
• Provides insights
• Offers success models
• Informs judgment
• Creates value
• Enables goals attainment
What you should expect
• A knowledgeable account rep
• Armed with relevant data and research
• Providing key facts and shopper insights
• Integrated into a CatMan plan
• Unique to your customers’ needs
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A Knowledgeable Account Rep?
• Everyone in every transaction deserves a
knowledgeable service person. That‘s what
an account rep is … a service person.
• Everyone who gets his car serviced or for
that matter his gall bladder serviced wants
someone whose expert credentials are
certified by an external authority.
• That’s what the Category Management
Association does.
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The Category Management
Association
• Is an unbiased central resource for industry
information and best practices. The CMA is the
only organization certifying Corporate
Category Management training programs and
individual professionals according to recognized
industry standards.
• We certify manufacturers and retailer personnel
at three levels
• The CMA does NOT conduct training programs
itself.
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Other CMA Services
• An Annual Conference
• Share Groups on Multiple Subjects
• Jobs Postings
• A Newsletter
• Best Practices Mentoring
• Website cpgcatnet.org
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Find your issue: Click for a solution
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What you should expect
• A knowledgeable account rep
• Armed with relevant data and research
• Providing key facts and shopper insights
• Integrated into a CatMan plan
• Unique to your customers’ needs
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Example of Data Sharing
• Shown below is a list of data shared by one best practice supplier.
Data like this is available in many if not all categories.
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Category Structure and consumer need states
Ethnographic research on in home and in store (shopper) behavior
Category, segment and sub-segment share trends by brand and size
Consumer behavior (purchase cycle, shopper annual worth, brand exclusivity)
Assortment optimization by segment, brand, type
Space constrained assortment optimization (turf analysis)
Pricing optimization between price tiers including private label
In store merchandising optimization including adjacency and aisle optimization
Promotion response by type, in-store merchandising and price reduction
Total basket revenue optimization
Path to purchase and touch point promo optimization
Loyalty card analysis
Cross category promotions including ‘cause’ and local promotions
Your first questions to the Rep
• From all the data your company has, please
tell me the five most important facts that I
should know to plan our business together.
• Please tell me the most important changes
that have occurred in your category since we
last talked.
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Example of Major Trends
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The premium segment is growing
Private brands and price brands are growing
Decreasing premium brand space is hurting sales
Increasing Private brands price increases profits
Premium buyers = your best shoppers
Brand D is dying without marketing $’s
Your 4th quarter share is tanking without support
Focus on Answers to the
Really Big Questions:
Why does my consumer choose another store
over mine?
Why does a consumer in my store buy a category
I sell but in another store?
How do I fail to meet my consumer’s key wants
and needs?
How are my categories changing and how do I
keep up?
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Expect a shopper marketing process
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Expect ‘Success Models’
• A success model is a tactical program
(assortment, pricing model, in store
presentation or promotion) that has
repeatedly driven business profitably.
• Most success models are built on Insights
beyond mere facts.
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Insights (Facts are not Insights)
Dog
Treats
Fact: 60% of
Heavy Users are
Empty Nesters
Insight: Empty
Nesters view their
dog as their child
Baby
Food
Beer
Fact: Baby’s eat
with their fingers
at 6 months
Fact: Men age
21-34 consume
80% of beer
volume.
Insight: Mom
knows the baby is
normal
Insight: The beer
you drink is the
badge for the
group to which
you belong.
Facts are essential to insights; but insights are the levers
that build the business. Do your managers know the difference?
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From Insight to In Store
1. Identified the “purity” USP via attitudinal segmentation
2. Created in-store section w/demos, tab support, cross promos
area where Sensitive Skin products are located
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Led to introduction of flanker items
•
Triggered “Environmental Sustainability” initiative at retailer
Shopper Insight:
Retailer Has A Billion Dollar Opportunity Gap
Similar in everyday candy
Seasonal
Opp Gap
$877MM
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From Insight to In Store
1. Changed the category role to Destination
2. Repositioned core items and resized package
to meet price point and value objectives and
drive additional traffic to the seasonal aisle
3. Revamped selling cases to highlight item
type and ease of selection: Environmental
Sustainability = less packaging
4. Built transaction size by positioning
transaction-building items in adjacent areas
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A Fact: Beer Out of stocks cost money
Reducing out-of-stocks is a significant
opportunity for retailers
 5% of beer volume is out-of-stock on
an average day … nearly 4 times
higher on promoted items
As a result of out-of-stocks …
 45% of beer shoppers avoid purchases
 23% of Beer Sales are lost to competitors
100%
55.4%
20.6%
45% avoid purchases
+4X
21.4%
23% lost sales
18.7%
5.0%
4.5%
Total
Average Day
On-Promotion
20Source: GMA Full Shelf Satisfaction Study
Buy another
item in
category
Make no
purchase
at all
Buy item at
different
store
Leave store,
shop
elsewhere
Shopper Insight:
C-Store beer O-O-S problems caused by mis-alignment
of shopper segments and store clusters
SIPPERS
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TRENDSETTERS
Aspirers
EXPERIMENTERS
LOYALISTS
These beer attitude segments are… well ….
