The AWG Category Management Glossary of Terms
AWG GLOSSARY OF TERMS
Activity Based Costing (ABC) 1.) Cross-functional cost-accounting to determine the true business cost and profitability of a
business process of activity.
2.) An accounting method that enables a business to better understand how and where it makes
profit. In ABC, all major activities within a cost center are identified and the costs of performing
each are calculated, including costs that cross-functional boundaries. The resulting costs are then
charged to the product, product line, customer or supplier that caused the activity to be performed.
ABC provides a more complete picture than traditional accounting methods of the profits and the
costs of doing business, fine-tuned to a particular category, vendor or item. It also includes those
costs that add or delete value for the consumer.
All Commodity Volume (ACV) - The dollar volume of all goods sold through a specific market/channel
over a specified period of time. Market level ACV is the projected dollar volume of all goods sold
within a market.
Alternative Formats - Channels of distribution other than the traditional supermarket channel (e.g. club,
mass, drug).
Annual Equivalent Volume/Household – A method of equivalizing volume, enabling analysis of
purchases or consumption without regard to product form (e.g., creates an "apples to apples"
comparison: liquid to powder detergent, 2-liter soda to 12-pk soda)
Balance Sheet - One of the major summary financial statements of a company. It summarizes the value
of a company’s assets, liabilities and resulting net worth (total assets minus total liabilities) at a
certain point in time (e.g. at the end of a company’s fiscal year).
Blended Gross Margin - The total gross margin generated by a group of categories or
subcategories (see Contribution to Margin).
Buying Rate (Annual Expenditures) – The total volume ($ or units) purchased among the total number
of households purchasing the product group.
Buying Rate =
TTL Volume Purchased
# of Buying Households
Cash Generator - A Category strategy which focuses on the ability of a category or products within a
category to generate cash flow (i.e. high product turns relative to payment terms).
Category - A group of products and services that the consumer identifies as being interrelated and
substitutable.
Category Business Plan - A structured, detailed document comprised of the following elements:
category definition, category structure, category role, summary of the category assessment, category
scorecard, category strategies, category tactics (assortment, pricing, promotion, shelf presentation,
product supply), and implementation plan.
Category Definition - The process of determining the products and services that make up a category and
its segmentation or structure.
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The AWG Category Management Glossary of Terms
Category Development Index (CDI) – The level of development of a category for a specific region,
market or retailer, compared with total development (e.g., TTL U.S.). Similarly, a Brand Development
Index compares a brand's development within a region or market to its total development.
CDI
=
% of Category $ Sales in Market "X"
% of TTL U.S. Category $ Sales
* 100
Category Management - A supplier-distributor process of managing categories as strategic business
units, producing enhanced business results by focusing on delivering consumer value. The practice
empowers a category manager with full responsibility for the assortment decisions, inventory levels,
shelf space allocation, promotions and buying. With this authority and responsibility, the category
manager is able to judge more accurately the consumer buying patterns, product sales and market
trends of that category. By emphasizing business results for entire product groups - rather than
individual items or brands - Category Management encourages a longer-term, joint distributorsupplier focus in marketing and product supply.
Category Management Business Process - A core component of Category Management which refers to
the day-to-day work required to achieve the strategy; the sequence of activities, the methodology and
the accountabilities within which the work of Category Management will be transacted.
Category Definition
CategoryReview
Category Role
Category Assessment
Category Scorecard
Assortment
Category Strategies
Pricing
Category Tactics
Shelving
Plan Implementation
Promotion
Category Role - The process of assigning a category role (purpose) based upon quantitative and
qualitative cross-category analysis considering the consumer, distributor, supplier and the market
place.
Census Data – Census data represents every individual in a given population (e.g., the U.S. Census,
which surveys every household in the United States). Census data differs from panel data, which collects
a representative sample of the population from panel participants (e.g., HH panels capture the shopping
behavior of a representative sample of the U.S. population, and then project them to U.S. levels).
