Practical CatMan Workshop For Modern Pharmacies H&B Oct2014 PDF

PRACTICAL CATEGORY
MANAGEMENT WORKSHOP
OCTOBER 2014
JAKARTA, INDONESIA
Health & Beauty

OBJECTIVES
• Get an overview of the current market dynamics

• Understand what is Category Management and how it can
bring additional value to your business
• Understand and experience every step of the Category
Management process
• Get insights into shopper behavior
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
• Learn and apply best practice from various retailer types to

apply in modern pharmacies / health & beauty stores
2
AGENDA
Day 1 Day 2
Introduction Review day 1
Market Context
Shopper behavior
Definition
Roles & responsibilities Category tactics
Lunch Lunch
Category definition
Category tactics
Category role
Category assessment Implementation & review
Category scorecard CatMan Opportunities

Category strategies Tools and data needed
3
HOUSERULES
4
PEOPLE INTRODUCTION
THE ONE SENTENCE CHALLENGE
Who are we and what are our objectives for this workshop?
2 minutes to prepare, work in pairs
6
MARKET CONTEXT
MARKET OUTLOOK 2014
THE NIELSEN COMPANY
2013
INDONESIA RETAIL MARKET TREND
INDONESIA
10
World economy recovery, weakening

2014= 3.7 2015= 4.0
3.4 2013 = 3.2
1.7 1.1
1.2 1.5
2.8 3.0 -0.5
1.9
4.6 5.6
5.2
2.0 2.5 3.0 2.6 5.4 5.5

5.0 6.4
2.6
Source: IMF April 2014

11
SEA overall show rebound in 2015

despite China’s continuous slow down. Indonesia is 2nd
best in SEA after Philippines
Source : IMF 12
It has been a stable growth despite slow down

GDP Growth
4.9 4.5 4.8 5.0 5.7 5.5 6.3 6.5 4.5 6.1 6.5 6.2 5.8 5.2 5.8 6.0
3.6
0.8
-13.1
98 99 20 01 02 03 O4 O5 06 07 08 O9 10 11 12 13 est est 16
14 15
Source : BI and IMF 2014 13

Impacting slower growth in auto and motorcycle
H1 14 7% 5,6%
H1 13 12% 8.2%
Source: Gaikindo AISI 14

H1 13
H1 14
17%
20.6%
Credit growth is slowing down also
Source : BI
15
Electronic sales growth is slowing down
H1 14 8%
H1 13 14% Source : EMC 16

Food & beverage market is growing slower in YTD2014
Price increase starting mid 2013 suppresed FMCG growth
Value in Trillion Rupiah Monthly Inflation & CPI
146 147 146 147 3.8

Food & Beverages
140
3.3
137
2.8
2.3
Consumer Price Index

1.8
Monthly Inflation (%)
1.3
11.2 11.5 0.8

10.3
9.5
0.3
-0.2
Jul-12
Jul-13
Jan-12
May-12
Nov-12
Jan-13
May-13
Nov-13
Jan-14
May-14
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Jan-12
Sep-12
Nov-12
Jan-13
Sep-13
Nov-13
Jan-14
May-12
May-13
May-14
Mar-12
Jul-12
Mar-13
Jul-13
Mar-14
Source: Nielsen RMS Data, and www.bps.go.id
17
Modern Trade also showed slower total volume growth in

YTD 2014
Indonesia Modern Trade| % Growth Trends | Total FMCG
16.9 17.4
14.6
7.7
11.0
9.8
9.7
4.8 5.9
2012 2013 YTD May'14
Unit Value Change Volume Change Nominal Growth
Retail Audit
18
Food volume growth is only 6.4%
compared to last year’s 11.4%
Indonesia Modern Trade| Food
6,707
5,780 5,750
5,242 5,385 5,444 5,265
5,071 5,245
4,637 4,889 4,986 4,752 4,939
4,550 4,614
4,117
19.3 20.3 18.1 20.5 20.6 19.8 18.6 18.4 20.0 17.4
16.7 15.0 14.1 17.6
12.6 12.5 10.8
JAN 13 FEB 13 MAR 13 APR 13 MAY 13JUNE 13 JULY 13 AUG 13 SEP 13 OCT 13 NOV 13 DEC 13 JAN 14 FEB 14 MAR 14 APR 14 MAY 14
Sales Growth vs. Last Year Sales Value (in billion)
19
Only chocolate, water, SCM,RTD tea, CSD
hit double digit volume growth

Indonesia Modern Trade| Total 59 FMCG Categories |YTD May 2014 vs. YTD May 2013
8.6
Ice Cream 18.0 8.6
19.1
Chocolate 32.5 11.2
10.6
Mineral Water 25.7 13.6
Tea-RTD 10.9
22.5 10.5
Sweetened Condensed Milk 15.0
33.4 16.0
Coffee -0.5
8.1 8.7
Carbonated Soft Drink 13.1
20.1
-5.8
Powder Milk -0.9
12.0
11.0
Cooking Oil 17.8
31.3 11.5
Biscuit 5.2
11.9
17.8
Instant Noodles 5.5 16.2
22.7
Liquid Milk 4.6 14.6
Volume Growth %
19.9
Snack 9.9 9.8
Value Growth % 20.6
Average Price Increase20
IHK RAW FOOD IN Q1’14
HIT AS HIGH AS FESTIVE 2013
LPG increase Food Price Adjustment

due to supply improvement
Raw food Price increase
Festive 2013
Fuel price increase

Rupiah Depreciation Rupiah Apreciation
Prepared for: [Client Name]

Source: XXXXXX 21
PRICE INCREASE IS RISING CONCERNS
ID – Q1 2014 ID – Q2 2014
What is your biggest concern over the next six months?
The economy 20 14 The economy 22 12
Political stability 12 8 Work/life balance 10 10
Health 9 8 Political stability 11 8
Parents' welfare and happiness 7 8 Health 7 8
Work/life balance 7 7 Parents' welfare and happiness 7 8
Crime 6 7
Crime 7 8
Childrens' education and/or
5 7
welfare Increasing fuel prices 5 7

Global warming 6 5
Global warming 5 5
Increasing fuel prices 5 6 Childrens' education and/or
4 6
welfare
Job security 4 6 Biggest concern
Increasing food prices 3 7
Second biggest concern
Base : All respondents n=503 Base : All respondents n=502
Consumer Confidence Survey – Q2 – 2014 Field Dates: May 12 to May 30, 2014 22
Indonesia
Bigger & Faster
2025
Over 2 Trillion USD
2015 1.5 Trillion USD
1 Trillion USD 9000 USD
2005 0.6 Trillion USD 68%
Size economy 0.7 Trilion USD 4000 USD
Consumer market 0.3 Trillion USD 50%
GDP per capita 1500 USD
Urban population 43% Source: WB,McKinsey
23
DEBT RATIO IS 22% IN 2013 THE LOWEST IN THE

REGION, DOWN FROM 37% IN 2007
24
POLITICAL CONDITIONS
INVESTMENT TO GDP IMPROVES DURING STABLE
25
CONSUMER GOODS ARE EXPANDING CAPACITIES
26
MOVING INTO LARGE ECONOMY (NEW WORLD ORDER)
Source: Standard Chartered
27
EXPERIENCE ECONOMY
28
INDONESIA CONSUMER TREND
LARGE BASE OF YOUNG GENERATION WITH POPULATION GROWTH OF

1.48 %
Source: USCB, CIA
30
MIDDLE CLASS HAS BECOME MAJORITY POPULATION WITH

131 MILLION, GROWING 7 MILLION PER ANNUM
25% 56.5%
1999
2010
Source: WorldBank, BPS
31
MOVING INTO HIGHER EXPENDITURE
2010
56.5%
32
THIRD LARGEST MIDDLE CLASS IN ASIA
33
PROFILE OF MIDDLE CLASS

• More into services, local entrepreneurs (very small
business)
• Regular well paid salary
• Human capital investment and savings, increase
productivity
• Lower-income middle class market “Bottom of the
Pyramid” may be a profitable target
• Hotbeds of business Innovation
• Better educated, aware of its right, and better
organized
• Transition to democracy Source: The Rise of Asia’s Middle Class
34
LARGE MARKET OF MIDDLE CLASS …

DEMANDING CONVENIENCE
Convenience Products and Eating outside

Educated and
service that SAVE home
working women Modern retailing
TIME
35
SMALL CONVENIENT FORMAT:

500% OUTLET GROWTH IN LAST DECADE,
LIKELY TO CONTINUE FOR NEXT DECADE
2003 2013 Growth %
Traditional store 1,750,000 2,500,000 750,000 42%
Minimarket 4,038 20,000 (est) 16,000 500%

Supermarket 896 1,200 (est) 304 133%
Hypermarket 43 224 181 524%
Warehouse club 24 34 10 141%
Modern drugstore 179 869 690 485%
Source: Nielsenstorecensus 36
THE NEXT PROXIMITY IS FOR HEALTH & BEAUTY

Very high expansion and new competitor will bring the proximity in Health & Beauty
Store
BEAU
37
INDONESIA ANNUAL PACE +4 PERCENT

ONE OF THE MOST RAPIDLY URBANIZING COUNTRIES IN THE WORLD.
By 2025 : 68 percent
Source : WB vs 52 percent in 2012 (according to UN projections). 38
DRIVE THE GROWTH

MEANS MODERN LIVING FMCG
39
Next growth destination:

secondary, tertiary, out java area
40
Source: Mc Kinsey
237 MILLION INDONESIAN ARE
TO LIVE BETTER
MegaTrends:
Convenience
Healthy
Looking Good
41
PREMIUM AND INNOVATION AT AFFORDABLE PRICE
42
ASIDE FROM PRICE, ASSORTMENT + AVAILABILITY IS IMPORTANT
Availability and Unique Offering is very important to our product. Private Label also can create
uniqueness in our store
Low prices for most items 0.82

Are the first to have new products 0.73
Every thing I need in one shop 0.72
Has a wider variety of products 0.70
Always have what I want in stock 0.69
Provide really good deals and promos 0.69
Staff provide excellent customer service 0.68
Offers their own brand of (products) groceries which offers a good… 0.67
Ease of parking 0.63
Efficient checkout counters 0.62
Long opening hours 0.57
Clean and hygienic store 0.54
Health and beauty products are good value for money (i.e.… 0.47
Wide range of imported product 0.41
Has programs that reward regular purchase of products (food,… 0.40

Convenient to get to 0.39
Wide selection of high quality premium brands and products 0.34
A place where its easy to quickly find what I need. 0.31
Well presented product displays 0.15
Pleasant store environment 0.08
43
HEALTH IS LIVING A REVOLUTION
Traditional pharmacy Drug or Health & Beauty store

