Defining Category Management? The strategic management of product - PowerPoint PPT Presentation

Defining Category Management? The strategic management of product groups through trade partnerships which aims to maximise sales and profit by satisfying consumer and shopper needs. Institute of Grocery Distribution ~IGD Category management is a process that involves managing product categories as business units and customising them [on a store by store basis] to satisfy customer needs. Nielsen 1 www.makingbusinessmatter.co.uk

Defining Category Management? A Distributor-Supplier process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value ECR via TPG Supplier Retailer Consumer 2 www.makingbusinessmatter.co.uk

Defining Category Management? Retailer and suppliers working together to strategically manage product categories to maximise mutual profits and satisfy customer needs. Key Points Retailer / Supplier partnership – working together and sharing information for mutual benefit. Product Categories – products grouped according to shopper/eater usage or purchase behaviour . Decisions based on fact and insight not gut feel. Focus on satisfying customer needs – consumer/shopper focused not production or retailer led. 3 www.makingbusinessmatter.co.uk

Production Push ~T o~ Consumer Pull Sales driven by production not Sales driven by consumer demand consumer demand Agriculture Agriculture “This is what we have grown” “This is what we need to grow” Manufacturing Manufacturing “This is what we have made – “This is what we need to please sell it for us” manufacture” Retailing Retailing “This is what we have to sell – take “This is what we need to stock” your pick” Consumer Consumer “This is what we want to buy” 4 www.makingbusinessmatter.co.uk

Category Management 8 step cycle 5 www.makingbusinessmatter.co.uk

Fair Share Explained Measuring the Fair Share opportunity Category market share 17.2 CDI = = 0.87 Grocery market share 19.8 Value of category in Retailer A £176.6m Incremental Category opportunity = category value – category value CDI £26.4m 6 www.makingbusinessmatter.co.uk

Planning for promotions i.e. Extra Free Reward loyalty More i.e. 2 for £3 and improve buyers awareness Transaction i.e. Save 50p Building Mechanics Traffic Building Mechanics Current buyers 7 www.makingbusinessmatter.co.uk

Promotional Planning Consumer Protection Transaction Building -Reinforce value for -Create Excitement - Drive Penetration -Turf Protection Image Enhancing -Encourage Trial Improved Price Traffic Building -Reward loyalty -Increase AWP money/quality Perception -Awareness -Trade up BOGOF aa BOGOHP aa a 2 For 3 aa a 2 For £3+ aa Half Price aa Save a Third a 50% Extra Free a a 100% Extra Free aa a 3 FTPO 2 a Link Save aa aa a Save 10p (to price point) a Save 20p, 30p, 40p a Save 50p & 60p > a a Save 10% & 20% a aa Save 25% aa a Save 33% & 50% aa Campaigns & events aa a a Magazine Advertorial a a P .O.P. advertising a 8 www.makingbusinessmatter.co.uk

Just how trustworthy are you? TQ = C+R+I S TQ = Trust Quotient (trustworthiness) C = Credibility R = Reliability I = Intimacy S = Self-orientation 9 www.makingbusinessmatter.co.uk