Clustering – A geodemographic (lifestyle/lifestage) approach to grouping stores based on similarities of
trading area profiles, or "clusters." Clustering reveals shopper composition for each store and percent of
each type of shopper living in a store's trading area, and it may be useful to align retail strategies and
operations. Clustering is also known as "Micromarketing."
Collaborative Relationships - The co-development of category business plans among trading partners
presumably creating synergy when the trading partners collaborate to optimize their unique
perspectives and resources for a common objective - delivering superior consumer value more
profitably.
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The AWG Category Management Glossary of Terms
Computer Assisted Ordering 1.) Having the computer, in concert with scan data, generate store orders for warehouse and DSD
items.
2.) A retail-based system that automatically generates replenishment orders when the shelf inventory
drops below a predetermined level. The computer system tracks inventory of all items in the store,
adjusting for receipts and sales. Essential to the success of CAO are complete store-level inventories
and accurate point-of-sale scan data. CAO generally reduces the labor required to generate orders
and provides timely information on item movement and inventory turnover at the store level.
Consumer Worth, Consumer Worth Index - Represents the total amount of category purchases by the
consumer who purchases a particular brand (size, type, flavor, etc.). This measure enables the
distributor to discriminate in favor of those items which attract the highest overall category
spending. Consumer Worth is converted into an index by taking the total category spending
associated with the brand (consumer worth) and dividing it by the average category spending for all
brands. This measure can be determined at all levels of data analysis (brand, size, flavor, SKU, etc.).
Consumption Index – The percent of a product's sales volume in relation to the household penetration in
the category.
CI
=
% of $ Volume Consumed
* 100
% of HH's Purchasing Category
Contribution to Margin (CTM) - A tool used to determine the blended gross margin for a group of
categories or subcategories. The formula is:
CTM =
% of Sales
x
Gross Margin %
CTM recognizes the velocity of a category, crediting faster selling items of smaller Gross Margin %,
for their overall contribution to the operations $ profits.
Contribution to Margin (CTM) Quadrant Analysis - A quadrant analysis showing the relationship
between the size of a category (or its subcategories) measured in dollar sales and gross margin %.
Convenience Role - The role (purpose) designated for categories which will be managed to reinforce the
distributors image as a full service store by providing good value to the target consumer in meeting
less-planned, fill-in needs. The distributors focus is to generate profits while providing the target
consumer value via time savings creating an image of “one-stop-shopping”.
Conversion (Buyer) – The percent of category buyers who shopped in a certain channel and also
purchased the category within that channel.
Buyer Conversion =
Category Buyers Purchasing the Category in Channel
Category Buyers Shopping the Category in Channel
Conversion (Trip) – The percent of total channel shopping trips by category buyers that included a
purchase of the category.
Trip Conversion =
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Category Buyer Trips in Channel
Category Buyer Trips (ALL Channels)
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The AWG Category Management Glossary of Terms
Core Shopper – A shopper responsible for the majority (e.g., more than half) of all grocery dollar sales at
a given retailer.
Cross-Category Analysis - The process of examining multiple categories within a distributor’s category
portfolio for the purpose of determining their relative importance in terms of the consumer, the
market, the competition, and the distributor.
Cross-Docking - The practice in which products are transferred from manufacturer to storebound
vehicles at the distributors warehouse without extensive handling or long term storage.
Cross Purchase Interaction – The likelihood of a consumer purchasing similar or interrelated items in
conjunction with their current transaction (e.g., the percentage of times a consumer purchases bleach
with laundry detergent).
Days-of -Supply - The number of days of product stock on hand within a distribution system or retail
store.
Demand Index (DI) – A number indicating a product's expected demand, or volume potential, based on
comparing its shopper profile to the demographic composition of a specific geography. A demand
index may be calculated for a store's trading area, store, cluster, chain, or zip-code.
1. Demand Index =
% of Total Store HH's
*
in demographic segment
2.