Specialist in medicine Generalist in health
Pharmacy Health care

Independent
Chains
Small Small – medium – large format
Medicine Drugs, health, beauty, (fresh) food, services
Counter Self service
Passive behavior, pharmacist’s choice Active behavior, personal choice
Occasionally Frequently
Negative drive from shoppers Positive drive from shoppers
Dispensing business Servicing business 45
CHANNEL BLURRING IS HAPPENING EVERYWHERE
CVS
Mini-Mart Super/Hypermarkets
Discounters Dept stores
Pharmacies Beauty store

46
47
48
49
THE NEXT STEP: EVERYDAY DAILY WELL-BEING
COMPANIONS?
Duane Reade, New York
50
PHARMACY/HEALTH&BEAUTY STORES TRENDS
Compliment hospitals in the health chain

Shrinking margins (Rx)
Attract more shopping missions
Offer shopper-friendly environment
More educated and vocal consumers

More health-conscious consumers
Mix of trust and suspicion in pharmacists

Open to generics to save cost
Less chemical, more herbal and organic
51
PERCEPTION OF PHARMACIES VERSUS….
More convenient
Cheaper
Hospital
Better products
Trusted products
Professional advice
Supermarket
52
PHARMACIES' CHALLENGES
“
Faced with sliding dispensing profitability,
pharmacies need to embrace a customer
engagement model to drive profits”
Pharmacy’s only choice is in fact to focus on

customer traffic
Knowing what your customers want and

“ We are focused on creating a complete
Well Experience for our customers
across all of our touch points,
transforming the role community
pharmacy plays in health care
Four strategies – customer value,

innovative products and services,
having the product in stock, helping them to systematic localized offerings and the
find products efficiently, and use of signs and
most relevant networks and formats.
” ”
brochures, are also key
Pharmacy News, Australia, 2012 Greg Wasson, President and CEO

Walgreens, US
53
NEED TO DO FOR SUCCESS IN MODERN TRADE
Retailers Manufacturers
Split into groups. 10 minutes to brainstorm. Nominate a speaker to

feedback.
54
RETAILERS HAVE TO RESPOND TO GROWING

SHOPPING NEEDS
• Optimize accessibility • Increase traffic and

• New stores basket size
– Prioritized categories
• New store formats
– Optimized range
– Quality
• Claim a unique positioning – Availability
– Presentation
• Advertising / communication – Promotions
• Also: internal communication – CUSTOMER SERVICES
• Improve efficiency
Category – Distribution logistics
– Inventory costs
Management – Space productivity
55
SUPPLIERS HAVE TO ADAPT TO THE ENVIRONMENT
• Focus more on Chains Category

• Increase capabilities Management
• Develop relationship
• Talk the same language: category as opposed as brand
• Develop both consideration and conversion

• Understand the role of their brands within categories
• Build shelf space via BTL Space Planning, assortment via Range
Planning, in the context of the entire category dynamics
• Focus more on shoppers

• Increase shopper understanding
• Offer value through appropriate products and activities
• Develop solutions to satisfy shopper needs
• Collaborate with retailers to maximize shopper satisfaction
56
CATEGORY MANAGEMENT DEFINITION
Definition and relevance

4 key outputs
What it means to shoppers
RETAILERS’ FOCUS CHANGES AS THEY DEVELOP
Demand focus
Developed
Marketing
Needs shopper
Merchandising knowledge and
analytical skills
Buying
Developing Operations
Supply focus
Retailer open up to supplier input 58

MANUFACTURERS’ NEEDS ALSO EVOLVE
BRAND
Consideration
Manufacturer Retailer Store Shopper

Consumer
Conversion
Needs retailer and shopper engagement 59
CATEGORY MANAGEMENT DEFINITION
A joint retailer/supplier process

of managing categories as strategic business units,
producing enhanced business results
by focusing on delivering consumer value.
60
CATEGORY MANAGEMENT IN THE VALUE CHAIN

Product Store Space Customer
Production Transport Storage
development mgt mgt relationship
Supply Chain Management Category Management
$ Efficiencies Shopper $
Retailer / needs
Supplier
relation
Efficient Consumer Response 61

APPLICATION OF CATEGORY MANAGEMENT
Legal restrictions
T Self-service
Personal choice
62
RETAILERS: TAKING A STEP BACK
Supplier 2 Supplier 3
Supplier 1
Supplier 4
CATEGORY
Supplier 5
63
MANUFACTURERS: TWO WAYS TO INCREASE

BUSINESS RESULTS
A. Increase the slice in the pie B. Increase the size of the pie
(Share increase) (Grow the category)
Category Management
64
A CONSTANT PROGRESSION
1990 2000 2010
Spread
Wal-Mart to Europe, Asia,
first retailer Middle East,
US to apply esp. in saturated
recession CatMan markets
Simplification
Shopper focus
Broader application
(Pharma, Electronics) 65
TRANSLATING SHOPPER BEHAVIOR AND

RETAILER IMPERATIVES INTO IN-STORE ACTIONS
4P resentation
roduct range
romotional plan
ricing
+1 People
66
SO WHAT DOES IT MEAN TO SHOPPERS?

ONCE UPON A TIME … CLOSE YOUR EYES AND IMAGINE…
• Retailers faced a huge competition.

• All they cared about, was to maximise front and back
margin
• Therefore whenever they met Manufacturers, all they
cared about was trade terms and promotional fees
• Even when they were comparing their results, they were
not talking the same language  manufacturers talked in
brands, retailer talked in categories
Retailers were too busy to care about shoppers, as they
were busy trying to maximise margins, listing fees and
space fees from manufacturers
• You go to a pharmacy, and this is what you see…
67
Workshop
68
CSD category, Vietnam
Baby wipes
Mouthwash
Hand & foot cream
69
THEN THE INDUSTRY REALIZED THAT A CHANGE

IS NEEDED.
• Retailers understood that to be successful, they need to
improve their operational standards
• Thus, they are also able to make more money simply by
increasing the sales of their category by exploiting new
consumer needs and maximizing the shopper experience
• To do this, retailers need the help of Manufacturers, as these
have a deep knowledge about consumers and shoppers
• Manufacturers therefore begin to work as consultants to
retailers, sharing consumer and shopper insights to help
drive the sales of the category, therefore taking away the
focus from only price discussions
• Both Manufacturers and Retailers use a common working
process to satisfy consumer and shopper needs
• After they applied this common process, you go into a store
and this is what you see 70
Workshop
71
Toothbrush & paste, Carrefour China
72
THE SIX COMPONENTS OF CATEGORY

MANAGEMENT
Collaborative Trading
Performance Measurement
Partner Relationships
Business Strategy
Business Process
Information Technology Organization Capabilities
73
CHALLENGES
74
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need advice on how to start? Just contact us

Workshop
ROLES, RESPONSIBILITIES AND BENEFITS
Organizational Change
Category captaincy
Relationship
WHY DO CATEGORY MANAGEMENT?
79
RETAILERS ARE ADAPTING THEIR STRUCTURE

FROM FUNCTION ORIENTED…
General
Management
Buying Stores Distribution

Department Management Management
Promotion Merchandising
Buyers team
team team
80
… TO CATEGORY AND SHOPPER ORIENTED.
General
Management
Customer Buying Stores Distribution

Management Department Management Management
Category Category Category

Manager Manager Manager
Promotional
Buyer Merchandiser Sales Analyst
Manager
81
CATEGORY MANAGERS HAVE A BROADER SCOPE

OF WORK
Buyer Category Manager
• Buys to have products on • Plans/Buys to improve
shelves and maximise fees category growth, profit
• Viewed as another cost • Category Profit&Loss
centre responsibility
• Bonus based on overall
corporate results
• Typically a former Store
Manager
• Detailed, tactical
+ • Bonus based on category
measurements
• Finance, operations, &
marketing experience
• Conceptual, strategic
• Short-term focus • >1 year horizon
Optimize revenue & profit Manage a business 82

RETAILERS WILL SEEK THE INPUT FROM A

MANUFACTURER
As long as he can: C
• Understand the retailer’s strategy B
• Support the retailer’s strategy
• Share it own strategy
• Support the retailer’s tactics
That preferred suppliers company is called a

category captain.
83
RETAILER
What criteria would you use to chose the captain?

Talk to the person next to you. 3 minutes to brainstorm.
84
RETAILER
How would you chose the captain?
Size and performance in the market

Number and quality of resources
Commitment from directors
Strategic fit
Experience in Category Management
Usage merchandising software

Consumer / Shopper knowledge
…
85
MANUFACTURER
BENEFITS OF DOING CATMAN FOR A
87
AWAY FROM A SILO-WORKING STRUCTURE…
General
Management
Sales Marketing Admin
Account Brand
Managers Managers
Retail knowledge Consumer knowledge

Shopper knowledge (limited) Shopper knowledge (limited)
Trade Strategy Brand strategy
88
… TO A MORE CUSTOMER FOCUSED STRUCTURE.
General
Management
Trade Marketing /
Sales Marketing Admin
Shopper Marketing
TM Managers
Account Managers Category Managers Brand Managers
Sales Analysts
Retail knowledge
Consumer knowledge
Shopper knowledge
Trade strategy Trade activities Brand strategy
Category
Management 89
A CONSULTANT FOR RETAILERS

Sales Manager (KAM) Category Manager
• Market level sales data • Account level sales and
• Expertise on own brands shopper data
• Brand/companies review • Category expertise
+
• Own brand/SKU • Category reviews
promotions • Full-line category programs
• Recommended brand • Recommendations on
programs retailer’s category strategies
• Trade segment marketing • Customer specific marketing
• Adversarial relationships • Partnering/alliances
Salesperson Consultant
90
CATEGORY PARTNER
What criteria would you use to prioritize retail partners you

want to do Category Management with?
Talk to the person next to you. 3 minutes to brainstorm.
91
HOW TO CHOOSE KEY RETAILERS
How would you prioritize retailers?
Size and performance

Importance for the business
Strategic fit
Commitment from board of directors
Implementation compliance
92
THE RELATIONSHIP
HOW DEEP WILL THE RELATIONSHIP BE?
High
Manuf. strategy sharing
Joint extended
Category Projects
Manufacturer
Capability
To Be TRUST Full Category
Management
Category
“Expert”
Space &
Assortment
Management
Fact-Based
Selling
Low Retailer data sharing

Low Retailer Commitment To Category Management High
94
BOTH BRING SOMETHING TO THE PROCESS
Manufacturer Retailer
• Market data • Sales data
• Consumer & Shopper knowledge • Shopper knowledge
• In-market category knowledge • In-store category knowledge
• Marketing & Selling Skills • Selling and Operational skills
• Assortment & Merchandising skills • In-store execution skills
• Company & Brand strategies
+ • Company & category strategy
• Analysis • Review & decision

