Category Management AC Nielsen

Consumer-Centric Category
Management
Presented by Samir Bhaloo 27th April 2006

International Business Consulting Manager, ACNielsen
ACNielsen Consumer 360 Norway, Simplifying Complexity
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Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
In the next 30 mins you will gain an insight into...
● What is Category Management and what it is

not
● The Evolution of Category Management
● Consumer Centric Category Management
● Tips and Tricks

ACNielsen Consumer 360, “Simplifying Complexity”
Samir Bhaloo, International Business Consulting Manager
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What Category Management is NOT
● Not just a grocery thing – ACNielsen has

worked in over 20 different trade channels in
Category Management`
● Not just a retailer thing – Manufacturer’s have
significant advantage in going to market
● Not just a sales thing – requires new skills,
processes and multifunctional support
● Not just an assortment review to get the right
listing

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Category Management is...
● Managing the business of a category with a

plan
● A common sense approach to building and
managing your business
● A disciplined process that has evolved over
time

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Initial Eight-Step Category Process
Readiness
1 - Category Definition
2 - Category Role
Monitoring Objectives
3 - Category Assessment
4 - Category Scorecard
5 - Category Strategy
6 - Category Tactics
Implementation Program

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In reality meant...

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The process was integrated into the business

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The pitfalls of Category Management
● Too much coordination needed from too many

departments
● Paralysis of Analysis – lost in data
● Sales People were asked to learn the
intricacies of CM
● Manufacturers restricted their CM efforts to
their largest retailers only

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The evolution of Category Management
● Early 1990’s focus on data, forgot about the

consumer
● Late 1990’s, availability of data granularity on
the consumer had increased
–consumer panel data from households
–named account data
–new demographic data
● A new chapter was unfolding...making the
process less product-centric and more
consumer-centric

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When a consumer purchases a category, consciously or sub-consciously,
they are making decisions based on a number of choice alternatives
Pack
Brand
Size
Diet vs
Flavour
Non-diet

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Consumer-Centric Category Review
Category Definition
Consumer Decision Tree

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Category Definition split into 2 steps
● The consumer-centric category management

splits Category Definition into two steps
–Retailer’s Category Definition
–Consumer Decision Tree
● Not all retailers are the same
● Market structure and preference segmentation

are used to create the consumer decision tree

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Consumer-Centric Category Review
Demand Clustering is
where Consumer Centric
Category Management
Demand Clustering
sets itself apart from the
traditional methods. This
is where unique
consumer groups are
identified and located and
then stores are clustered
to serve them based on
future demand potential

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Assessment
Choose store clusters with

largest upside potential.
Quantify the opportunity by
evaluating potential sales
Assessment (based on consumer fit)
vs. existing sales.
Clusters based on
demand gapping, which
uses consumer demand
and demographics to
quantify opportunity gaps
based on store size and
sales potential
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The Million Dollar Case Study
● Retailer Joe’s Foods* was looking to use

consumer centric management to increase
sales
● The following case study details the steps

Joe’s Foods took to turn a million dollars of
opportunity into a million dollars of sales
* Retailer name masked

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The Million Dollar Case Study: Step 1
Category Definition Category Review conducted for
Cereals category.
Joe’s Foods defined the category to

be reviewed and identified the
sub-categories.
The following segments were

reviewed:- ready-to-eat; hot;
granola and natural; wheat germs
and (hominy grits) oats

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For Joe’s Foods, the first decision
was that the consumer wanted to
Consumer Decision Tree
buy cereal
The next decision was the type of

cereal to buy. The “cereal type”
decision is made before other
considerations like brand and size
Joe’s Foods current planogram had

been developed based on brand

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Demand Clustering
Joe’s Foods used demand-based
clustering to identify and locate
unique customer groups,
clustering stores to reflect those
groups. Using Spectra’s
Lifestyle/Lifestage Grid, several
unique groups of customers
emerged

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19
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The next step was to choose store

clusters with the largest upside
Assessment potential in which to develop a
unique marketing plan at the end
of the category review

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Tips and Tricks - Assessment
Assessment is “Business Question Driven”

● Why do Consumers buy the category?
● Who buys the category?
● When do Consumers buy the category?
● How do Consumers buy the category?
● Where do Consumers buy the category?

