Transcript STRATEGIC MARKET PLANNING for Kmart Category Managers

Category Management is a Continuous Process
Category review
Category
definition
Category
assessment
•
• Organize
product groups
and offerings
based on specific
consumer needs
and relevant
business
requirements
• Design category
product hierarchy
down to SKULevel
Category
strategy
& tactics
Conduct full value • Assign role for
chain analysis of
each category
situation:
based on
– Customers
customer
(profile, purchase perspective
behavior)
– Market
(trends, share,
prices)
– Competitor
performance,
strategies, and
tactics
• Analyze financial
metrics
– Performance vs.
target
– Trends
• Conduct SWOT
Analysis across
portfolio
• Develop roledriven strategies
Category
performance
measures
• Create balanced
score card
– Specific and
measurable
• Gain consensus
on ratios and
measurements
Plan
implementatio
n
• Draw detailed action
plans based on
category roles and
strategies
– Line strategies
• Receive approval
from management
– Relate to
– Strategic fit with
• Review score card
Pentagon and
company's overall
consistency with
Triangle
business plan
–
Company
– Brand strategy
– Attainability of
strategy
objectives and goals
– Product/ sourcing
– Role of categories
strategy
– Potential conflicts
–
Role
of
suppliers
– Marketing/
• Coordinate with
– Horizontal
pricing/ promotion
suppliers
function goals
strategy
(e.g.
brand
– Assortment
• Align organization
management,
strategy
and assign
CRM, marketing)
• SSF allocation
responsibilities
– Visual
merchandising
• Outline a critical 1
strategy
path timeline
Goal
•
Category Definition Exercise
Begin to develop hypotheses on category definitions within business
Questions to consider
1.
How do customers think about products?
1.
Main reasons for shopping, e.g. need, purchase occasion, decision tree
2.
Natural clusters, e.g item I went for, items to go with it, impulse items
2.
3.
4.
What capabilities are required to run products “clusters” successfully?
How do best practice competitors approach the business?
How do others in the industry define categories, e.g. vendors, trade groups/journals,
syndicated data sources?
Exercise
Individually or in Groups
 Discuss and agree working definition of categories for today
 Write categories down on yellow post-it notes
 Group like categories together into larger groupings (e.g. divisions, business)
 Place post-its on flip chart to create merchandise hierarchy - one per business
 Identify any outliers or key gaps
2
Men’s Example of Product Hierarchy
Business
Men’s
Division
Sportswear
Categories Pants
Casual
Dress
Pants
Casual
Pants
Dress
Pants
Lines
Brand type
Brands
Product type
Dresswear
Casual Tops
Knits/
Sweaters
Wovens/
Flannels
etc.
etc.
Furnishings
Suit Separates &
Sport Coats
Suits/
Blazers
Sport
Coats
National Brands
Dress
Shirts
Accessories
Dress
Shirts
Accessories
etc.
etc.
Private Brands
Mycompa
ny own
YearRound
Other
Seasonal
Product
Wool
Linen
Item/SKU (color/size)
Navy
43L
3
Category Management is a Continuous Process
Category review
Category
definition
Category
assessment
•
• Organize
product groups
and offerings
based on specific
consumer needs
and relevant
business
requirements
• Design category
product hierarchy
down to SKULevel
Category
strategy
& tactics
Conduct full value • Assign role for
chain analysis of
each category
situation:
based on
– Customers
customer
(profile, purchase perspective
behavior)
– Market
(trends, share,
prices)
– Competitor
performance,
strategies, and
tactics
• Analyze financial
metrics
– Performance vs.
target
– Trends
• Conduct SWOT
Analysis across
portfolio
• Develop roledriven strategies
Category
performance
measures
• Create balanced
score card
– Specific and
measurable
• Gain consensus
on ratios and
measurements
Plan
implementatio
n
• Draw detailed action
plans based on
category roles and
strategies
– Line strategies
• Receive approval
from management
– Relate to
– Strategic fit with
• Review score card
Pentagon and
company's overall
consistency with
Triangle
business plan
–
Company
– Brand strategy
– Attainability of
strategy
objectives and goals
– Product/ sourcing
– Role of categories
strategy
– Potential conflicts
–
Role
of
suppliers
– Marketing/
• Coordinate with
– Horizontal
pricing/ promotion
suppliers
function goals
strategy
(e.g.
brand
– Assortment
• Align organization
management,
strategy
and assign
CRM, marketing)
• SSF allocation
responsibilities
– Visual
merchandising
• Outline a critical 4
strategy
path timeline
The CM category assessment includes a full valuechain analysis of both internal and external data
Data:
Sample
questions:
Customer
Competitor
Financial
•
•
•
•
•
Draw
Cross-shop
Target Segments
Attribute importance
Performance vs.
competitors
• Purchase occasions
• Brand strength
• Overall financial
performance
• Market share/growth
• Productivity
• Space allocation
• Assortment
• Brand strategy
• Product strategy
• Visual merchandising
• Pricing / promotion
• Marketing /
advertising
• Productivity (GMROI,
GMROF)
• Category financials
• Brand financials
• Assortment level
financials
• Market analysis
• Who are our
customers?
• How and why do they
shop at Mycompany?
• How do they view
Mycompany?
• What are our
competitors’ strategies?
• What are the best
practices?
• How is our financial
performance?
• What is our full
potential?