• Recommendations • Implementation
• Implementations resources • Compliance
Holistic
business
understanding
95
HOW A PARTNERSHIP USUALLY TAKES PLACE
• Supplier(s) approach(es) retailer (or the opposite)
• Retailer nominates category captain
• Retailer & Supplier define scope of collaboration, define

key decision makers and agree process
• Both partners follow the process, but supplier does most of

the analysis and makes recommendations
• Retailer reviews the recommendations and makes final

decision
96
BENEFITS FOR ALL PARTIES

Shoppers
• Evaluate category offer according to their needs
• Enhance shopping experience
• Get high levels of satisfaction and value
Retailers
• Improve store image
• Increase existing consumer loyalty
• Attract new consumers
• Increase financial results
• Get free additional resources
Manufacturers
• Become category captains / advisors
• Build strong relationships with retailers
• Increase financial results
97
CATEGORY MANAGEMENT PROCESS
Retailers missions
ECR 8 steps process outline
UNDERSTANDING A RETAILERS’ MISSION
Cheapest
Easiest Biggest
Best
Mission
“Saving people’s money so they can live their
life better”
Provide value for sustainability and health 99
MISSIONS OF OTHER PHARMACY CHAINS
We're on a mission to provide our

customers and patients with great
healthcare products and services,
which help them look and feel
better than they ever imagined
“Help people around the world to

look good, feel great and have
fun”
100
ECR’S 8 STEPS PROCESS
Category Category Category Category Category Category Category

Definition Role Assessment Scorecard Strategy Tactics Implementation
How to define Destination, Market and Category KPIs Traffic Builder, Assortment, Approval and
the Category? Preferred, Category Profit or Cash Merchandising, implementation
Occasional, analysis Generator, etc. Pricing, of plans
Convenience Promotion
Category Review
ECR=Efficient Consumer Response Progress vs. plan 101
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need an objective CatMan third party? Just contact us

CATEGORY DEFINITION
Category definition
Category decision tree
KEY OBJECTIVE
Create a distinct, measurable and manageable grouping of

products
that the retailer and his captain will optimize by better

understanding and meeting the needs of shoppers
Define the Understand

category its structure
105
DEPENDENT ON THE RETAILER AND CATEGORY –
THE SHOPPER PROFILE WILL DIFFER
Pet CONSUMERS
food SHOPPERS
Food
Personal
CONSUMERS
SHOPPERS
CONSUMERS
?
Supermarket ≠
Convenience Store ≠
Hygiene SHOPPERS
Pharmacy chain
106
Define the category
DEFINING
THE CATEGORY
KEY BUSINESS QUESTION
WHAT IS THE CATEGORY WE WILL
BE WORKING ON AND WHICH
PRODUCTS BELONG TO IT?
CATEGORY DEFINITION PROCESS
Define the consumer need
List interrelated and substitutable products
Cluster them in groups

Define measurable and manageable categories
108
EXAMPLE
Need Provide healthy food to my baby
List of
interrelated
products
Clusters of
substitutable
products
Manageable
- Expertise from the captain
category
- Single location in the store
- Available data
109
A PROPER DEFINITION.
Category definition
Infant Milk Powder
• All powdered milk based products designed to feed infants

or young children until 6 years old on their own or in
combination with breast feeding
• It includes any milk-based powdered products suitable for
various stages between new born to 6 years old, with
different flavors like plain, vanilla, chocolate, and various
specific benefits depending on the age of the infant.

• It excludes milk based products designed for adults as health
supplements or for pregnant women, cereals, liquid milk
products or other products not based on milk and not in the
form of powder. 110
POINTS OF ATTENTION
It is important that the grouping is not…
• …Too large, for strategic focus
• …Too small, and therefore insular, possibly ignoring the bigger picture
Every product should be evaluated from
• Retailer’s perspective (Store Management)
• Manufacturer’s perspective (Category Expert)

• Shopper’ perspective (Consumer Need - current or potential future )
The extent and structure of the category varies by format

and is determined by the retailer with input from his captain
111
TYPICAL CATEGORY STRUCTURES

Health
Weight
Nutrition Vitamins …
Loss
Beauty
Medical
Aids
Cosmetics Fragrances Skin Care …
Health
Sport aids …
Monitors
Skin
Medicine Facial Care
Cleansing
Analgesics Cold/Flu Cough Stomach First Aid Eye Care Allergy …
Diarrhea Laxatives Antacids … Personal

Care
Male Hand/ Body

Baby Care Deo Hair Care Oral Sexual Sun …
grooming /Foot
Hair
Shampoo … Confectionary …
Conditioner
112
Define the category
SEGMENTING
THE CATEGORY
KEY OBJECTIVE
UNDERSTAND THE GROUPINGS OF
HIGHLY SIMILAR PRODUCTS THAT
SHOPPERS MAKE
CATEGORY DECISION TREE

DO LAYOUTS REFLECT HOW SHOPPERS SEGMENT

THE CATEGORY?
CATEGORY X
Brand A Brand B Brand C Brand D
Small pack size Small pack size Small pack size Small pack size
Medium Medium Medium Medium

pack size pack size pack size pack size
Big pack size Big pack size Big pack size Big pack size
114
THERE ARE MANY DIFFERENT WAYS IN WHICH

CONSUMERS COULD SEGMENT A CATEGORY
Examples of a category segmentation parameters
Example
Meal occasion Morning/evening; snack/main meal
End use Bathroom/kitchen; indoor/outdoor
Formula Diet/regular; decaff/caffeine; smooth/strong
Brands Coca-Cola/others
Size Single use/multipack
Price position Economy/regular/premium

Recipe/flavour Indian/Chinese; beef/chicken; orange/lemon
End user Male/female; children/adults; cat/dogs
Format Liquid/powder; spray/roll-on
Which ones appear, and in which order?

115
CATEGORY DECISION TREE EXAMPLE:

TOOTHBRUSH
Toothbrush
Kids Adults
Stage 1 Stage 2 Etc. Manual Electric
$ $$ $$$ $ $$ $$$ $ $$ $$$ Regular Enhanced Brush Bristles
Hard Soft Polish Tongue Rotation Oscillation Hard Soft
Illustration
116
UNDERSTAND THE STRUCTURE OF THE

CATEGORY
Prioritize the parameters

using the following key
question:
if some product segments Store switching Pre-store decision

with that specific
parameter were not Product switching In-store decision
available, would shoppers
• switch to another store

 important factor
• switch to another
product
 less important factor
117
WHERE DOES BRAND FIT?
• The shopper purchase decision hierarchy is shaped by

consumer usage, of which Brand only plays a part
• Brand can appear directly in the hierarchy if:

- Brand has a dominating share
- Brand loyalty is extremely high
- Consumer marketing dominated category
118
HOW TO GET A CATEGORY DECISION TREE?
Market research data

- Qualitative in-depth exit interviews
- Virtual Shopper quantitative study
- Quantitative substitution exit interview questionnaires
- Consumer panel or loyalty card data using market structure
methodology
 Purchase frequency of product
 Purchase quantity rates
 Brand loyalty
 Brand switching rates
119
EXAMPLE
Candy = sweet snacks.

2 main segments: chocolate and sugar
120
EXAMPLE
Hard to convert overall

Hard to shop traffic into category
shoppers
121
EXAMPLE
122
EXAMPLE
123
EXAMPLE
124
EXAMPLE
125
OUR RETAILER
V-Mart
The best from
here and there
Local chain of pharmacies
Famous for imported products
126
CATEGORY DEFINITION / DECISION TREE EXERCISE
• Write the name, definition of your category including min. one product type that
would be excluded from the definition
• Work out the category decision tree (max. three levels)
Shampoo
Mosquito Repellent
Baby diapers
Painkillers (OTC)
Split into groups. 15 minutes to prepare. Nominate someone to

feedback. 5 minutes to present.
127
PLAN ON A PAGE
FILL IN THE RELEVANT PART IN YOUR CATEGORY
128
CATEGORY ROLE
4 category roles
FOUR DIFFERENT CATEGORY ROLES
Destination Occasional / Seasonal

Max. 15 categories Some categories
Total: 50-150 categories
Routine Convenience
More than half of categories Some categories
130
CATEGORY ROLE DEFINITIONS

Destination - To be the primary category
provider and help define the retailer as the
store of choice by delivering consistent,
superior target consumer value
- Signature items
- High consumer penetration
- Highly image building
- Will ensure differentiation 5%-7% of categories
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
- Core items
- High consumer penetration
- Important turnover 55%-60% of categories
131
Occasional / Seasonal - To be a major

category provider, to help reinforce
the retailer as the store of choice by
delivering frequent, competitive
target consumer value
Only shopped at certain times
15%-20% of categories
Convenience - To be a category
provider and help reinforce the
retailer as the store of choice by
delivering good target consumer
value
- Ease the shopping experience
15%-20% of categories - Impulse categories
Workshop
132
HOW TO ASSIGN THE ROLE TO A CATEGORY?
Quantitative aspects
• The performance of the category in the market
• Shopper expenditure, penetration, frequency
• The performance of the category at the retailer
• Sales, profit, share
Qualitative aspects
• The relevance to the retailer’s target shopper
• The category’s differentiation power
Roles are based on a vision, on goals, and are not

necessarily reflective of current realities
Workshop
133
CATEGORY ROLE BREAKOUT
Objective: using the description of V-Mart and the performance

of various categories, determine the role of your category for V-
Mart.
Split into same groups. 20 minutes to prepare.

Nominate someone to feedback. 2 minutes to present.
134
Destination - To be the primary Occasional / Seasonal - To be a

category provider and help major category provider, to help
define the retailer as the store reinforce the retailer as the store
of choice by delivering of choice by delivering frequent,
consistent, superior target competitive target consumer
consumer value value
Signature items Only shopped at certain
times
Convenience - To be a category
Routine - To be one of the

preferred category providers provider and help reinforce the
and help develop the retailer as retailer as the store of choice by
the store of choice by delivering delivering good target consumer
consistent, competitive target value
consumer value Ease the shopping
Core items experience
135
PLAN ON A PAGE
136
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need a category decision tree? Just contact us

CATEGORY ASSESSMENT
Four assessment areas

Category issues &
opportunities
FOUR AREAS TO UNDERSTAND OPPORTUNITIES
Category
CONSUMER / MARKET
SHOPPER Segment
Brand
SKU
RETAILER SUPPLIER
140
CONSUMER ASSESSMENT
• What do we know about the consumers of this category?

- demographics
- lifestyle
- attitude
• What is the category penetration rate?

• Why and when do they use the category?
• What do they like/dislike?
Workshop
141
SHOPPER ASSESSMENT
Who  Why  Where  What  How

Segments Missions Channel/Store Category / Shopper
choice product choice behavior
Workshop
142
MARKET ASSESSMENT
• Category & segments trends

• Number of SKUs in the market
• Seasonality
• Innovation
• Pricing per segment/SKU
• Share & performance of each channel / retailer?
Workshop
143
ASSESS THE IMPORTANCE OF INNOVATION
Real data, Vietnam. 40 % of sales coming of products less than 2 years old.
Shampoo Toothpaste
144
RETAILER ASSESSMENT
• Sales and profit trends

• Number of SKUs
• Pricing positioning
• Margins
• ROI
• Space allocation
• Days of stock
• Promotion effectiveness
Workshop
145
• Share
• Margin
• Growth
• Innovation level
SUPPLIER DATA
146
ASSESSMENT EXERCISE
Look at the analysis information for your category.