"Weighted" Consumption Index in demographic segment
3. DI (TTL =
Trading Area)
=
Consumption Index
in demographic segment
Sum of Weighted Consumption Indexes
for all demographic segments
Demographics – A traditional form of segmentation which identifies target consumers or groups based
on characteristics including: Household age, income, size, presence of children, race, gender, education,
and occupation.
Destination Role - The role (purpose) designation for categories which will be managed to establish the
distributor as the dominant store of choice by providing the target consumer with consistent, superior
value. The distributor’s objective is to be identified as the “store of choice” for the target
consumer’s needs pertaining to the category.
Direct Exchange of Business Information (DEX/UCS) - A store level data interchange system that
extends UCS to support Direct Store Delivery (DSD) and allows direct data transfer between the
supplier’s delivery personnel and the store’s receiving agent. The standardized hardware/software
reduces time, costs and inaccuracies at the retail back door. The vendor’s salesperson or driver is
equipped with handheld terminal in which the details of the order are maintained. Once the item
count is verified by the receiving agent, the handheld terminal is directly connected to the store’s
computer and the information is downloaded. The data is then transmitted to the retailer’s
accounting department for reconciliation and payment. (see NEX/UCS)
Direct Product Profitability (DPP) - The profit contribution by a product after all revenues, including
sales revenue and allowance, have been credited and all the direct costs involved in moving and
handling it from a retailer’s warehouse unloading dock (or store) to the consumer have been
allocated. (The result of Activity Based Costing/Profitability performed at the product level).
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The AWG Category Management Glossary of Terms
Direct Store Delivery (DSD) 1.) A program that allows direct store delivery of product to a store door at best price versus a
warehouse shipment. Limited availability by brand per quarter.
2.) A method of delivering merchandise from the manufacturer directly to the retail store, bypassing
warehouse facilities. Product supply (model stock and replenishment) can be managed by the
supplier with varying degrees of retailer oversight, although product check-in is done by both the
supplier and the store receiver. Major DSD categories include soft drinks, beer, bread and fresh
baked goods, dairy products and fragile items requiring special handling such as potato chips and
some gourmet items.
Distributor - Retailer or Wholesaler.
Efficient Assortment - A collaborative Supplier-Retailer process of determining the optimal product
offering, within a category, that achieves target consumer fulfillment and enhanced business results.
By optimizing shelf space with true assortment that meets consumer needs, retailers and suppliers
can eliminate the cost of non-required sizes, products with little differentiation and those with low
turns. In so doing, efficient assortment helps retailers increase store volume and gross margins. The
key drivers of this initiative are category and space allocation targeted by store, quicker adjustments
of products in response to changes in customer purchases, identification and emphasis on higher
volume/margin items and improved pricing strategies to increase return on investment (ROI).
Efficient Assortment Business Process - A core component of the Efficient Assortment Model. A highly
disciplined 6-step process by which distributors and suppliers working in collaboration determine the
percent of market coverage and product mix required to optimize category performance given its
specific role in the distributor’s portfolio.
Market Coverage
Category Definition
Deletion Validation
CategoryReview
Category Role
Retention Validation
Category Assessment
Addition Validation
Category Scorecard
Assortment
Category Strategies
Pricing
Category Tactics
Shelving
Plan Implementation
Promotion
Finalization
Quantification
Efficient Consumer Response (ECR) - A strategy in which the grocery retailer, distributor and supplier
trading partners work closely together to eliminate excess costs from the grocery supply chain. The
ECR strategy focuses particularly on four major opportunities to improve efficiency; Efficient
Replenishment, Efficient Promotion, Efficient Assortment, and Efficient Product Introduction.
Efficient Product Introduction - Efficient product introduction centers on reducing system costs by
finding new and better ways to identify and introduce new products that are more directly related to
consumer needs.
