Next Generation of Category Management

Shopper & Category Development
The Next Generation of Best Practices Category Management

The Partnering Group
Dr. Brian Harris John Clutts
Hallmark Cards Inc.,

Wayne Strickland
Next Generation Category Management FMI 5-6-08
2008 The Partnering Group, Inc.
Retail Marketing - The Big Waves

ECR Category Management Best Practices Next Generation Store Designs Shopper Marketing
Space Management Scanning
Category Management
Today 2000
1995 1989
1975
1985
Category Management
Concept introduced in the late 1980s Category Management has had global acceptance since its introduction The 1995 US ECR Report documented the Best Practices definition and business process
Adoption of Best Practices Spread Quickly
Adoption 1993
Today
The Best Practice Model provided a Platform for Global Adoption.

Next Generation Category Management FMI 5-6-08 4
It Spawned Related Best Practice Reports

1997 - Category Management Building Organizational Capability 1998 Advanced Category Management A Pizza Category Case Study 1998 Category Management in a Direct Store Delivery Environment 1999 Micromarketing A Tool for Category Management
Many other US and International reports followed.

Category Management Filled A Need

Products were not viewed as consumer-centric categories Lack of a formalized business planning process Underutilization of consumer research, data, and tools Data mining was in its infancy No formalized & balanced view of business performance Non-collaborative supplier relationships
It Remains A Top Priority
98% of retailers and 89% of manufacturers consider Category Management critically important.
Key Reasons why CM Has Worked

Provided foundation for strategic retail marketing
Categories as SBUs Aligning Company to Company strategies Balanced portfolio of Category Roles Linking Category Strategies and Tactics
Brought consumer focus to Retail Marketing and Merchandising

New Category Definitions and Structures Consumer-driven Strategies and Tactics
Key Reasons why CM Has Worked

Provided a new and more effective model for collaboration through better information sharing Expanded organizational capabilities
New skills and talent Roles and accountability Scorecard-based performance
Delivered superior results

Retailers and Manufacturers Sales, Profits, and ROI
Industry Results
Grew Sales Improved Profitability Increased Market Share Improved Operational Efficiency Optimized Store Assortments Created a basis to evaluate new items
11% 10%
Category Definition Category Review Category Role Category Assessment Category Scorecard Category Strategies Category Tactics Plan Implementation
Retailer Revenue Growth
Retailer Profit Growth
Source: ECR Industry Report 2000
10
Category Management Results
Category Management is now standard practice at nearly every U.S. supermarket, convenience store, mass merchant, and drug chain. And its use is growing because it works at least from a dollars-and-cents standpoint.
Sales growth attributed to Category Management + 14% Retailers & Wholesalers + 8% Suppliers
Source: Business 2.0, Feb 2003 & 2002 Cannondale Studies
Why CM Hasnt Achieved Its Full Potential

Inconsistent top management support Used more as a tactical tool than an competitive strategic advantage Scorecards have not changed enough to motivate and reward new behavior Too project oriented not a continuous process Work cycles too long and time intensive Process to data focused and template driven not enough emphasis on insights
12
Why CM Hasnt Achieved Its Full Potential

Too much reliance on manufacturers lack of retail ownership Too headquarters focused not enough store / shopper focus Inconsistent implementation at store level Pipeline of new people not well maintained Lack of software supporting tools, especially in promotion and pricing tactics New trends and competitive challenges have emerged
13
Trends Shaping The Next Generation of Category Management
14
Retail Marketing - The Wave Continues

Next Generation Store Designs Shopper Marketing
Space Management Scanning
Category Management
ECR Category Management Best Practices
Today 2000
1995 1989
1975
1985
15
Best Practices Have Evolved
Industry Trends
Category Management Experience
Category Management is more important than ever, and it has evolved to reflect the changing times.
A Next Generation approach of Category Management has emerged to address the new needs and opportunities.
16
Shopper and Category Development
17
The Philosophy & Objective Remain The Same

A Distributor-Supplier Process of managing categories as Strategic Business Units, producing Enhanced Business Results by focusing on delivering Consumer/Shopper Value.
Supplier
Retailer
Consumer/ Shopper
Shopper & Category Development
Key Elements
Streamlined, robust for all categories Consumer & shopper insight driven Shopper centric strategies Loyalty Marketing integration Breakthrough, differentiated initiatives Global & local application Emphasis on implementation
19
The Evolution of Best Practices Process

Category Definition Category Role Category Review Category Assessment Category Scorecard Category Strategies Category Tactics Plan Implementation Plan Review Category Definition Category Role Insight Generation
Strategic & Tactical Planning
Initiative Development Plan Launch
20
Best Practices Enhancements