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Item Strategies are developed for

each cluster. In this case, the
high-, middle- and low-income
Item Strategies
clusters all have different “turf”
items.

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Once the item strategies for the

category have been identified for
each cluster, the category role can
be easily determined for each
cluster
Category Role

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The Million Dollar Case Study: Step 7-9
Once the item strategies for the
category have been identified, the
category role can be easily
determined for each cluster
Scorecarding adds three more
dimensions so that progress
against goals can be measured for
each of the targeted consumer
groups
Tactics
Implementation stage has to added
Scorecard dimension of keeping track of
Implementation which strategies are to be applied
at which stores
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Tips and Tricks
Simplifying Complexity
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Who are you talking to?
● The monkey or the organ grinder?
● The decision making process appears to be getting longer,
category management is re-emerging
● And opportunities to get a listing are becoming less and more
controlled – key times to get product launched
● With more people from retailing getting involved
● 46% of head office personnel now believe 2-3 people are
involved (Source: Grocer Magazine, Jan 28 2006)
● And more worryingly 32% believe 6 or more are involved
(Source: Grocer Magazine, Jan 28 2006)
● Both are up significantly

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Fast Track Approach
1 22 3 4
Formulate Create Created
Research “Blueprint” Detailed
Master
Consumer: Targeting, Template / guide to Use lowest level data Use account /
Purchase hierarchy, layout based on to define SKU level cluster / store level
behavior etc. consumer research approach at total trade data to create
Retailer: Objectives, channel level or detailed plans
strategy, current customer level.
approach

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1
Research
Purchasing Habits
Consumer: Targeting, Purchase hierarchy, behaviour etc.
Retailer: Objectives, strategy, current approach
Examples of Category
Category Sub-Category
Sub-Category Segment
Segment Sub-Segment
Sub-Segment
category
segmentation
parameters
• Meal occasion
• End use
• Formula
• Brands
• Size
• Price position
• Recipe/flavor
• End user
• Format

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What is Eye Level?

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22
Formulate “Blueprint”
Template / guide to layout based on consumer research
Example of a Blueprint (generic)
Category
Category
TBC
TBC TBC
TBC TBC
TBC
TBC
TBC TBC
TBC TBC
TBC
TBC
TBC TBC
TBC

Samir2.Bhaloo,
Section International Business Consulting Manager
What is …
32
22
Formulate “Blueprint”
You must know your store
● Be in the high traffic aisles (aisles 1-4 in most
supermarkets)
● Impulse products perform better in early aisles
● Be near good aisle partners (tea and sugar, beer
and snacks)

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3
Create Master
Use lowest level data to define SKU level approach
at total trade channel level or customer level, ideally at store cluster level
Example of a Planogram

Samir2.Bhaloo,
Section International Business Consulting Manager
What is …
34
4
Create Detailed
● What are the different fixture types?
● What are the different fixture sizes?
● What are the different fixture dimensions
– height, width, depth of base, segment,
shelves, pegs, etc.; spacing between
shelves, etc.?
● What is the replenishment cycle of the
fixture?
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Consumer-Centric Category

Presented by Samir Bhaloo 27th April 2006

● What is Category Management and what it is

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

● Not just a grocery thing – ACNielsen has

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

● Managing the business of a category with a

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

● Too much coordination needed from too many

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

● Early 1990’s focus on data, forgot about the

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Consumer Decision Tree

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

● The consumer-centric category management

● Not all retailers are the same

● Market structure and preference segmentation

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Choose store clusters with

● Retailer Joe’s Foods* was looking to use

● The following case study details the steps

* Retailer name masked

Joe’s Foods defined the category to

The following segments were

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

The next decision was the type of

Joe’s Foods current planogram had

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

The next step was to choose store

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Assessment is “Business Question Driven”

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Item Strategies are developed for

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Once the item strategies for the

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

● Both are up significantly

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Example of a Blueprint (generic)

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

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