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The AWG Category Management Glossary of Terms
Efficient Promotion - By shifting away from a buying strategy to a consumer-oriented selling strategy,
costs for inventory handling, storage and uneven manufacturing runs will be reduced. At the same
time, more effective promotions at the retail level are expected to generate growth in volume and
improve competitive position. Consumer promotions, such as couponing, are highly ineffective, and
the move toward one count processing and scan validation will ultimately drive costs down.
Efficient Replenishment - Efficient replenishment focuses on the integration of the flow of information
and product from supplier to store shelf. Some of the practices that make up efficient replenishment
are accurate scan data needed to drive information systems, electronic store receiving, Electronic
Data Interchange communications, manufacturing, distribution, electronic accounts payable systems
and dynamic computer-assisted ordering.
Electronic Data Interchange (EDI) - The computer-to-computer transmission of business information
between trading partners. The information is usually organized in standard file formats or
transaction sets following guidelines administered by the Uniform Code Council (UCC) for the
grocery industry or the Voluntary Inter-Industry Communications Standards Group (VICS) for the
general merchandise industry. Standards have been developed for all regular business-to-business
communication, including purchase orders, invoices, shipping notices and funds transfer. By
eliminating the clerical, mailing and other costs associated with paper-based information, EDI
reduces costs, time delays and errors.
Everyday Low Price (EDLP) - A permanent competitive pricing strategy where retail prices continually
reflect all off-invoice, bill-back, and other promotional funds eliminating short term “hot sale
prices”.
Excitement Creation - A category strategy which communicates a sense of urgency or opportunity to the
consumer (e.g. impulse, lifestyle oriented, seasonal).
Exclusivity, Exclusivity Index - A measure representing the percent of consumers purchasing a
particular brand (size, type, flavor, etc.) that fulfill 100% of their category needs exclusively with
that brand. As example, if 40 Households out of 100 surveyed fulfilled 100% of their annual
category needs with Brand A, Brand A would have an exclusivity of 40%, (40HH/100HH = 40%).
This measure enables the distributor to discriminate in favor of those items where targeted
consumers have shown an unwillingness to use other products within the category. The
discontinuation of these products could result in the target consumer leaving the store. Exclusivity is
converted into an index by taking the exclusivity associated with the particular brand and dividing it
by the average exclusivity measure for all brands in the category. This measure can be determined at
all levels of data analysis (brand, size, flavor, SKU, etc.).
Geodemographics – Consumer segmentation which aggregates households by cross-tabbing the
principal drivers of consumer goods (Income, Urbanicity, Age, Absence or Presence of Children).
Because U.S. Census data can also be cross-tabbed in this way, geodemographics can directly link
product consumption to geographies (states, DMAs, channels, stores, zip-codes) so that high
potential consumers can be found on the ground, in restaurants, in stores and through media.
Gross Margin - The difference between an item’s retail price and its cost expressed as a percentage of
the selling price. That is:
Gross Margin =
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Retail Price – Cost
Retail Price
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The AWG Category Management Glossary of Terms
Gross Margin Return on Inventory (GMROI) - Used to quantify assortment
decisions made for the category. Represented as Current and New (estimated) Gross
Margin Return on Investment. Calculated by dividing Annual Gross Profit $ by
Inventory $ at Cost.
GMROI
=
Gross Margin
100 - Gross Margin
X
Turns
Turns are calculated as follows:
Annual $ Sales at Costs
Average Inventory $ at Cost
Gross Margin Return on Inventory (GMROI) Quadrant - A quadrant analysis showing the
relationship between the gross margin and the annual turns among categories or subcategories. It
helps identify which actions are most appropriate to increase the overall return on assets in a
category.
Gross Profit - The dollar difference between the sales of a product and its cost. It usually refers to the
profit generated from the sales of a number of units (e.g., a case) of an item.
Heavy User – A category user whose product consumption is significantly higher versus the category
(e.g. indexed at 120 or higher versus the category average).