5
Category Management is a Continuous Process
Category review
Category
definition
Category
assessment
•
• Organize
product groups
and offerings
based on specific
consumer needs
and relevant
business
requirements
• Design category
product hierarchy
down to SKULevel
Category
strategy
& tactics
Conduct full value • Assign role for
chain analysis of
each category
situation:
based on
– Customers
customer
(profile, purchase perspective
behavior)
– Market
(trends, share,
prices)
– Competitor
performance,
strategies, and
tactics
• Analyze financial
metrics
– Performance vs.
target
– Trends
• Conduct SWOT
Analysis across
portfolio
• Develop roledriven strategies
Category
performance
measures
• Create balanced
score card
– Specific and
measurable
• Gain consensus
on ratios and
measurements
Plan
implementatio
n
• Draw detailed action
plans based on
category roles and
strategies
– Line strategies
• Receive approval
from management
– Relate to
– Strategic fit with
• Review score card
Pentagon and
company's overall
consistency with
Triangle
business plan
–
Company
– Brand strategy
– Attainability of
strategy
objectives and goals
– Product/ sourcing
– Role of categories
strategy
– Potential conflicts
–
Role
of
suppliers
– Marketing/
• Coordinate with
– Horizontal
pricing/ promotion
suppliers
function goals
strategy
(e.g.
brand
– Assortment
• Align organization
management,
strategy
and assign
CRM, marketing)
• SSF allocation
responsibilities
– Visual
merchandising
• Outline a critical 6
strategy
path timeline
Considering a category’s target role in the business
portfolio is critical to developing category strategies
Stand-alone impact
Standalone
GMROI
Standalone
GMROF
- High
Impact on other businesses
Relative
Draw
(Freq)*
Same Day
Cross-Shop
GMROI**
Indirect
Lift**
Market
share
Role
Traffic builder
Complementary
Authority
Leadership
Assortment Enhancer
Impulse
- Low
Definition
Signals superior value, driving
customers into the store and
generating significant opportunities for
cross-shopping
Fills out planned bundled offerings
associated with traffic builders
Although category does not generate a
lot of traffic, Mycompany is viewed as
dominant store of choice, reinforcing
core Mycompany DNA/image
Generates traffic and is viewed as a
dominant store of choice, reinforcing
core Mycompany DNA/image
While Mycompany will never achieve a
dominant position, the business
reinforces the image of the store as a
full-line provider of good value in
meeting fill-in or occasion-driven
planned needs
Supplements customers’ purchases
with items that meet their unplanned
needs
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7
Product roles help shape different
merchandising strategies
Traffic builder
Leadership
Complementary
Sign prominently
Visual
merchandising: to emphasize
Display
prominently to
draw into floor
Position adjacent
to leadership and
traffic builders to
allow comparison
shopping
Marketing:
Market
prominently to
build traffic
Market to
leverage
leadership, grow
share and
increase overall
business
credibility
Pricing and
promotion:
Price to increase
draw affordably
Promote
frequently and
competitively
Assortment:
Deep assortment
of high
- traffic
items
Avoid stock
- outs,
but don’t overinvest
presence
Assortment
enhancer
Impulse
Authority
Position in lower
traffic areas
Position near high
traffic areas but
don’t complicate
visual
presentation
Does not need to
be in high traffic
areas, but
displays should
be prominent to
assert dominance
Invest (especially
in
- store) to
encourage
cross
- shop
Moderate level
of marketing to
maintain
awareness
None as stand
alone, but as part
of bundle can be
used to
accentuate
otherwise non
descript offering
Market to
leverage
leadership, grow
share and
increase overall
business
credibility
Price and
promote
competitively to
hold/ gain share
Price to optimize
business profits
Shield at
markdown
Price/ promote to
optimize GMROI
Price to optimize
GMROI
Do not promote
Price and
promote
competitively to
hold/ gain share
Complete
assortment of
major and
secondary brands
Depth to avoid
stock
- outs
Moderate
assortment of
major brands and
SKU’s
Minimal
assortment
Select
assortment of
only major
brands and SKU’s
Avoid stock
- outs
Complete
assortment of
major and
secondary brands
Depth to avoid
stock
- outs
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8
Category Management is a Continuous Process
Category review
Category
definition
Category
assessment
•
• Organize
product groups
and offerings
based on specific
consumer needs
and relevant
business
requirements
• Design category
product hierarchy
down to SKULevel
Category
strategy
& tactics
Conduct full value • Assign role for
chain analysis of
each category
situation:
based on
– Customers
customer
(profile, purchase perspective
behavior)
– Market
(trends, share,
prices)
– Competitor
performance,
strategies, and
tactics
• Analyze financial
metrics
– Performance vs.
target
– Trends
• Conduct SWOT
Analysis across
portfolio
• Develop roledriven strategies
Category
performance
measures
• Create balanced
score card
– Specific and
measurable
• Gain consensus
on ratios and
measurements
Plan
implementatio
n
• Draw detailed action
plans based on
category roles and
strategies
– Line strategies
• Receive approval
from management
– Relate to
– Strategic fit with
• Review score card
Pentagon and
company's overall
consistency with
Triangle
business plan
–
Company
– Brand strategy
– Attainability of
strategy
objectives and goals
– Product/ sourcing
– Role of categories
strategy
– Potential conflicts
–
Role
of
suppliers
– Marketing/
• Coordinate with
– Horizontal
pricing/ promotion
suppliers
function goals
strategy
(e.g.
brand
– Assortment
• Align organization
management,
strategy
and assign
CRM, marketing)
• SSF allocation
responsibilities
– Visual
merchandising
• Outline a critical 9
strategy
path timeline
Performance targets are assigned to every
category based on several factors
Performance Target
Alternatives
•
•
•
Maintain performance
in current role
Improve performance
in current role
Target performance consistent
with a
different role
Relevant factors
•
Category Role
– Traffic Builder, Impulse, etc.
•
Competitor and industry environment
– Growth, trends
– Relative market shares
•
Customer/market context
– Target segment opportunities/threats
– Loyalty
•
Capabilities
– Related products
– Brands
•
Mycompany
•
National/Private
– Management capabilities
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