There is one key issue in each category. Write down the key issue and the implied
action you might have to take for the category.
Split into same groups. 20 minutes to prepare. Nominate

someone to feedback. 5 minutes to present key facts and
actions.
147
148
149
150
151
PLAN ON A PAGE
152
CATEGORY SCORECARD
Key scorecard values

QUANTIFY AND CAPTURE PERFORMANCE
OBJECTIVES
Metrics Current Target
SALES
Performance Key Measurable Strategy Action
Category value Opportunities Objectives
Growth
Sales/sq ft/ wk 1
Profit
Gross Profit 2
Gross margin
Gross Profit/sq ft/ wk 3
Share
Category to total business 4
Retailer category market share
SHOPPERS 5
Penetration
6
Frequency
Transaction Size
Retention Rate 7
Satisfaction Rating
8
SUPPLY
Days of supply
Inventory value
Turns
GMROI
Service level 154
KEY FINANCIAL VALUES
GROSS & NET PROFIT
• COGS = Cost of Goods Sold
• Gross Profit (Profit before expenses)

– Gross Profit $ = Sales - COGS
– Gross Margin % = Gross Profit x 100
Sales 1
• Net Profit (Profit after expenses)

– Net Profit $ = Sales - COGS - Expenses
– Net Profit % = Net Profit x 100
Sales 1
156
CONTRIBUTION TO MARGIN
• CTM is a method for analysing the profit contribution of

different components.
• CTM can be used at retail level for Department, Category,
Segment and Promotional analyses.
% of Sales x Gross Margin = CTM

Dairy 11% 25% 2.75
Fruit & Veg 12% 28% 3.36
Meat 11% 19% 2.09
157
GMROII: GROSS MARGIN RETURN ON

INVENTORY INVESTMENT
Yearly Gross Profit 35mil

GMROII = = 3.5
Average Inventory
10mil
Value (at cost)
Indicates the number to times gross margin is earned

from the invested inventory. Avg. grocery GMROI in
the US is 5,0*.
Source: Risk Management Institute, Seattle
158
SCORECARD
Fill-in the scorecard section in your Category Management

plan according to the below instructions
Shampoo: how much additional sales revenue would you
achieve for Anti-Dandruff Shampoo if you would get the same
growth rate as the market?
Mosquito repellant: how many additional volume sales would
you achieve if promoting Brand D?
Painkillers: how much additional profit could we achieve by
bringing out of stock for Brands C to an average of 2%
Diapers: how many additional households buying toothbrush

could we achieve if regaining historical penetration levels?
Split into same groups. 5 minutes to prepare. Nominate someone to

feedback. 5 minutes to present.
159
CATEGORY STRATEGY
Seven possible strategies

HOW TO ACHIEVE THE TARGET
Attract & retain Shoppers Increase Shopper spend Increase profit / cash flow
Traffic builder Transaction builder Profit generator
Image builder Cash generator
Excitement Creator
Turf protection
Strategy
161
A TRAFFIC BUILDING STRATEGY FOCUSES ON

ATTRACTING SHOPPERS
• Strategic Assignment
• Persuade shoppers to visit the category
• To direct shoppers moving in the store
• Segment Property
• Segment with high buying rate
• High penetration among target group
• Segment with high price sensitivity
162
A TRANSACTION BUILDING STRATEGY

FOCUSES ON CREATING VALUE
• Increase value of shopper’s shopping basket
• To increase average purchase
• High impulse purchase
• Complementary goods
• Segments attractive to target group
163
A PROFIT GENERATING STRATEGY FOCUSES

ON CREATING PROFIT
• Increase the profitability of category
• Segments with high margin
• Low price sensitivity and low price awareness among shopper
164
A CASH GENERATING STRATEGY FOCUSES ON

CREATING CASH FLOW
• Increase cash flow
• Segments with high penetration, buying frequency and turnover
165
A IMAGE BUILDING STRATEGY FOCUSES ON

INCREASING THE SHOPPER’S PERCEPTIONS
• To strengthen desired image in mind of shopper i.e. “high quality”,
“wide assortment”
• Certain segments may be used as image creators with unique features
• Special products in assortment
166
A IMAGE BUILDING STRATEGY FOCUSES ON

INCREASING THE SHOPPER’S PERCEPTIONS
167
A TURF PROTECTING STRATEGY FOCUSES ON

KEEPING THE SHOPPER’S LOYALTY
• Protect currently high market share
• Maintain loyalty of current shoppers
• Segments with high importance for target group
168
A EXCITEMENT CREATING STRATEGY FOCUSES

ON INCREASING THE SHOPPER’S AWARENESS
• Increase impulse purchases by creating needs and image enhancement
• New Segments, products with high impulse rate
169
STRATEGIES USUALLY IMPLIED BY CATEGORY

ROLE
• Destination • Occasional / Seasonal
• Traffic Building • Traffic Building
• Turf Defending • Excitement Creation
• Transaction Building • Profit Generating
• Image Enhancing • Transaction Building
• Excitement Creation
• Routine
• Transaction Building • Convenience
• Profit Generating • Transaction Building
• Cash Generating • Profit Generating
• Image Enhancing (mainly just One-
Stop-Shop image)
170
STRATEGIES BREAKOUT
Take into account the category role you have chosen earlier
Listen to what the retailer’s CatMan team says about your

category and determine 1 or max. 2 strategy/ies to apply.
10 minutes to prepare, 3 minutes to present.

171
PLAN ON A PAGE
172
STOP AND THINK
RECAP DAY 1
• A changing marketplace
• Why Category Management
• Roles, responsibilities, benefits
• 8 steps introduction
• 5 first steps
174
RECAP DAY 1
Any questions?
Tomorrow start at 9am
175
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need a category assessment? Just contact us

PRACTICAL CATEGORY
MANAGEMENT WORKSHOP
DAY 2
Health & Beauty

AGENDA
Day 1 Day 2
Introduction Review day 1
Market Context
Shopper behavior
Definition
Roles & responsibilities Category tactics
Lunch Lunch
Category definition
Category tactics
Category role
Category assessment Implementation & review
Category scorecard CatMan Opportunities

Category strategies Tools and data needed
178
REVIEW DAY 1
179
SHOPPER KNOWLEDGE
The human eye

The human body
The human brain
Workshop
181
EYE LEVEL IS NOT BUY LEVEL
15°
30°
182
Source: Nielsen shopper observation
OR STANDING
5-7 meters
1.5 meters
THE EYE ACTS DIFFERENTLY WHETHER WALKING
183
COLORS
THE HUMAN EYE REACTS FASTER TO THREE
184
COLORS
Workshop
THE HUMAN EYE REACTS FASTER TO THREE
185
Workshop
THE HUMAN EYE GETS ATTRACTED BY….
186
LIGHT ATTRACTS THE HUMAN EYE
187
SHOPPERS USE FAMILIAR COLORS AND SHAPE TO

NAVIGATE IN THE STORE
Brand
As our brain simplifies tasks and puts us into auto-pilot,

as we are attracted by the familiar
188
USE BASKETS/TROLLEYS ENCOURAGES

PURCHASING
= min.+20%
 Spread baskets around, optimize

size of the trolley 189
SHOPPERS ARE EITHER IN SHOPPING MODE OR

LOCATING MODE
Locating
Transition
Shopping
190
SHOPPERS TEND TO SEEK PRODUCT

INFORMATION FROM BIG PACK SIZES
1 litre pack sizes play a role Small pack sizes (110 or 180 ml)
in conveying information are purchased
81% bought 4x small

packs
191
Source : Exit Interviews/Focus Group Discussions
MIRROR, MIRROR ON THE WALL…

Mirrors slow shoppers down and
increase sales of whatever is next
to them
We buy more if we look better
Warm, spacious and private fitting room

Soft lighting (not to reveal shape/skin flaws)
Slightly tainted mirrors to make the shopper look better
Some stores place “unflattering” mirrors and light outside 192
IN-STORE TV MEDIA NEEDS TO FIT WITHIN THE

SHOPPER EXPERIENCE
• nobody watched the ads

• better location near
counter or at eye level on
the aisle
• short messages in display
more effective
193
Source: shopper observations
SAMPLE BEST PRACTICES FOR RETAIL
NEUROLOGICAL BEST PRACTICES FOR RETAIL

MARKETING
AVOID “REPETITION
BLINDNESS.”
Too much of the same thing

in the aisle will decrease the
effectiveness of all displays
and signs. If everything looks
the same, everything will
suffer. Use different lighting,
ambiance in different zones.
195

MARKETING
USE THE
ENVIRONMENT TO
PRIME THE PRODUCT.
Appropriate materials enhance the
characteristics of the products or
displays. Natural-looking materials
are especially important for food
product displays.
Rite AIDS “wellness center”, US 196

USE ROUNDED EDGES/SHAPES
197

MARKETING
KEEP IT SIMPLE.
The Brain loves order

and simplicity. Clutter
overwhelms and
frustrates the
shopping brain.
198
INTUITIVE NOTIONS
Shoppers have got their own intuitive notions of how their

body works, and how outside agents work on their bodies
“dry and
“A
creaky
pounding “hot
joints”
headache” forehead”
“rubefacients
“antacids
lubricate “inhalations
coat the
joints” dissolve
stomach”
phlegm”
Not necessarily related to how it works in medical terms,

and not always consistent across shoppers, cultures
199
INTUITIVE NOTIONS
Presence of intuitive logic in the communication leads to
greater confidence in decision making, engages the shopper
“They have shown exactly what happens to “When I watch this (ad) I feel like it is
me” happening to me … the medicine must
“That is how my stomach feels when I have be coating my stomach like this”
acidity … they have shown it correctly” “I also feel like someone is massaging
the balm and unknotting my muscles”
Not just about speed…
200
INTUITIVE NOTIONS ARE EVEN USED IN FMCG
201
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need shopper insights? Just contact us

CATEGORY TACTICS
Range
Macro & Micro Space Planning
Price
Promotion
Assortment management
List Maintain De-list
to maximise shopper satisfaction
Key content & output

Less is more? Final product range
Listings
Delistings
Workshop
205
FINDING THE RIGHT ASSORTMENT IS A SUBTLE

MIX
More products = more sales?
Sometimes, less is more
10
5
0
% evolution
-5
-10 # SKUs
-15 Sales
-20
-25
-30
-35
Source: category project, Carrefour Italy
Workshop
206
How to maximise OTC sales

Reckitt Benckiser’s Trevor Gore, Global Healthcare Training
Manager
Product
• Don’t try to do it all. “Pharmacies like to try to stock everything – but
you can’t stock everything”. Check your sales data regularly to work
out what sells – and be ruthless. “The public finds it easier to shop
when you have fewer products and less clutter,” Mr Gore says, giving
the example that there are more than 60 adult pain relief products –
but just 25 of these make up 80 per cent of pharmacy sales in the
market.
• As well as the leading brands, stock new products with media
awareness, as customers may come in and ask for them
207
LISTING AND DELISTING ARE CRUCIAL
Listing new products

Vital to capture new trends, attract
shoppers, build store image
De-Listing non-performing products

Key to optimize space productivity, make way
for new products, build retailer image
How to decide to keep, delist and list products?