Heavy User Purchasing Behavior – Describes purchasing behavior among heavy users based upon
number of criteria, including: Annual purchases, typical purchase size ($ or units), percent deal
volume, etc.
Household Panel Data – Product purchase behavior data collected from a "panel" of households which
are projected to represent a targeted area (e.g., a region, local market, or total U.S.). All purchases
are captured at the point of sale, or in-home via hand-held scanners. Captured sales conditions may
include: pricing, trade channel, display, feature, TPR, etc.
Image Enhancing - A category strategy which communicates the distributor’s desired image to the
consumer in one or more of the following areas: price, service, quality, and variety.
Inventory Turns—The number of times a retailer sells out of his complete inventory in a given period of
time. It represents the speed with which inventory is sold. The most common way to compute
Turns is:
Inventory Turns =
Sales
Average Inventory
If a retailer turns his inventory 22 times a year, it means that on average he purchases and sells a
product 22 times a year. Sales and inventory must be in the same units (e.g., both at retail or cost
or units).
Lifestage– A form of consumer segmentation, which combines age and presence of children in a
particular household (e.g., 18-34 households w/ no children).
Lifestyle - A form of consumer segmentation which combines demographic data such as occupation,
household income, and level of education with geographic data such as family dwelling status and
location (e.g., Metro Elite, Rural Towns and Farms, Mid-Upscale Suburbs).
Light User – A category user whose product consumption is significantly lower versus the category (e.g.
indexed at 80 or lower versus the category average).
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The AWG Category Management Glossary of Terms
Loyalty, Loyalty Index - That share of annual category requirements that the consumer is able to satisfy
with a single brand (size, type, flavor, etc.). As example, if a consumer makes 10 purchases
annually in a given category, 3 of which are made of Brand A, Brand A would have a 30% loyalty,
(3/10 = 30%). This measure enables the distributor to discriminate in favor of those items where
targeted consumers have shown a higher loyalty to purchase versus other products within the
category. The discontinuation of these products could result in the target consumer leaving the store.
Loyalty is converted into an index by comparing (dividing) the loyalty of Brand A by the average
loyalty of all brands within the category. Loyalty and the loyalty index can be measured at all levels
of data analysis (brand, size, flavor, SKU, etc.).
Loyalty is often referred to as “share of requirements”.
Market Basket Analysis – Understanding the value of total market basket relating to a category, subcategory, segment, brand, or SKU. This measure is effective when compared to average market basket.
Market Coverage - That percent of market demand that a Distributor chooses to meet with a category’s
assortment. Using a market level item ranking report, the distributor identifies those items in the market
that represent a determined percentage of each segments sales within the category. This percentage
(market coverage) is set at levels that enable the Distributor to achieve the specific strategies, scorecard,
and role performance that have been established for the category.
Market Share - That percent of $ sales in a given category controlled by a distributor in a specific
geography. Market share is also captured in terms of a distributor’s all commodity volume (ACV)
which represents the average weighted market share for all categories within the distributor’s
operation.
Market $/$MM ACV Index - An items $ Sales for each million dollars of all commodity volume (ACV)
in a given market place. This figure is converted into an average by taking the items factor, dividing
it by the average for the segment.
Mark-Up - The penny difference between the selling price and the cost of a single unit.
Most Preferred Substitute - A data point collected via household panel which provides insight on those
products within a category that consumers will most likely switch to, when not purchasing a
competitive product within the same category. This data allows distributors to better predict where
consumer purchases will shift when delisting items that have been identified as having low consumer
loyalty within their product mix.
Network Exchange (NEX/UCS) - UCS provides two communications links between store and supplier:
DEX and NEX. NEX supports communications between office-based computer systems over public
communications networks, while DEX provides direct linkage between trading partners at the store’s
back door without the need for other (or public) networks. NEX/UCS is used by both the grocery
and mass merchandise industries. It provides additional benefits when used with DEX; automates
post-delivery accounts payable and receivable; maintains data files on products, costs, promotions,
and delivery authorization. Additionally, it minimizes payment discrepancies and the time required
to correct them.
