Transcript Where to Category Management [Download Powerpoint presentation]

Where to Category Management?
Evolution and Best Practice
7 August, 2007
Norrelle Goldring, Moxie Market Strategy
Peter 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
PAST
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!
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.”
PAST
Consolidating market necessitated efficiencies
Bigger/national suppliers and bigger retailers with more products and
floor space meant need for space and profit efficiencies
The 1990s: The original 8-Step CM Process
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 Definition
Category Role
Category Assessment
Category
Review
Category Scorecard
Category Strategies
Category Tactics
Plan Implementation
Price
Promotions
Assortment
Layouts
Private Label
Category Management
+
+
+
+
+
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last year’s activities
opportunity gaps
better promotions
range management
space provisions
cost reduction through
ECR disciplines
+ competitive analysis.
Performance
+ Formal, continuous process of fine tuning elements such as:
Time
Key Issues
+ Category Management often seen as ‘cost’ reduction
ECR = Efficient Cost Reduction?
+ Over-riding need to hit the internal numbers
+ Retailers struggle:
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+
+
+
+
Supply vs demand?
Culture for collaboration?
Skills and resources?
Internal silos?
Information and what to do with it?
No wonder we’re struggling …
Sales
Marketing
Trade Marketing/
Category
Supply/
Operations
Retail buyer
Key Issues
+ Manufacturers struggle:
+
+
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+
+
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
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+
+
+
+
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Growing channel promiscuity
Smaller baskets more often
Give me Solutions
Time poor
Educated
Health and well being
Impatient
Judgemental
PAST
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
Where are we now,
and where to from here?
CURRENT
Now … modifications to the original 8 step process
Consumer
Decision
Tree
Category
Definition
Item
Strategies
Category
Role
Demand
Clustering
Tactics/
Initiatives
Category
Assessment
Scorecard
Implementation
Spectra Marketing Systems process, 2006. Assumes greater shopper focus.
CURRENT
Where are we now? Depends on who it reports to
Nobody ‘owns’ the shopper
Sales Based
Marketing Based
+Sales decision support &
+Retail presence
analysis
+POS development
+Category analysis and
+Consumer
reviews
promotions
+Range & space analysis
+Price promotion analysis
= brand not category
+Space management
focussed
= Customer not shopper
focus
Makes it difficult to cover all instore marketing drivers:
Range, Space, Visibility/merchandising/theatre, Price,
Promotion, Persuasion/service/incentives/training
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 store
Difference between ‘behaviour’ and providing an experience!
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
Performance
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+
+
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+
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Time
Understanding the Difference
Category
Management
Category
Development
Operational Effectiveness =
“Running the same race faster.”
Strategy =
“Running a different race.”
•measure retail performance
•identify opportunity gaps
•focus on retail performance.
Consumer
•identify consumer-based
opportunities
•create value
•focus on total supply chain.
Retailer
Retailer
Source: Porter: Competitive Strategy
Taking a Category Development approach encourages innovation
and maximizes total supply chain value.
FUTURE
Insights
Customer/
Sales
Consumer/
Marketing
Shopper/
Category & Channel
The future … a potential model
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
SEGMENTED EXECUTION
Pharmacy example: executional priorities change
by channel segment
Front of store
displays
2
5
1
At shelf
Staff
recommendation
4
3
Check out
(impulse)
Gondola end displays – condition based cross-sell with related categories
e.g. cold & flu, arthritis, skin care, infant care / women’s health
DEMAND CLUSTERING
Identifying unique shopper groups by store or category
Forecasting category or brand demand at a local level
Also applied to store marketing strategy
THEATRE
THEATRE
THEATRE
SUMMARY
From
…
To
+ Performance based
+ Demand based
+ A better yesterday
+ A new tomorrow
+ Numbers focussed
+ Led by shopper behaviour and
needs
+ Range and space focus
+ All sales drivers, plus theatre
+ One size fits all solutions
+ Clustering and segmented
execution
+ Subset of sales
+ 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!
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?
Moxie Market Strategy
Market Concepts
Norrelle Goldring
P: 61-2-9427 7473
M: 61-411-735 190
E: [email protected]
W: www.moxiemarketing.com.au
Peter Huskins
P: 61-2-9982 3084
M: 61-412-574 793
E: [email protected]
W: www. marketconcepts.com.au
THANK YOU