208
KEY QUESTIONS NEED TO BE ADDRESSED WHEN

DEFINING THE BEST ASSORTMENT
• What breadth and depth of products will satisfy the target

customers’ needs at each level of the category decision
tree?
• How well is the product range in line with the category’s

role and strategies?
• How can we minimize the investment in stock?
• What criteria should we consider when adding/deleting

products from the range?
Workshop
209
TOOLS AND PRINCIPLES
• Breadth vs depth
• 20/80 principle No market date available
• Listing/Delisting principles
• Quadrant analysis
Market date available
• Market coverage
210
BREADTH VS DEPTH
When adding, consider Breadth first
When removing, consider Depth first
Breadth
4 1 3 9 - 8
2 5 6 Depth
10 7
211
THE PARETO RULE

Must have Strategic Questionable
Cumulated sales in the category (retailer data)
80%
20%
212
THE STARTING POINT FOR LISTING & DELISTING

Turnover
SKU 1
SKU 2
SKU 3
…
IN …
Candidates for …
listing based on … 20%-30%
sales in the market
…
…
OUT
Candidates for de-listing
…
Turnover = average weekly turnover per store,

excluding promotions 213
ELEMENTS TO BE CONSIDERED BEFORE

DELETING
Lifecycle
Value = Benefit
Price
Regional differences, off-take, cross-category purchases, brand loyalty, profit margin, supplier s support, lifecycle, different price points214
ELEMENTS TO BE CONSIDERED BEFORE ADDING
X

Product duplication, shopper value, logistics issues, personal selection / exclusivity/first mover
215
advantage, innovative, in line with target shoppers profile, needs and expectations
PRODUCT RANGE IN RX
• Keep stock of leading products according to internal sales

data or external sources
• Determine stock for each product based on sales per week
or month
• Ensure all other products can be delivered rapidly by
distributors/wholesalers or suppliers and either picked up
by clients or delivered to them.
• Some countries have legal obligation for wholesalers to
deliver the next day or 24h delivery (US, Australia, …)
216
MARKET COVERAGE: WHERE ARE WE, WHERE

DO WE WANT TO BE?
• How much consumer demand does the retailer satisfy with
its current product range?
Retail audit (Total MT or benchmark) Retailer category or segment data

Market
share%
SKU 1 xx.x SKU 1 Market coverage
SKU 2 xx.x SKU 2 benchmarks:
SKU 3 xx.x SKU 4 Destination: >80%
Routine: > 60%
SKU 4 xx.x SKU 5
Convenience: 35%-40%
SKU 5 xx.x SKU 7 Seasonal: according to
SKU 6 xx.x … season & strategy
SKU 7 xx.x
… xx.x
Sum (Market coverage)
=yy.y%
Volume or value share will be used depending on the objectives in the scorecard 217
CATEGORY QUADRANT ANALYSIS

Average Retailer Share
Sleepers 25%
Winners
Category B
Category A
20%
1. Keep current assortment
1. Review product mix vs. market
2. Keep adding fast moving
2. Look for emerging sub segments
SKUs
3. Replace slow with fast
15% 3. Further develop emerging
moving SKUs
sub segments
10% Average
0% 2% 4% 6% 8% 10% 12% Retalier
Growth
1. Consider reducing assortment
1. Review product mix vs. market
2. Increase gross margins where
2. Review package types or sizes
possible by decreasing low ROI5%
3. Apply trading Category
up techniques
D
SKUs
Category C
Questionable 0%
Opportunity Gaps
218
DEFINE RANGE BY CLUSTER: EXAMPLE
100%
selected
95% items
+ possibility to
selected
90% items introduce a
selected limited number
85% items
selected of personally
80% items
selected selected
items products to
reinforce
01 02 03 04 05 personal
servicing
CORE FULL
RANGE RANGE
219
ADAPTING RANGE OF PRODUCTS IN VARIOUS

STORE CLUSTERS
On the street In neighbourhoods In shopping malls

Missions Immediate & Immediate + top-up Main shopping trip
specific need
Category focus Health Health + baby + Health, Beauty ,
some personal care Well-being
and well-being
Pack sizes Small Small, some large Full range
 Developing distinct store clusters

220
ASSORTMENT BREAKOUT
• Painkillers: based on the information you have, and given a

one in-one out rule, what assortment recommendations will
you make?
• Repellent: which 3 SKUs would you recommend to delete?
• You are diapers manufacturer A: recommend 3 new SKUs to
V-Mart and explain why.
• Shampoo: based on the provided information, if you could list
5 more SKUs of Anti-Dandruff, how many SKUs of which

brands would you recommend?
20 minutes to prepare, 5 minutes to present. Don’t forget your category role and
strategies!
Workshop
221
Workshop
222
Workshop
223
Workshop
224
Workshop
225
PLAN ON A PAGE
226
SPACE MANAGEMENT
GENERAL RULES AND THEIR APPLICATION IN
PHARMACIES
DIVERSE NEEDS LEAD TO SPECIFIC TASKS
Needs Tasks
Assist
shoppers
Shopper
Supplier
Retailer Experience Profit Operations Manage Influence

operations shoppers 228
LOCATION IN STORE NEEDS TO FOLLOW ALL THE

PREVIOUS INSIGHTS
Understand the category

• Image, profitability
Understand the retailer

• Retailer overall mission and strategy
• Strategy assigned to the category
• Space available
Understand the shopper

• Shopper mission
• Category attractiveness
• Category adjacencies : cross-category purchases
• Multiple siting opportunities: impulse purchases
Workshop
229
KEY PRINCIPLES
• Place destination categories in high visible, high traffic areas
• Spread destination categories across the store
• Create theme zones (Baby, Health, Personal Care, Beauty,
Men, Sport, Nutrition, etc.)
• Place high image building category near the entrance
• Place routine categories in “regular” locations
• Place convenience categories in available locations
• Place highly planned categories in “colder zones”
• Place more impulsive categories in “hotter zones”, near
the traffic flow
Workshop
230
PARTICULARITIES OF PHARMACY STORES AND

SHOPPERS
• Smaller store sizes

• Shopper mostly planned to buy a single item
• Some categories are embarrassing to buy or the be seen
spending time in
• Challenge is to make prescription drugs shoppers to buy
more (related) items, and also to attract “non-prescription
drug” shoppers
231
MODERN PHARMACIES INFLUENCE SHOPPERS

BEFORE REACHING THE COUNTERS
Dispensary at the back to Highly planned
minimize congestion Pharmacy (prescription) or very slow moving OTC
Impulse items Dispensary Restricted OTC
(seasonal) or
Items prone to NEED /

Destination
Service counter High rotating
impulse OTC
Destination
theft
PAIN
Destination
Destination
OTC products
Perpendicular
aisles
WANT / Wide aisles

(eg. for baby
PLEASURE
Seasonal / impulse / promotions
Entrance
zone)
232
Dispensary
Street
Entrance
Dispensary
THE DISPENSARY SECTION NEEDS TO BE SEEN!
233
MODERN PHARMACIES USUALLY SHOW A VERY

VISIBLE ENVIRONMENT
Sun store, Switzerland
Low shelf heights to locate the pharmacy counter areas from any place
234
BOOTS
Place baskets
at the entrance
But careful: do NOT place cheap & low quality products (eg.
hair clips) at the entrace, as decreasing the pharmacy’s image
235
236
237
238
THE “EMBARRASSMENT FACTOR”
• We don’t want other people to know about our condition

• We don’t want other people to see what we are buying
• We don’t want to be seen in an inappropriate location
• We don’t want the staff to have any emotions when we
buy something
Discuss with the person next to you: which categories?

2min. to discuss
239
SOME “EMBARRASSMENT CATEGORIES”
• Hormones (menopause)
• Medicine for digestion problems
• Cellulitis / Stretch marks
• Adult diapers
• Products against verruca/fungus
• Cream against sexual diseases
• Condoms / Oral contraceptive / Pregnancy test
• Weight control products
• Memory loss pills
• Feminine protection
• … 240
HOW TO DEAL WITH EMBARRASSMENT

CATEGORIES
• Place in dark, cold spots (corners), using subtle light
• Shopping bags as opposed to baskets
• Dedicated zone for pharmacist consultations
• Digital in-store/on-line/mobile tools to check availability
• Self-scanning devices
• Non-transparent plastic bags
• Home delivery
• …
241
HOW TO DEAL WITH THEFT

• Place near the counter
• Add security tags
• Sell in “blister package”
• Place empty packs on the shelf,
hand out real one at the counter
• Place fake packs on the shelf,
hand out real one at the counter
• Product lockers
242
THE SPACE ALLOCATED TO EACH CATEGORY
• The more a category sells, the more space it deserves…

but…
• Is there enough space to support the existing assortment
without risking out of stocks of fast movers?
• Do we need to increase the visibility based on the desired
strategy?
• Does the category have very large pack sizes which need a
disproportionate size?
• Has the space allocation kept in line with the increase in
sales of the category or segments in the category?
Workshop
243
CVS VIRTUAL STORE
244
LOCATION BREAKOUT
Looking at the store map, where would you place your

category?
Split into same groups. 10 minutes to prepare. 2 minutes to present.
Workshop
245
Entrance
Traffic & Dwell time
Service counter
246
Traffic & Dwell time Codification
A B C D E F G H
Service counter
1
4
7
Entrance 247
PLAN ON A PAGE
248
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need a product range review? Just contact us

Space
x x
y y z
Key content & outputs

Facings calculation Facings per SKU
Selling vs. allocating facings

Workshop
251
THE ALLOCATION OF FACINGS WILL BE DONE BY

CONSIDERING VARIOUS FACTORS
• Unit sales
• Turnover
• Profit
• Brand image
• Strategy
• Etc…
Workshop
252
BUT THE BASE IS ALWAYS UNIT SALES