Occasional (Category Role) - Also known as Occasional/Seasonal. The role designation for categories
which will be managed to reinforce the image of the distributor as a store of choice by providing
timely, competitive value to the target consumer. Such categories do a majority of their volume in a
shorter time period(s) during the year.
Occasional Shopper – A shopper responsible for the minority (e.g., less than half) of all grocery dollar
sales at a given retailer.
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The AWG Category Management Glossary of Terms
On-Sale/Off-Sale Mix - A means of showing the promotional mix within a category or subcategory.
The on-sale component is the percentage of the total business supported by merchandising activity
(i.e. price reduction, feature, display); the off-sale component is the percentage of business sold at
normal cost and retail (i.e. without merchandising support).
Opportunity Gap - Using quadrant analysis during category assessment, opportunity gaps are
represented by the linear distance between the current performance of the category versus the desired
state (role). These distances can be quantified to determine the location of the largest business
opportunities to be addressed in the further development of the category strategies and tactics.
Out of Stock – A product is considered "out of stock" whenever it is not available for purchase.
Payment Terms - The payment terms offered by a supplier to a retailer. Average payment terms within
the industry are “2/10 net 30” (i.e. the retailer received a 2% discount for payment on or before the
tenth day, but the full amount is payable within 30 days). “Extended terms” are often offered on
new or seasonal items. Payment terms will vary from category to category, and in some cases, from
one manufacturer to another.
Penetration (% of HH's Purchasing) – For a specific market/region, the percent of households who
purchased a product group at least once within a given time period (usually annual).
Percent of ACV Selling – The percent of All Commodity Volume (ACV) that sold at least 1 unit of an
item during a specific time period.
Percent of Category $ Sales – The percent of product $ Sales compared with total category and/or
demographic segment sales.
Percent (%) of Cumulative $ Share (Sales) of Segment - That percentage of segment $ sales controlled
by an item and all other items of higher rank. Example: The top ranked item in a segment controls
5% dollar sales. The 2nd ranked item controls 4.5% $ sales. The % Cumulative $ Share of item 2
would be 9.5%. This measure is used in determining proper market coverage levels in Efficient
Assortment analysis.
Percent (%) of Market ACV Availability - The availability of an item in the market measured as a
percent of All Commodity Volume. If an item can be found in stores within a market that are
responsible for 75% of ACV $ sales, the item would have 75% ACV Availability.
Percent (%) of Segment $ Share (Sales) - An item’s share of a category segment’s $ Sales. Example:
Category A represents $100 sales. One of the segments within Category A represents $20 sales. An
item in this segment that represented $5 sales would be responsible for 25% of the Segment $ Share.
Percent of Transactions per Shopping Occasion – see "Conversion"
Percent Sold on Deal – The percent of product purchases on which a consumer perceived that a deal was
present (e.g., features, displays, coupons, price/bonus packs).
Planogram - The design of shelf schematics allocating specific space and facings on a per item basis.
Shelving software has enabled the input of such schematics to provide specific financial
performance expectation around inventory $, turns, and GMROI.
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The AWG Category Management Glossary of Terms
Preferred Role - See Routine. A preferred role can also be established as the “best in class of trade” for
the retailer.
Product Switching, Switching Index - The cumulative percent of the brand's users who buy other brands
(size, type, flavor, etc.) divided into the average cumulative percent of users buying other brands
(size, type, flavor, etc.) in the segment. This measure enables the distributor to discriminate in favor
of those items where targeted consumers have shown an unwillingness to switch to other products
within the category.
Profit Generation - A category strategy which focuses on the ability of a category or its components to
generate profits (i.e. high gross margin, high gross profit dollars).
Profit and Loss Statement - Also known as Income Statement. A major financial statement of any
company summarizing the sales, gross profits and margins, expenses and net profit results for the
company during a specific time period (e.g. prior fiscal year).