different
1. They drink different beers
2. For different reasons (needs)
3. They drink different amounts
Experimenter
11%
Trendsetter
8%
Aspirer
20%
Loyalist
55%
Sipper
6%
4. With vastly different loyalties
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Follow the EIA Rules
1. Start with category segments . Make all assortment decisions within
segments
2. Create store clusters based on beer attitude clusters. Vary space and
assortment by the size and importance of these shopper segments for each
cluster
3. Recognize that 75% to 80% of SKU’s will be the same everywhere .
4. It’s the marginal sku’s bought primarily by experimenters, trendsetters and
aspirers who create the assortment problems
5. Discriminate in favor of brands with the highest brand loyalties or those
bought by high worth shoppers
6. For the big brands drunk by loyalists, focus on DOS issues
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Deployment Process
Operate within Guard Rails
Days of Supply For Individual Stores
Exception Based Reporting can be used to identify schematics with Actual
DOS beyond the acceptable range of values; these schematics can be
adjusted so that DOS fall within the established targets
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Success means O-O-S < 1%
1. This means an > of nearly 3% in beer volume and profit day in and day out.
2. It also means happierbeer shoppers and higher store loayaly
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Shopper Insight:
Millions Of D.I.Y.’ers All Change Their
Motor Oil On The Same Days
• Oil changing is steeped in tradition
• Key holidays signal time to change oil,
especially Memorial Day, Independence
Day, and Labor Day
• The motor oil business is complicated and
fractionated by type, brand and package
size
• Out-of-stocks are rampant
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From Insight to In Store
1. Developed a strategy to stay in stock at key times and
days:
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New rolling fixture for weekend and peak time holding
power alleviates OOS’s,
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Color-coded pallets and cases to match shelving enable
stocking ease
2. Identified convenience opportunity via TLE to appeal to
men and placed additional register for ease of check-out
3. Created in-store smart sections with Kiosks and
information including education/information on
synthetics
4. Placed appearance items in key location drive impulse
sales
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Shopper Insight:
“If I can’t touch it, I won’t buy it”
• 70% of the Retailer’s business was in basic,
functional socks; 30% in fashion socks
• The overwhelming majority of basic sock
shoppers judge a sock’s quality by touching the
fabric
• Manufacturers failed to supply this Retailer
with packages that allowed the shopper to
touch the fabric
• Shoppers tore the packages open and
frequently dropped the socks on the floor
• The Retailer had >$20 million in damaged
merchandise in the backrooms of its stores
• The Retailer lost $150 million in sales to other
stores, where shoppers could touch the socks
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From Insight to In Store
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1.
Solved the “touch” problem with new packaging to allow shoppers to feel the
socks
2.
Built on that “reinvention” to:
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Make the new packaging environmentally sustainable, i.e. less packaging
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Resize the package to meet price-point and value objectives and drive additional traffic
into the section
•
Revamp selling cases to highlight item type and ease of selection
•
Reorganize the shelf set into one layout for all of the three leading brands (rather than
three conflicting layouts)
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Build transaction size by developing the sock category as a destination, positioning
transaction-building items in adjacent areas
Shopper Insight:
Women Shoppers Won’t Buy Tires
Unless They Know They Are Safe
• Six Club members buy their tires
elsewhere for every member who buys
tires at this Club
• Significant lack of service and
information:
– Shoppers found the sales people
unhelpful
– Shoppers must use a tattered catalog to
find tire information
• The tire selection process is a
cumbersome, filthy experience that
takes too long
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From Insight to In Store
1. Provided shoppers the information they need to know the tires are safe for their car….“Tire
Professor” informational kiosk for member use to identify tires/accessories needed
2. Developed operational training guide for key service areas
3. Streamlined the purchase process with pull cards and display tires only
4. Implemented a paging process so members can shop while they wait
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Shopper Insight:
Set The Shelves By The Way
The Shopper Uses The Category
•
Shoppers prefer to shop category by
usage
• 40% of shoppers find the Food Storage
department difficult to shop
• Shelf merchandising is haphazard
(Trays/PDQ’s used for some cases – cut
case for some, hand-stacked for others)
• Retailer was capturing only 26% of
category purchases across all channels
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From Insight to In Store
1. Transitioned from brand set to product type set
2. Utilized PDQs
3. Added category name to Aisle Sign
4. Fixed assortment
5. Under-assorted in sliders in storage bags
6. Under-assorted in foil at the aggregate
7. Moved section near food items to improve adjacencies
8. Out-posted Food Bags to other departments
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Shopper Insight:
Untrained Labor Can’t Be Expected
To Keep Top Selling SKUs In-stock
• Fashion is critical to sales in the category:
– sunglasses are a “sexual signal”
– purchase entails 20 minutes of shopping
• High fashion SKU’s sold and were replaced with low
fashion SKU’s
• Very low conversion at the Retailer
• Sub-optimal presentation of the products
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Expect New Product Validation
• What segment?
• Is it growing?
• What sales from new item?
• Source of volume?
• Effect on category profits?
• What trial support?
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Category Plan Basics
Best Practice Category Management Business Process
What
products are
included?
What are the
subcategories?
Category
Definition
How
important is
the category
to the
consumers?
To the
retailer?
Category
Role
Who buys the
category?
What are the
goals and
objectives?
How is the
Category
doing?
How will we
achieve our
goals?
How shall we
measure
success?
Category
Assessment
Category
Scorecard
Category Review
Examine the Scorecard
Category
Strategy
What are the
elements of
the plan for
each subcategory or
segment?
Category
Tactics
Who does
what and
when?
Plan
Implementation