Unit sales Facings
1,000
• Brand A 1,000
4 4,500 * 18
2,000
• Brand B 2,000
8 4,500 * 18
• Brand C 1,500 6 1,500
4,500 * 18
4,500
Facings available: 18
Workshop
253
BUT THERE WILL BE LOSERS
• Poor performing products will lose space, and ultimately be

deleted from the assortment
• 40% of share of sales does not always mean 40% of shelf

space
Workshop
254
IS AN ISSUE
USE APPROPRIATE SHELF SIZES IF DAYS OF STOCK
255
LIMIT STOCK ON SHELF IN BEAUTY STORES
256
FACINGS BREAKOUT
Which of the following will you take into account when allocating facings in your
category? More than one answer possible. Add on your category plan.
Unit sales (reflects popularity)

Price per SKU
Margin
Image (=origin)
Team work. 5 minutes to discuss. Same teams as before

257
FACINGS BREAKOUT
Looking at the following information, determine the number of facings for various
SKUs and be ready to defend your point of view.
Volume Supplier Price Origin Margin%
Product A 320 Alpha Medium Local Low
Product B 350 Beta Low Local Medium
Product C 160 Delta Medium Imported High
Product D 170 Omega High Local Medium

1,000
Available facings: 10
Team work. 10 minutes to prepare. Same teams as before.
Team Shampoo: you work for Manufacturer Alpha
Team Painkillers: you work for Manufacturer Omega
Other teams: you work in V-Mart’s own Merchandising Team 258
Placement

Key merchandising rules Planogram
Category signage Category in-store theatre elements
Workshop
259

Manager
Merchandising
• Ensure signpost brands are visible in all categories
• This visibility is important even to those customers who aren’t
brand-focused: “Mothers may not buy Calpol, but they need to see
Calpol to know they’re in the right place.”
260
PLACEMENT ON THE SHELF (=MERCHANDISING)
Based on
• common shopper behavior
• shopper decision tree
• retailer strategy
• product range
• space available
• etc…
Workshop
261
BEHIND THE COUNTER
CHALLENGES AND OPPORTUNITIES
• OTC or restricted OTC products

• Customer can see but not access: importance of the
correct merchandising is less relevant
• Pharmacist needs to be able to quickly hand out the
product
• Is simple alphabetical order needed?
• Is there an opportunity to achieve impulse purchase?
Workshop
263
ARE WE PAYING ATTENTION?
264
Popular
KEEP IT SIMPLE AND VISIBLE
Impulse
Seasonal
265
MAKING SHOPPERS NOTICE AND UNDERSTAND
THE BACK OF THE COUNTER
Segment A Segment B Segment C Segment D Segment E
Strategic products
Signpost products
Strategic products
266
MAKING THE COUNTER AREA WORK HARDER
Promotions Restricted OTC Communication
with signage
267
Hayfever&allergy
PLANOGRAM EXAMPLE
268
Cough& Cold
PLANOGRAM EXAMPLE
269
TILTING PRODUCTS TOWARDS THE SHOPPER
270
FRONT OF STORE
CREATE MERCHANDISING BLOCKS
Segment 1 Segment 2 Segment 3
Sub-segment 1 Sub-segment 1 Sub-segment 1
Sub-segment 2
Sub-segment 2
Sub-segment 2
Sub-segment 3
Sub-segment 3
Create blocks and sub-blocks in line with the decision tree 272
GENERAL MERCHANDISING RULES

Large store Small store
Segment 1
Segment 1 Segment 2 Segment 3 1st level of
Segment 2 decision
tree
Segment 3
1.5m
2nd level
or of
decision
tree
Min. 40-50cm
Create clear segment blocks 273

THE CASE OF RENTED / SINGLE BRAND SPACE
274
THE CASE OF RENTED / SINGLE BRAND SPACE
275
BRAND BLOCKING EXAMPLE
Products made by
same manufacturer
grouped together.
Using the packaging
design to create
attractive fixture
276
Allocate facings according to sales, objectives

and strategy
Workshop
277
PLACE PRODUCT TO PUSH IN HIGH INTERACTION

CATEGORIES IN THE MIDDLE OF THE AISLE

Products you want to push
Browsing
LOCATING SHOPPING MODE

MODE
Assumed consumer flow
278
LEADING PRODUCTS ACT AS SIGNPOSTS FOR LOW

INTERACTION CATEGORIES

Products shoppers
expect to find
quickly
Other
products you
want to push
(leaders)
Grab & Go
LOCATION SHOPPING MODE

MODE
Assumed consumer flow
279
Large pack sizes or high rotation items
280
GENERAL MERCHANDISING RULES: TO INCREASE

PROFIT
Medium profit items
High profit items
Medium profit items
Low profit items
281
GENERAL MERCHANDISING RULES: TO BUILD

IMAGE
Excellent image
Good image
Low image
282
GENERAL MERCHANDISING RULES: FOR PRICE

SENSITIVE CATEGORIES
Expensive
Medium price
Cheap
283
BUILDING A PLANOGRAM AND SHELF STRATEGY
Planogram
Merchandising principles
SDT
Segment A Segment B Segment C
Segments on shelf
Allocate products to segments
284
STANDARD PLANOGRAMS
285
PRIVATE LABELS
THERE ARE USUALLY THREE DIFFERENT TYPES OF
PRIVATE LABELS
Generic Private Label
• Strategy – Cheapest, entry price point, basic product
• Objectives – Provide customer with low price option, expand customer base
• Branding – No brand name, or identified as first price label
• Pricing – Large discount, 20-50% below brand leader
• Category coverage – Basic functional product categories
Copy Brand
• Strategy – Similar product at a lower price
• Objectives – Increase negotiation power, increase retailers share of category profit
• Branding – Store brand or category-specific own labels
• Pricing – Moderate discount, 5-25% below brand leader
• Category coverage – Originated in large categories with strong brand leader
Premium Store Brand

• Strategy – Value added
• Objectives – Provide added value product, differentiate store, increase sales & margin
• Branding – Store brand with sub-brand or own label
• Pricing – Close to or higher than brand leader
• Category coverage – Image-forming categories, often fresh products
287
IN THE CONTEXT OF CATEGORY MANAGEMENT
• Private labels must be accepted and considered when

available or planned
• Sales and ROI must be assessed just like any other

manufacturer brand to justify them in the assortment
• Depending on the category strategy and the nature of the

Private Labels, they will be placed at the beginning of a
category section as a price entry point, or next to the
leading brand to attract shoppers
288
SIGNAGE WILL HELP TO LOCATE THE CATEGORY,

THE SEGMENTS AND TO MAKE CHOICES
289
Source: ECR, IGD
SIGNAGE MAKES IT MORE ENGAGING
290
HELPING SHOPPER TO MAKE A SELECTION
291
HELPING SHOPPER TO MAKE A SELECTION
292
SIGNAGE, LIGHT AND EDUCATION MATERIAL

CONTRIBUTES TO A GREAT SHOPPING EXPERIENCE
LUMINARIA
VERTICAL CON
INFORMACIÓN
MECHEROS
GIRATORIO
ESPEJO
HOT SPOT (ESPACIO NOVEDAD) 293

VISIBILITY
ENSURE PROPER SHELVES AND PRODUCT
294
VISIBILITY
ENSURE PROPER SHELVES AND PRODUCT
295
HIGHLIGHT BEST SELLERS IN BEAUTY SECTIONS
296
MERCHANDISING RULES
What are some of the key merchandising rules you will use? Add them to your
category plan.
OTC painkillers: 3 bays

Shampoo: 4 bays
Mosquito repellents: 1 bay
Diapers: 5 bays
1) First blocks by which elements of the tree?

2) Horizontal or vertical?
3) Push visibility of which products?
Same groups. 5 minutes to prepare

297
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need a planogram? Just contact us

Pricing Promotions

EDLP / Hi-Lo Pricing &
Promotional plan
Key promotional rules
Tactics by role / strategy 300


Manager
Price
• Of course price is important – but it’s not community pharmacy’s
USP (unique selling point), says Mr Gore, so don’t give it undue
weight in your mindset. “If you’re just going to sell boxes for money,
somebody can do it better than you and for less money,” Mr Gore
says. “We have got to get out of the mindset that selling medicines is
just a cash transaction.”
301
THE RIGHT PRICING NEEDS TO BE DETERMINED
• Key inputs to determine pricing per SKU:

• Role and Strategy
• Competitors price positioning Mostly not
applicable
• Gross Margins to Rx
• Value provided to shoppers

• Legal constraints (most often for Rx or OTC)
• Pricing approach:
• High-Low (high reaction to promotional price decrease)
• Every Day Low Price (EDLP) (high reaction to long term price
increases) 302
KEY RULES Service
Value = Benefit
Price
Decrease?
Increase? $=?
Maintain?
303
Minimize price of selected popular items, maintain high price of little price awareness or sensitivity
CASE STUDY: DUANE READE PHARMACY CHAIN,

US
• Situation: the chain tried discounts and coupons to boost diaper sales,
but was still losing ground to the competition
• The findings of a pricing optimization software showed that the
product markup should be a function of the child’s age, since
parents of newborns are far less price sensitive than
parents of toddlers
• Duane Read made newborn sizes more expensive and big-kid pull-ups
cheaper. After a year, the increased sales of diapers booster baby care
revenue by 27 percent, and gross margin rose by 2 percent
304

Manager
Promotion
• Promotions can play a role in customers’ purchasing decisions, says
Mr Gore, but make sure you know why you are offering them. Take
time to analyse what is the most effective for your pharmacy and
your customers; is it a certain percentage off the usual price, BOGOF
(buy one, get one free), or BOGSHP (buy one, get second half price),
for example?
305
WHY AND WHERE PROMOTIONS
• Promotions are done to improve the value perception of

the pharmacy/health/beauty store, as well as bring
excitement and therefore generate impulse purchase
• Visibility:
• Use a dedicated promotional area to highlight 5 or 6 of the best
promotions during one period
• Place seasonal promotions at the entrance in a high visibility area
• Display a poster with best offer/promotions near the counter
where customers hand in prescriptions (+ have some stock at the
counter)
306
PROMOTIONS MUST BE VISIBLE
307
OFFER FULL SOLUTIONS: ROUNDY’S
SUPERMARKET (US), BOOTS (THAILAND)
During the cold and flu season, Shoppers want to be
reassured that they live a healthy life so they minimize the
risk of falling ill
Bundle or co-locate products in-store to create “Prevent,

Protect & Soothe” theme and leverage the combined
marketing voice of leading health and wellness brands
New Year resolution solution

Source: GMA / Booz company

308
SHOPPER-CENTRIC PROMOTIONAL PLAN

EXAMPLE
Jan Feb Mar Apr MayJun Jul AugSep Oct Nov Dec
Events
Valentine's day
Ramadan
Olympics
…
Themes
Sport
…
Product Mechanics
Lindt Lindor Multipack 400g 10% price off + display
Carte d'Or Dark Choc 200g Cross Cat. offer with flowers
Mars 53g 10pack Introduction - trial
Twix 55g Buy 5 get one free
…
…
Indulgence
Functional Chocolate
Social
Indulgence Social Functional
309
ENSURE EFFICIENCY OF PROMOTIONS TO

MAXIMIZE TOTAL CATEGORY VALUE
• Run promotions mostly on big brands
• Don’t promote leading SKUs at similar price positioning at

the same time: the whole competitive set gets cheaper,
cross-trial will not happen, hence not maximizing category
sales
• Maximize calendar events leverage
• Achieve Above The Line / Below The Line synergies
310
TACTICS BREAKOUT GROUPS 1 & 2
Fill in the following board with the appropriate text boxes provided.
Provide one example per category role.
CATEGORY TACTICS
CATEGORY
Assortment Merchandising Price Promotion
ROLES
Destination
Preferred
Occasional
(seasonal)
Convenience
Split into different groups. 20 minutes to prepare. 5 minutes to present.