Profit Productivity Index - The segment’s Share of Category Net $ Profit divided by the segment’s
share of category items (SKU’s).
Projected Annual $ Sales/$MM ACV for Retailer - The projected annual dollar sales a new item will
generate for a Retailer determined by multiplying the average
$ Sales for each million dollars of all commodity volume (ACV) in the market place, by the amount
of million dollar ACV done by the Retailer.
Purchase Cycle – The average number of days between purchases of a particular product group among
households who purchased at least two times annually (repeat buyers).
Purchase Frequency – The average number of times each buyer purchases an item over a given time
period.
Purchase Frequency = TTL Purchase Occasions
# of Buying Households
Projected Annual $ Sales for Retailer - The projected dollar sales the item will generate for the Retailer
over a one year period.
Repeat Buyer % – The percent of buyers who purchase the product group more than once in a given
time period.
Repeat Buyer
=
# of Repeat Buyers
# of TTL Product Group Buyers
Retailer Dollar ($) Sales/Sq. Ft. Index - An item’s dollar sales per square foot of retail space, divided by
the average dollar sales per item for the Retailer’s segment.
Retailer GMROI or ROA Index - An item’s Gross Margin Return on Investment (GMROI) or Return
on Assets (ROA), divided by the average GMROI or ROA per item for the Retailer’s segment.
Retailer Profit Index - An item’s dollar profit, divided by the average profit per item for the Retailer’s
segment.
Retailer Share Index - Retailer’s share of segment, divided by the retailer share of total market (ACV).
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The AWG Category Management Glossary of Terms
Retailer Trend Index - Retailer’s share of segment during the latest 52 weeks, divided by retailer share
YAG (year ago).
Return on Assets (ROA) - The ratio of a company’s net profit in relation to its net worth, derived by
dividing the company’s after taxes net profit by its net worth.
Return on Investment (ROI) - A general measure of how well a company’s invested assets are
generating profits during a period of time. In general, ROI is measured as:
ROI =
Net Profit (After Tax)
Investment
If “investment” in this formula is Net Worth (Assets minus Liabilities), ROI becomes Return on Net
Worth; if it is Total Assets, ROI becomes Return on Total Assets.
Routine Role - The category role designation for categories which will be managed to establish the
distributor as the store of choice by providing consistent, competitive value in meeting the
consumer’s routine/stock-up needs. The routine role will likely be assigned to a majority of the
categories in a Retailer’s operation.
Sales Per Million ACV ($ Sales/$MM ACV) - The sales of a product for every $1MM of ACV to which
a product is exposed at retail. May also be expressed as unit sales per million or equivalent sales per
million. Available through data suppliers, the formula is:
$ Sales ($, units or equivalent units)
=
$ Sales/$MM ACV
All Commodity Volume (Millions)
Sales Per Million ACV is useful in that any market can be related to the national average or
compared to other markets; without discriminating against those products which are in limited
distribution, but perform well where offered.
Sales Per Point of ACV - A measure used to equalize a brand’s sales (or share) position by assuming that
all brands have equal retail availability. As an alternative measure to Sales Per Million ACV, it
relates sales (or shares) to each 1% of All Commodity Volume (ACV) to which that brand is
exposed at retail.
Sales Volume (or Share) = Sales (Share) Per Percentage Point of ACV Selling
Sales Per Point of ACV Selling is useful in offering rationale for additional retail placement, and for
estimating potential sales from a new retail placement.
Sales Percent from Display – The percent of product sales ($ or units) which occurred during store
display only.
Sales Percent from Feature – The percent of product sales ($ or units) which occurred during store
feature only.
Sales Percent from Feature & Display – The percent of product sales ($ or units) which occurred during
store feature and display.
Sales Percent from Price Reduction (TPR) – The percent of product sales ($ or units) which occurred
during any form of price reduction.
Sales Percent from Shelf at Regular Price – The percent of product sales ($ or units) which occurred
without any store level promotional support (feature, display, feature + display, TPR).
