CATEGORY MANAGEMENTSession Objectives:lDefine Category Management (CM)lDescribe Category Management as a Business ProcesslDiscuss Critical Issues Related to Successfully Developing a Category Management System Category Management ProcessCategory Management IssuesDefine Category ManagementDefinitionBringing Better Value to the Consumer is the Primary Focus of Category Management.“A Retailer-Supplier process of managing categories as Strategic Business Units, producing improved sales and profit results by focusing on satisfying consumer needs and delivering consumer value.”Source: ECR Best Practices ReportCategory Management has expanding into durable goods and services.Is Category Management just for the grocer?lDurable GoodslAuto Industry - GM Pontiac & FordlService IndustrylPhone ServicelFinancial Services/BanksDefinitionThe ECR SystemTimely, accurate, paperless information flowSupplierDistributorRetail StoreConsumer HouseholdSmooth, continual product flow matched to consumptionDefinitionEfficient PromotionEfficient Store AssortmentDefinitionCategory Management is at the at the core of ECR. CM provides a process & framework for collaboration.Efficient New Product DevelopmentEfficient ReplenishmentCATEGORYMANAGEMENTCategory Management as a Business Process is comprised of interrelated components both within and outside of the organization.What is Category Management?DefinitionInformation TechnologyStrategy & Business ProcessScorecardCollaborative RelationshipsOrganization CapabilitiesCoreEnablersEnablersCATEGORY MANAGEMENT: HOW IS IT DIFFERENT?lCategory/Brand/SKU Management under one Decision MakerlConsumer-Focused StrategieslData-based Decision MakinglProactive Business PlanninglCollaborative Work ProcesslManage Category As Business UnitlFocused on Category ROI - NOT Sales or Gross MarginDefinitionSKILLS NEEDED TO BUILD BUSINESS THROUGH CATEGORY MANAGEMENTlData analysis and technical masterylShopper and consumer understandinglStrategy developmentlFinancial and logistics expertiselInnovationlTotal Systems FocusDefinitionDefinitionWhy is it beneficial for Retailers and Manufacturers to Invest in Category Management?Helps Retailers -l Define customer needsl Determine strategic issuesl Enhance category and store profitsDefinitionWhy is it beneficial for Retailers and Manufacturers to Invest in Category Management?Helps Retailers -l Define customer needsl Determine strategic issuesl Enhance category and store profitsHelps Manufacturers -l Position themselves as category captains for retailersl Become an indispensable resource for the retailerl Enhance brand profitsRoad MapCategory Management as a Business ProcessCategory Management IssuesDefine Category ManagementProcessCategory Management as a Business Process.Category DefinitionCategory RoleCategory AssessmentCategory ScorecardCategory StrategiesCategory TacticsPlan ImplementationCategory ReviewSource: The Partnering GroupWhat is a Category? A distinct, manageable group of products/services that CONSUMERS perceive to be interrelated and/or substitutable in satisfying their need(s).ProcessCategory Definition - critical in determining the products that make up the category and in establishing the segmentation strategy.What is a Category? A distinct, manageable group of products/services that CONSUMERS perceive to be interrelated and/or substitutable in satisfying their need(s).ProcessCategory Definition - critical in determining the products that make up the category and in establishing the segmentation strategy.How does defining a category help?lProduces better retailer/manufacturer alignment with the consumerlCreates better manufacturer-retailer alignmentlGives new perspectives on how to view a product and/or categoryProcessJuices & drinksShelf stableRefrigeratedFrozenGlass/PlasticAsepticReady to ServeConcentrateCategory Sub-Category Segment Sub-Segment Defining a Category by Usage SegmentLemon Juice Segmentation:Source: Borden, Inc.ProcessCategory Role (or purpose) defines how the consumer views the category.Possible Category Roles:l Destinationl Conveniencel Routinel Seasonal/OccasionalProcessCategory AssessmentCategory Assessment involves conducting a complete analysis of the category by investigating its sub-categories, user-segments, brands, and SKUs. Such an analysis must be based on current consumer, distributor, supplier and market information.ProcessOne example might be identifying the gap between the current sales and the potential sales of a category.Source: Borden, Inc.ProcessKey Questions in Conducting a Category Assessmentl Who is my target customer?l How important is this category to that customer?l What are the category trends? volume, share, profits?l What are the key product segments?l What are the least and most important SKUs?ProcessKey Questions in Conducting a Category Assessment (continued)l How well is shelf space aligned to