311
Fill in the following board with the appropriate text boxes provided.
Provide one category example per strategy.
Strategy Product characteristics Key tactics

Traffic
building
Transaction
building
Cash
generating
Profit
generating
Turf defending
Excitement
creating
Image
enhancing
Split into different groups. 20 minutes to prepare. 5 minutes to present. 312

Product characteristics Key tactics

Strategy
Traffic building Products with high share, high price awareness, Frequently promote high loyalty items with
high household penetration & loyalty and frequent important discount, maximize visibility. Create
purchase loyalty with EDLP items.
Transaction Products with large transaction size, attractive to Promote big spending segments, encourage
building large families, move well off display and subject trade up and cross-category purchase. Slightly
to impulse purchase bias visibility towards high priced items.
Cash Fast turning products with excellent payment Ensure good payment terms, draw consumer
generating terms and low inventory. attention with high visibility for new/high profile
SKUs
Profit Products with higher margin, higher loyalty, with Limit promotions to items with above average
generating highly profitable cross-category purchases and margin, minimize price discounts, slightly bias
little price sensitivity visibility towards high profit SKUs
Turf defending Products frequently purchased by target customer High promotional frequency on selected SKUs to
with big consumer preference, highly price- highlight competitiveness. Keep price at parity
sensitive, frequently promoted by competition with competitors, focus on media events.
Maximize visibility of own labels.
Excitement New or seasonal products, rapidly growing Discount new, noteworthy items to communicate
creating segments excitement and urgency, chose high profile
location in store.
Image Products that reinforce the store theme or Frequently promote image building products, only
enhancing advertised positioning (freshness, healthy, quality, discount if pricing image desired, also use media
price, etc.) advertising
313
CATEGORY TACTICS
CATEGORY
ROLES
Destination Complete variety Prime store Leadership (best High level of
at segment and location with high value for the activity, high
SKU level traffic, high category, loss frequency, long
exposure leader) duration, many
vehicles
Preferred Broad variety, Average store Equal to Average level of

down to SKU level location, high competition, activities, various
space allocation across all SKUs vehicles
Occasional Timely variety Good store Equal to Seasonal, timely

(seasonal) location, average competition during activities using
space allocation season several vehicles
Convenience Selected SKUs Available store Within reach of Low level,

(biggest sellers) location competition, selected vehicles
around 15%
higher
314
Fill in the category plan with the key rules for pricing and
promotions
Which pricing level vs. the

average market?
High
Medium
Low
Which level of
promotions?
High
Medium
Low
Same groups. 5 minutes to prepare

315
Product characteristics Key tactics
Strategy
Traffic building Products with high share, high price awareness, high Frequently promote high loyalty items with important
household penetration & loyalty and frequent purchase discount, maximize visibility. Create loyalty with EDLP
items.
Transaction Products with large transaction size, attractive to large Promote big spending segments, encourage trade up and
families, move well off display and subject to impulse cross-category purchase. Slightly bias visibility towards
building purchase high priced items.
Cash generating Fast turning products with excellent payment terms and low Ensure good payment terms, draw consumer attention with
inventory. high visibility for new/high profile SKUs
Profit generating Products with higher margin, higher loyalty, with highly Limit promotions to items with above average margin,
profitable cross-category purchases and little price sensitivity minimize price discounts, slightly bias visibility towards
high profit SKUs
Turf defending Products frequently purchased by target customer with big High promotional frequency on selected SKUs to highlight
consumer preference, highly price-sensitive, frequently competitiveness. Keep price at parity with competitors,
promoted by competition focus on media events. Maximize visibility of own labels.
Excitement New or seasonal products, rapidly growing segments Discount new, noteworthy items to communicate
excitement and urgency, chose high profile location in
creating store.
Image enhancing Products that reinforce the store theme or advertised Frequently promote image building products, only discount
positioning (freshness, healthy, quality, price, etc.) if pricing image desired, also use media advertising
316
CATEGORY TACTICS
CATEGORY
ROLES
Destination Complete variety Prime store Leadership (best High level of
at segment and location with high value for the activity, high
SKU level traffic, high category, loss frequency, long
exposure leader) duration, many
vehicles
Preferred Broad variety, Average store Equal to Average level of

down to SKU level location, high competition, activities, various
space allocation across all SKUs vehicles
Occasional Timely variety Good store Equal to Seasonal, timely

(seasonal) location, average competition during activities using
space allocation season several vehicles
Convenience Selected SKUs Available store Within reach of Low level,

(biggest sellers) location competition, selected vehicles
around 15%
higher
317
the
Plan
You just
Category
completed
CONGRATULATIONS!
318

Manager
Public expectation
• Advice is what the public expects of community pharmacies, and you
should offer it with every sale you make. He remembers, with a
shudder a 2008 which found “unsatisfactory” advice with a third of
pharmacy sales. “Eight per cent of independent pharmacies didn’t
ask any questions when selling medicines – that’s a disgrace,” he
says.
• He also issues a plea for pharmacists and pharmacy staff to
remember to ask open questions. “Do something that makes you
different from a vending machine.”
319
SERVICES IS A KEY DIFFERENTIATOR

Pharmacist should play a dispensing role AND a consulting role as the first point of
contact
Point of sale Point of care
Build relationship Provide Solutions

Product information Tests (blood, eye, pressure,…)
Personal recommendations Small interventions (ear-piercing, flu shots, etc.)
Offers, Promo information Magazines
Nutritionist Newsletters
Ophthalmologist Forums
… Mobile alerts
Home delivery
…
320
THE PHARMACIST
• Delivers expertise
• The key source of information esp. for OTC
• Builds relationships (and therefore loyalty)
• Almost a substitute for the family doctor
• Critical in listening and suggesting “companion purchases” to
offer a full solution
321
SHOPPER KNOWLEDGE VS. INVOLVEMENT
Limited / Some personal

no advice Hi Paper tissue Shampoo advice for
specific products
Knowledge Milk Powder
Deodorant OTC
Use of
visuals, Lo Mosquito Rx Active role by
the pharmacists
brochures repellent
Lo Hi
Involvement
322
EXAMPLES OF OTHER SERVICES Rose pharmacy, Philippines
Guardian Singapore
Caring (Malaysia)
Watsons Hong Kong
323
WHAT’S HAPPENING IN DRUGSTORES
Other Marketing Activities
MOBILE
HEALTH
MERCURY DRUG FREE CLINIC CHECK UPS
MONEY SENDING
324
Indonesia
WHAT’S HAPPENING IN DRUGSTORES
325
SUMMARY OF TACTICS IN PHARMACIES/H&B
Leveraging the trust and credibility of the pharmacist
Retailer Supplier
Engage with customers more often, Create tools and resources that
suggest appropriate products / help facilitate pharmacists’
services, linked to the Rx product recommendations on non-
prescription items
Place products that compliment
prescriptive drugs near the counter Develop sampling programs and
materials to promote the
Coach staff to be more attentive to pharmacist-patient relationship
shopper needs, ask open questions
326
SUMMARY OF TACTICS IN PHARMACIES
Encourage more frequent trips to the pharmacy and increased basket size
Retailer Supplier
Expose more categories on the way Provide promotional ideas and
to the counter display accessories to increase
basket size and traffic
Implement loyalty programs
Develop promotional schemes that
Leverage end-cap, displays, signage generate more frequent trips to the
to encourage front-end shopping store
327
Manage store inventory and timely new product introduction
Retailer Supplier
Assess stock level of each SKU Work with pharmacies to help
maximize profit in a limited shelf
Cut the tail space
Leverage assistance of suppliers, Create optimum planograms using

including in-store merchandising performance data and other
assistance objective information
Ensure key new items are available

on shelf in a timely manner
328
Enhance in-store experience
Retailer Supplier
Engage customers in self-care and Understand and share cross-
prevention (rather than “just” category relevance
treatment focused care) through
relevant category positioning and Develop integrated solution based-
adequate communication activities
Develop integrated solution-based Develop educational signage

activates across categories
Use simple yet relevant signage

within categories
329
Relate pricing to added-value and price-sensitivity
Retailer Supplier
Highlight personalized service as a Support pharmacy with added-
key differentiator value services and programs that
help justify a price premium
Create unique health & wellness
programs that retain existing Share insights on shopper price-
shoppers and attract new ones sensitivity
Adapt pricing based on category

role and services offered
Adapt pricing based on

involvement and price sensitivity
330
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need a planogram? Just contact us

CATEGORY IMPLEMENTATION
Implementation plan
A CAREFUL IMPLEMENTATION IS AS IMPORTANT

AS ALL THE PREVIOUS STEPS
• Final approval
• Tasks and timing
• Roles and responsibilities
• Monitor compliance
334
THE FINAL APPROVAL HAS TO INVOLVE ALL

DECISION MAKING PARTIES OF THE RETAILER
• Commercial Department
• Marketing Department
• Head of stores
• Buying Department
• Security
• Logistics
• Etc…..
But have them involved earlier!

