CATEGORY MANAGEMENT involves building a Business Plan around the 4 P

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CATEGORY MANAGEMENTinvolves building a Business
Plan around the 4 Ps
PROMOTING
PRICING
PRODUCTS
PLACEMENT
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Agenda

• Review Objectives Agenda
• Category Management Overview
• Why Category Management?
• What is Category Management?
• Implementing Category Management
• Core Components
• Strategy
• Business Process

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Agenda -- Continued

• Enabling Components
• Organizational Capability
• Information Technology
• Collaborative Relationships
• Scorecard
• Benefits of Category Management

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Agenda -- Continued

• The Strategic Category Business Process
• Corporate Strategy
• Category Definition
• Category Role
• Category Assessment
• Assessment Worksheets
• Category Profitability

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Agenda -- Continued

• Category Management Strategies
• Category Management Tactics
• Assortment Tactics
• Assortment Choices
• Category Role Linkage
• Assortment Analysis
• Assortment Assessment Worksheets

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Agenda -- Continued

• Pricing Tactics
• Pricing Choices
• Category Role Linkage
• Pricing Analysis
• Pricing Assessment Worksheets
• Promotion Tactics
• Promotion Choices
• Category Role Linkage
• Promotion Analysis
• Promotion Assessment Worksheets

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Agenda -- Continued

• Shelf Presentation Tactics
• Shelf Presentation Choices
• Category Role Linkage
• Shelf Presentation Analysis
• Shelf Presentation Assessment Worksheets
• Integration Into Strategic Category Plan
• Strategic Category Planning Worksheets

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Why Category Management?

• Consumer Trends
• Complex consumer demographics
• Population growth rates have declined
• Competitive Pressure
• New store formats
• Warehouse clubs mass merchandisers
• New product introductions

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Why Category Management? -- Continued

• Economic Considerations
• Slow growth economy low interest rates
• Companies pressured to improve financial
  performance
• Industry Capability
• Shared business goals -- Focus on Consumer
• Shifting from internal optimization to maximizing
  consumer value
• Trading Partner Alliances
• Leveraging of resources between trading partners

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Why Category Management? -- Continued

• Empowerment
• Authority accountability to front-line managers
• Pricing
• Procurement
• Promotion
• Information Technology
• Distributors Suppliers share data

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Category Management ECR

• ECR (Efficient Consumer Response) creates an
  environment and tools which enable the
  distributor supplier trading partners to work
  collaboratively to deliver superior value on the
  products and services they offer consumers

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Category Management ECR -- Continued

• Category Management key component of ECR
• Provides strategic framework, business process
  and organizational framework within which
  collaboration takes place
• Profound impact on each of the four ECR
  strategies
• Efficient promotion
• Efficient Replenishment
• Efficient Product Introductions
• Efficient Store Assortments

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Definition

• Category Management is a distributor/supplier
  process of managing categories as strategic
  business units, producing enhanced business
  results by focusing on delivering consumer value.

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Basic Principles of Category Management

• Categories are managed as strategic business
  units
• Categories are managed strategically through
  category plans and strategic roles
• Category Managers control their share of company
  assets
• Asset Returns measure performance and establish
  priorities

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Basic Principles of Category Management --
Continued

• Responsibility for category performance/ownership
  is clearly defined and not fragmented across
  organization
• Category Management leverages distributor and
  supplier expertise for mutual benefit neither
  party can do the job alone

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Six Components of Category Management

• Core Components (essential)
• Strategy
• Business Process

• Enabling Components (assisting)
• Scorecard
• Organization Capability
• Information Technology
• Collaborative Relationships

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Strategy

• Categories are strategic business units
• Overall company strategies provide a
  infrastructure for category level strategies
• Strategies must be clearly understood throughout
  the Retailers organization

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Business Process

• A formal, disciplined set of activities designed
  to produce a specified output
• Development and implementation of Written
  Category Business Plans

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Scorecard

• A tools that defines, measures and monitors the
  progress of Category Business Plans

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Organizational Capability

• Development of the organizations core competency
• Through organizational structure
• Roles/Responsibilities
• Skill/Knowledge development
• Reward Systems

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Information Technology

• Critical elements of the Category Business
  Planning Process
• Need data-driven, fact-based analysis and
  performance measurement

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Collaborative Relationships

• Relationships with suppliers who acquire unique
  perspectives, resources and skills
• Common objective -- delivering superior consumer
  value more profitability

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Distributor vs. Supplier (Overlap
Differentiation)

• Supplier (Manufacturers Brokers)
• STRATEGY
• INFO TECH
• ORG. CAP.
• SCORECARD

• Distributor (Wholesalers Retailers)
• STRATEGY
• INFO TECH
• ORG. CAP.
• SCORECARD

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CATEGORY MANAGEMENT PROCESS

The Strategic Planning Process
Category Definition
Category Role
Category Assessment
Category Scorecard
Category Review
Category Strategies
Category Tactical Plans
Implementation Plan
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Category Definition

• The trading partners need to define the new
  category with a name
• What is it?
• What are the sub-categories?

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Category Role

• The distributor (with supplier input) would
  define the overall role the selected category is
  going to play in the distributors total business
• How important is the category?
• How to leverage the importance?

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Category Role -- Components

• Destination
• To be the primary category provider and help
  define the retailer as the store of choice by
  delivering consistent, superior target consumer
  value
• Routine
• To be one of the preferred category providers and
  help develop the retailer as the store of choice
  by delivering consistent, competitive target
  consumer value

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Category Role -- Components Continued

• Occasional/Seasonal
• To be a major category provider, help reinforce
  the retailer as the store of choice by delivering
  frequent, competitive target consumer value
• Convenience
• To be a category provider and help reinforce the
  retailer as the store of choice by delivering
  good target consumer value

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Category Assessment

• Comprised of accumulation of all appropriate
  consumer, distributor, supplier and competitor
  data for analysis relative to opportunities
  represented for the category chosen
• How is the category doing?
• Versus Potential? Versus Goals?

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Scorecard

• Establishment of the performance measures by
  which the category manager will measure the
  quality of the execution of the plan
• What are the goals objectives?
• How is the progress?

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Category Strategies

• Assignment of specific strategies to key elements
  of the overall category
• What is the business plan?
• How will it achieve the role scorecard?

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Category Strategy - Components

• Traffic Building
• Consumer Draw
• Transaction Building
• Increase the Register Ring
• Profit Generating
• Improve Category Gross Margin
• Turf Protecting
• Defend Sales and Share (other formats)

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Category Strategy -- Components Continued

• Cash Generating
• Increase Category Cash Flow
• Excitement Creating
• Generate Sense of Urgency Opportunity
• Image Enhancing
• Reinforce Retailers Desired Image

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Category Tactics

• Specific activities supporting the category
  strategies which would include item variety,
  everyday and feature price targets, shelf
  presentation, etc.
• What do we do to achieve the strategy?
• Who does what?

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Category Tactics -- Components

• Assortment
• Pricing
• Promotion
• Shelf Presentation
• Product Supply

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Plan Implementation

• Key Components of Plan Implementation
• Approval Process
• Strategic Fit
• Scorecard Impact
• Resource Allocation
• Impact on Other Areas
• Assigning Responsibilities
• Scheduling

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Category Review

• Ongoing review and measurement of the progress of
  the plan toward the category role and scorecard,
  and modification of the plan when appropriate

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Conclusion

• The grocery industry is in a major state of
  transition. This change is a function of a
  complex mix of consumer, technological and market
  factors.
• Category Management represents a business
  oriented approach to achieving business results
  -- both for distributors and suppliers