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The AWG Category Management Glossary of Terms
Sales Percent with Any Promotion -- The percent of product sales ($ or units) sold on any store level
promotional condition (feature, display, feature + display, or TPR).
Sales Productivity Index - The segment’s share of category $ Sales divided by the segment’s share of
category items.
Scorecard - A measurement tool used to monitor the progress of the category business plan, improve
category planning decision-making, and as a basis for reward and recognition
Seasonality Index – The ratio of $ Sales to average weekly $ Sales within a category, sub-category,
segment, brand or SKU, and plotted over time for a specific retailer or market area. Useful in
comparing retailer and key competitor consumer purchase timing, or "seasonality" trends within the
retailer target market.
Segment $ Rank - Numerical dollar sales ranking of item within segment.
Segment $ Sales Index - A segment’s share of $ Sales that are controlled by a targeted consumer group,
divided by the share of ACV $ Sales controlled by that same targeted consumer group. This
measure enables the Retailer to discriminate in favor of segments having the greatest
appeal/importance to their target consumer.
Segment Shopper Index - The percentage of a segment’s shoppers represented by a targeted consumer
households (demographic), divided by the percentage of shoppers that the same demographic
represents of all shoppers in the market place. Example: 3 of 10 households (30%) using Olive Oil
make +$40K annually. In the market place, 2 of 10 households (20%) make +$40K. The Segment
shopper index would equal 150, (30/20). The use of this measure enables the Retailer to
discriminate in favor of segments having the greatest appeal/importance to their target consumer.
Service Level - Another measure of the ability of a retailer buyer/merchandiser to meet store orders from
warehouse stock or a supplier to meet the level of demand for its products in a store, e.g. when a
warehouse has a 97% service level, 3% of the items ordered by retailers are scratched or back
ordered because of out-of-stocks.
Service Level =
Cases Shipped (or Delivered)
Cases Ordered (or Required)
For example, if a store ordered 1000 cases and 970 were shipped, a 97% service level was achieved.
This is different than an out-of-stock rate which measures the percentage of items (not cases) that
were not shipped.
Share (%) of Category $ Profit - The segment profit as a percent of the category profit. “Net” profit is
preferred to gross profit, but may not be available.
Share (%) of Category $ Sales - The segment $ Sales as a percent of the total Category $ Sales.
Share (%) of Category SKUs - Segment SKUs (items) as a percent of the total category items.
Share of Requirements (SOR) - Expressed as a percentage, the share of a consumer’s total annual
purchases of the category that can be attributed to a specific brand, size, flavor, etc. Reached by
dividing Actual $ Spent (shopping trips per year * $ spent per trip) by Annual Household
Requirements (for the brand, size, flavor, etc.). SOR is useful as a measure with which to assess
consumer loyalty.
AWG 2001
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The AWG Category Management Glossary of Terms
Switching Index - The cumulative percent of the brand’s users who buy other brands (size, type, flavor,
etc.) divided into the average cumulative percent of users buying other brands (size, type, flavor,
etc.) in the segment. This measure enables the distributor to discriminate in favor of those items
where targeted consumers have shown an unwillingness to switch to other products within the
category. The discontinuation of these products could result in the target consumer leaving the store.
Traffic Generation or Traffic Building - A category strategy which focuses on drawing consumer
traffic into store, aisle, and/or category (i.e. items or segments having characteristics such as, high
share, frequently purchased, highly price sensitive, high % of sales).
Transaction Building - A category strategy that focuses on increasing the size or the average transaction
for a category (i.e. higher than average ring, larger sizes, impulse purchases).
Turf Protection - A category strategy which focuses on aggressively positioning the category (relative to
competition) to appeal to the target consumer.
Units per Transaction – Physical units purchased during a single shopping transaction.
Units/Transaction
AWG 2001
=
Annual # of units purchased
Annual # of transactions
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