335
ENSURE TASKS AND TIMINGS ARE

COMMUNICATED AND UNDERSTOOD
• De-listed products
• New products
• New planogram in store
• Promotion plan
• Price changes
• New signage / POS material
 prepare an implementation plan
336
MONITOR COMPLIANCE AS IMPLEMENTED

PLANS CAN CHANGE VERY QUICKLY
Visit stores at least once a week

• Check planogram: range and facings
• Check if promotional material is in place
• Check signage / POS material
• Check product availability
337
MONITORING STORE EXECUTIONS
Approved Lay-out Store check Photo
Fell down products
Over stocked product
Nonexistent product at
shelf
Lack of product
& facings
Mirror image
Reversed lay-out
Lack of product
& facings
Send WRITTEN feedback to stores and management

338
CATEGORY REVIEW
Results & corrective actions

A REGULAR REVIEW IS NECESSARY TO ENSURE

LONG TERM SUCCESS
• Up to quarterly reviews for key categories

• At least one big review per year for other categories
• Measure progress using the scorecard
• Review strategies, tactics and implementation
• Identify and implement corrective actions
340
MEASURE THE SUCCESS
Q1 Year N-1 Q4 Year N-1 Q1 Year N

Financials
Shopper behavior
a b c
Shopper satisfaction
Other categories same store

Same category different stores = Index
Q1 Year N-1 Q4 Year N-1 Q1 Year N
d e f = Index
341
SUMMARY
CATEGORY MANAGEMENT IS A SHOPPER-CENTRIC

WAY OF WORKING TO IMPROVE PERFORMANCE
343
IN PHARMA, ADAPTATION IS NEEDED
• Legal restrictions
• No possibility from shoppers to access some products
• Missions are different than in super/hyper
• Average grocery performance does not apply in pharma
• Store size is different
• Low product knowledge
• Importance of pharmacist
344
APPLICATION OF CATEGORY MANAGEMENT
Legal restrictions
T Self-service
Personal choice
345
TYPICAL RESULTS IN ALL AREAS
• Increased sales and gross profits by 5% to 10%

• Increased ROI by 5% to 10%
• Reduced inventory investment by 10% - 20%
Results published by ECR in the US Workshop

346
CASE STUDIES
BAYER, US
348
All!Good
Russia. Source: ECR

349
KEY PRINCIPLES
Each cosmetic purchase is associated with a dream, pleasure

and hope. Buying beauty products is a personal process.
Offer a unique shopping experience

• Unique and modern design
• Make-up space for leader brands
• Promotion & special events
• Emphasis on beauty categories
• Atmosphere – light, images, novelties, education
350
UNIQUE AND MODERN DESIGN

•  45% of shoppers attracted by
visuals & interesting design
•  20% buy more than they planned
351
MAKE-UP SPACE FOR LEADER BRANDS

•  73% customers of Drugstores said that “BRAND” played key
factor when buying make-up
•  52% prefer fewer brands, but wider range
352
PROMOTIONS AND SPECIAL EVENTS

•  41% of women can be influenced at POS
•  15% customers of Drugstores said that present
for purchase played key factor for spontaneous
purchase
353
EMPHASIS ON BEAUTY CATEGORIES
•  30% of shoppers do not plan visiting the store in advance

• 80% of shoppers go straight to make-up category
354
ATMOSPHERE: IMAGES, NOVELTIES, LIGHT
•  15% customers •  33% shoppers of •  36% customers of Drugstores

decided to buy a Drugstores decided to pay attention to what is written
product after watching try a new product on the package
ad on TV and after
seeing it in store
355
NEW FLOOR PLAN
•  Based on market trends, category penetration and space-to-sales analysis

•  Cross categories are grouped together to increase average shopper basket
•  Oval gondolas guiding shopper flow
•  Increased share of space for beauty categories 356
ASSORTMENT ANALYSIS
•  Based on market trends and client’s sale-out data

•  Market trends analysis, category dynamics, brand&sku performance
•  Assortment optimization (rotation, listings proposal) in line with All!Good strategy
357
PLANOGRAMS
•  Based on category decision tree and client’s sale-out data

•  Clear lay-out organization easy to shop by segment and brand
358
NEW DESIGN AND MERCHANDISING SOLUTION
•  Zones:
• 
•  Make-up
•  Skin care
•  Coloration
•  Hair Care
Men Care
Promo zones
and window decoration
359
RESULTS
First two months of test demonstrate great
results in sales turnover and number of # of checks
checks increase +16% pp
Sales
turnover
+11% pp
Beauty
category
+19% pp
Source: Client’s sell-out data, 2011 - 2012

360
PHARMAVITE, US
361
362
363
CURRENT CATMAN SITUATION
STATUS OF CATEGORY MANAGEMENT TODAY

Catman Few manufacturers have
Catman Mainly done by larger been investing in category
Capabilities
Participation retailer but local giant management capabilities
Level started to develop to support retailers from
catman capabilities over last 5 years
Suppliers are more

Adopting willing to work with
retailer
Average
Increasing demand from retailers Collaboration Category recommendations

Shopper Level & are not fully shopper
to better understand shoppers.
Research Challenges centric, which leads to half
Still limited use of shopper
Adoption hearted acceptance
insights to make informed tactical
Level
decisions.
Implementation Challenge
Region still developing on shopper
approach – most research are
based on global studies than on a
local perspective.
365
TOOLS & DATA NEEDED
RETAILERS AND MANUFACTURERS NEED TO

UNDERSTAND THE MARKET
• Retail audit measures

• Category, brands, SKU performance by city or region
• Shares
• Distribution
• Pricing
• Promotions
• New products introductions
Workshop
367

UNDERSTAND THE RETAILER’S DYNAMICS
• Key account (Retailer) data

• Retailer specific performance
• All items in the category
• By store
• By shopper group (if available)
• Performance by segment, brand, SKU
• Pricing
• Promotions
• Volume
• Value
• Profit
Workshop
368

UNDERSTAND THE CONSUMER/SHOPPER
• Who is consuming or shopping the category?

• Consumer and shopper profile through consumer panels, U&A tracking
• Why are they shopping?

• Shopper Missions through quantitative research
• Where are they shopping

• Channel choice understanding through quantitative & qualitative research
• How are consumers shopping the category?

• Shopper modality through exit interviews
• Category decision tree through virtual shopper, exit interviews
• Shopper behavior through in-store observation
• Shopper behavior through consumer card data, consumer panel data
• Shopper satisfaction through exit interviews Workshop
369
RETAILERS AND MANUFACTURERS NEED TOOLS TO

HELP CATEGORY PLACEMENT DECISION MAKING
Workshop
370
RETAILERS AND MANUFACTURERS NEED TOOLS

TO HELP ASSORTMENT DECISION MAKING
Workshop
371
RETAILERS AND MANUFACTURERS NEED TOOLS

TO HELP DESIGN PLANOGRAMS
Workshop
372
CONTACT NIELSEN SHOULD YOU NEED
ASSISTANCE IN ANY CATEGORY MANAGEMENT
AREA
• Retail audit • Software
• StorePlanner
• Key account / Scan data • ProductPlanner
• Spaceman
• Household panel • My.Spaceman
• Shopper study • Training and Consultancy

• Shopper modality • Category Management training
• Decision tree • Category Management project
• Winning brands
facilitation
• In-store observation
• Exit interviews • Category Management outsourcing
• Customer card data • Planogram designing
• …
• Any combination of services to

address a specific issue
Workshop
373
2014 PERFORMANCE MANAGEMENT WORKSHOPS
Impactful Space Management Audience (=retailers + manufacturers)
• Maximize sales by assisting or influencing shoppers whilst ensuring Space planning, Merchandising functions
2 days
efficient store / shelf operations Beginner and Intermediate level

• Ensure optimal placement and space, appropriate segment
blocking, facings allocation
Practical Category Management

2 days
• Get equipped to work jointly with a retailer/ manufacturer to Category Management, Merchandising
optimize the sales of a category Buying, Trade Marketing, Marketing, Sales,
• Establish joint objectives, strategies and 4Ps in-store tactics Key Account Management
following ECR’s 8-step CatMan process Beginner and Intermediate level
Shopper-Centric Category Management

2 days
• Apply the most recent techniques for shopper segmentation, store Category Management, Merchandising
Buying, Trade Marketing, Marketing, Sales,
clustering, insights generation

• Optimize in-store tactics using tools & tricks based on shopper Key Account Management
behavior, incl. from Intermediate and Experienced level
Storewars (cooperation with the Nielsen Company)

3 days
• Use strong decision making and negotiation skills to achieve a Category Management, Buying, Trade
leading and profitable market position Marketing, Marketing, Sales, Key Account
• Join the world leading business management simulation training
Needs a good knowledge and practice of ECR’s 8 steps process or similar, experience at least in rangeFinance,
Management, and merchandising
HR projects for
an developed
entire category, or having attended
by INSEAD (Paris) Nielsen’s Practical Category Management workshop
Experienced level
All workshops are public or tailored in-house workshops
374
For more information, please contact your local Nielsen partner
STOP AND THINK
FEEDBACK FORMS
The most dangerous phrase
in the language is 'We've
always done it this way.'
Grace Hopper, computer scientist

Practical CatMan Workshop For Modern Pharmacies H&B Oct2014 PDF

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PRACTICAL CATEGORY

Health & Beauty

• Get an overview of the current market dynamics

• Learn and apply best practice from various retailer types to

Roles & responsibilities Category tactics

Category scorecard CatMan Opportunities

2 minutes to prepare, work in pairs

World economy recovery, weakening

2.0 2.5 3.0 2.6 5.4 5.5

Source: IMF April 2014

SEA overall show rebound in 2015

It has been a stable growth despite slow down

Source : BI and IMF 2014 13

Impacting slower growth in auto and motorcycle

Source: Gaikindo AISI 14

Electronic sales growth is slowing down

H1 13 14% Source : EMC 16

Value in Trillion Rupiah Monthly Inflation & CPI

146 147 146 147 3.8

Consumer Price Index

11.2 11.5 0.8

Modern Trade also showed slower total volume growth in

2012 2013 YTD May'14

Unit Value Change Volume Change Nominal Growth

compared to last year’s 11.4%

Indonesia Modern Trade| Food

Sales Growth vs. Last Year Sales Value (in billion)

hit double digit volume growth

LPG increase Food Price Adjustment

Fuel price increase

Rupiah Depreciation Rupiah Apreciation

Prepared for: [Client Name]

The economy 20 14 The economy 22 12

Political stability 12 8 Work/life balance 10 10

Health 9 8 Political stability 11 8

Parents' welfare and happiness 7 8 Health 7 8

Work/life balance 7 7 Parents' welfare and happiness 7 8

welfare Increasing fuel prices 5 7

Base : All respondents n=503 Base : All respondents n=502

DEBT RATIO IS 22% IN 2013 THE LOWEST IN THE

CONSUMER GOODS ARE EXPANDING CAPACITIES

MOVING INTO LARGE ECONOMY (NEW WORLD ORDER)

Source: Standard Chartered

LARGE BASE OF YOUNG GENERATION WITH POPULATION GROWTH OF

Source: USCB, CIA

MIDDLE CLASS HAS BECOME MAJORITY POPULATION WITH

Source: WorldBank, BPS

MOVING INTO HIGHER EXPENDITURE

THIRD LARGEST MIDDLE CLASS IN ASIA

PROFILE OF MIDDLE CLASS

LARGE MARKET OF MIDDLE CLASS …

Convenience Products and Eating outside

SMALL CONVENIENT FORMAT:

2003 2013 Growth %

Traditional store 1,750,000 2,500,000 750,000 42%

Minimarket 4,038 20,000 (est) 16,000 500%

Modern drugstore 179 869 690 485%

THE NEXT PROXIMITY IS FOR HEALTH & BEAUTY

INDONESIA ANNUAL PACE +4 PERCENT

DRIVE THE GROWTH

Next growth destination:

PREMIUM AND INNOVATION AT AFFORDABLE PRICE

Low prices for most items 0.82