CATEGORYMANAGEMENTSessionObjectives:DefineCategoryManagement(CM)DescribeCategoryManagementasaBusinessProcessDiscussCriticalIssuesRelatedtoSuccessfullyDevelopingaCategoryManagementSystemCategoryManagementProcessCategoryManagementIssuesDefineCategoryManagementDefinitionBringingBetterValuetotheConsumeristhePrimaryFocusofCategoryManagement.“ARetailer-SupplierprocessofmanagingcategoriesasStrategicBusinessUnits,producingimprovedsalesandprofitresultsbyfocusingonsatisfyingconsumerneedsanddeliveringconsumervalue.”Source:ECRBestPracticesReportCategoryManagementhasexpandingintodurablegoodsandservices.IsCategoryManagementjustforthegrocer?DurableGoodsAutoIndustry-GMPontiac&FordServiceIndustryPhoneServiceFinancialServices/BanksDefinitionTheECRSystemTimely,accurate,paperlessinformationflowSupplierDistributorRetailStoreConsumerHouseholdSmooth,continualproductflowmatchedtoconsumptionDefinitionEfficientPromotionEfficientStoreAssortmentDefinitionCategoryManagementisattheatthecoreofECR.CMprovidesaprocess&frameworkforcollaboration.EfficientNewProductDevelopmentEfficientReplenishmentCATEGORYMANAGEMENTCategoryManagementasaBusinessProcessiscomprisedofinterrelatedcomponentsbothwithinandoutsideoftheorganization.WhatisCategoryManagement?DefinitionInformationTechnologyStrategy&BusinessProcessScorecardCollaborativeRelationshipsOrganizationCapabilitiesCoreEnablersEnablersCATEGORYMANAGEMENT:HOWISITDIFFERENT?Category/Brand/SKUManagementunderoneDecisionMakerConsumer-FocusedStrategiesData-basedDecisionMakingProactiveBusinessPlanningCollaborativeWorkProcessManageCategoryAsBusinessUnitFocusedonCategoryROI-NOTSalesorGrossMarginDefinitionSKILLSNEEDEDTOBUILDBUSINESSTHROUGHCATEGORYMANAGEMENTDataanalysisandtechnicalmasteryShopperandconsumerunderstandingStrategydevelopmentFinancialandlogisticsexpertiseInnovationTotalSystemsFocusDefinitionDefinitionWhyisitbeneficialforRetailersandManufacturerstoInvestinCategoryManagement?HelpsRetailers-DefinecustomerneedsDeterminestrategicissuesEnhancecategoryandstoreprofitsDefinitionWhyisitbeneficialforRetailersandManufacturerstoInvestinCategoryManagement?HelpsRetailers-DefinecustomerneedsDeterminestrategicissuesEnhancecategoryandstoreprofitsHelpsManufacturers-PositionthemselvesascategorycaptainsforretailersBecomeanindispensableresourcefortheretailerEnhancebrandprofitsRoadMapCategoryManagementasaBusinessProcessCategoryManagementIssuesDefineCategoryManagementProcessCategoryManagementasaBusinessProcess.CategoryDefinitionCategoryRoleCategoryAssessmentCategoryScorecardCategoryStrategiesCategoryTacticsPlanImplementationCategoryReviewSource:ThePartneringGroupWhatisaCategory?Adistinct,manageablegroupofproducts/servicesthatCONSUMERSperceivetobeinterrelatedand/orsubstitutableinsatisfyingtheirneed(s).ProcessCategoryDefinition-criticalindeterminingtheproductsthatmakeupthecategoryandinestablishingthesegmentationstrategy.WhatisaCategory?Adistinct,manageablegroupofproducts/servicesthatCONSUMERSperceivetobeinterrelatedand/orsubstitutableinsatisfyingtheirneed(s).ProcessCategoryDefinition-criticalindeterminingtheproductsthatmakeupthecategoryandinestablishingthesegmentationstrategy.Howdoesdefiningacategoryhelp?Producesbetterretailer/manufactureralignmentwiththeconsumerCreatesbettermanufacturer-retaileralignmentGivesnewperspectivesonhowtoviewaproductand/orcategoryProcessJuices&drinksShelfstableRefrigeratedFrozenGlass/PlasticAsepticReadytoServeConcentrateCategorySub-CategorySegmentSub-SegmentDefiningaCategorybyUsageSegmentLemonJuiceSegmentation:Source:Borden,Inc.ProcessCategoryRole(orpurpose)defineshowtheconsumerviewsthecategory.PossibleCategoryRoles:DestinationConvenienceRoutineSeasonal/OccasionalProcessCategoryAssessmentCategoryAssessmentinvolvesconductingacompleteanalysisofthecategorybyinvestigatingit’ssub-categories,user-segments,brands,andSKUs.Suchananalysismustbebasedoncurrentconsumer,distributor,supplierandmarketinformation.ProcessOneexamplemightbeidentifyingthegapbetweenthecurrentsalesandthepotentialsalesofacategory.Category:CandyMarket:ColumbusStore:KrogerTotalDollarSales-ColumbusMarket$1,000,000TotalDollarSales-KrogerColumbus$150,000KrogerMarketShare-TotalGroceries20%KrogerMarketShare-Candy15%Gap(%)5%Gap($)$50,000Source:Borden,Inc.ProcessKeyQuestionsinConductingaCategoryAssessmentWhoismytargetcustomer?Howimportantisthiscategorytothatcustomer?Whatarethecategorytrends?volume,share,profits?Whatarethekeyproductsegments?WhataretheleastandmostimportantSKUs?ProcessKeyQuestionsinConductingaCategoryAssessment(continued)HowwellisshelfspacealignedtoSKUmovement?Howdoconsumersviewbrands?BrandnamesversusstorebrandsWhentheymakeapurchase,Howlargeisit?Whatelsedotheybuy?Howdoesthecategory’spricingcomparetotherestofthestore?ProcessKeyQuestionsinConductingaCategoryAssessment(continued)Howdoesthecategory’spricingcomparetothemarket?Whatpercentageofvolumeissoldonpromotion?Whatistheimpactoffeaturinganddisplay?Whatbrandsandsizes“define”and/orbuildthecategory?ProcessTheCategoryScorecardmeasuresandmoni