Definition & Role remain an important elements of the process.
CATEGORY SEGMENTS SUB-CATEGORIES SEGMENTS SUB-
Category Definition Category Role Greater focus on strategic alignment and Destination categories. Performed as needed
21
Insight Generation Plan Review

Key opportunities versus

boiling the ocean
Heavy emphasis on shopper

understanding
Business question driven

versus templates
22
One step Strategies/Tactics for Insight Generation Plan Review

Strategic & Tactical Planning optimal linkages
Greater focus on the consumer

and shopper
Tactical Blueprints
Framework tactical guidance of initiatives Mechanism for core and local planning
23
Plan Localization
Local Tailoring
Tactical Blueprint
Market A
Core Category Business Plan
Local Tailoring
Tactical Blueprint
Market B
80%
Local Tailoring
Tactical Blueprint
Market C
20%
Core Planning
Local Planning

Rigorous cost/benefit
analysis & prioritization
Formal identification of plan

requirements
Secures commitment and resources
Importance of Initiatives
Bring innovation to life Creates a focus on implementation and success measurement

Detailed implementation
planning tied to each initiative
Formal approval & executive

Initiative Development Plan Launch commitment process
Improved scorecard target

setting & measurement
26

Plan review focused on

initiative results as well as total category
Continual evaluation and

adjustment
27
Moving Beyond Traditional Category Plans

Category Definition Category Role Insight Generation Plan Review
Traditional Category Plans

Portfolio Plans
28
Shopper Segment Plans

Wayne Strickland
Vice President Category Management
29
Category Management At Hallmark

Hallmark has been successfully practicing Category Management for years
Drove growth through collaboration with our customers
With the ever increasingly competitive market, we recognized the need to take it to the next level Took steps to enhance our Customer Marketing capabilities and adopted this new process
Revitalized our focus on driving Shopper focused solutions Established a rigor in the organization for converting consumer and shopper insights into action
30
Our Path
Assessed our current capabilities and challenges Refined many of our internal processes Reorganized our Customer Marketing Team Applied the new process Taken the new capability to our customers delivering innovative shopper focused solutions
Along the way, we had some key learnings.
31
Hallmarks Top Ten Learnings

1. 2. 3. 4. 5. 6. 7.
Top of the house support is critical Scorecard is a must to track and drive performance Courage and discipline to stay the course Research and Insights are not the same Everything starts with the Consumer & Shopper insights Cross-functional alignment the customer is essential A common / shared scorecard with the retailer keeps everyone focused on success 8. Customer Teams must become business partners with the customer 9. Develop the corporate capability and establish training programs that continue to grow the organization 10. Category Management is a way of life, not a project
32
Insights To Action
Many shoppers are short on time and patience
Many consumers did not know this customer carried Hallmark very important to core consumers Shoppers only taking a couple of minutes to find the right card Very convenience driven shopping trip When they find the right card they stay in the store longer
Insight Generation
Plan Review
Sections can be difficult to shop

Often organized by line A single occasion (eg. Birthday) can be found in numerous locations Display units designed to maximize inventory more than to showcase product
33
Two Shopper Focused Strategies
Convert The Shoppers

Simplify the shopping experience making it easier to find the right card.
Insight Generation
Plan Review Strategic & Tactical Planning
Build The Shopper Transaction

Encourage the purchase of complimentary products both in the section as well as the rest of the store.
34
Retail Marketing - The Big Waves
Scanning
Category Space Management Management
Shopper Next Generation Marketing ECR Category Store Designs Management Best Practices
Today
2000 1995
1989 1985
1975
35
In Summary Shopper & Category Development

Streamlined Insight driven strategies Selective set of tactics tied to each strategy Enables differentiating initiatives Closely ties implementation to initiatives Focused on driving sustainable results Heavy emphasis on plan execution Shopper is at the heart
Category Definition Category Role Insight Generation Plan Review

Upcoming FMI Report
Shopper and Category Development

The Next Generation of Best Practices Category Management
Publication: Fall 2008

38

Next Generation of Category Management

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Next Generation of Category Management

Hochgeladen von

Copyright:

Verfügbare Formate

Shopper & Category Development

The Next Generation of Best Practices Category Management

Hallmark Cards Inc.,

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Retail Marketing - The Big Waves

Space Management Scanning

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Adoption of Best Practices Spread Quickly

The Best Practice Model provided a Platform for Global Adoption.

It Spawned Related Best Practice Reports

Many other US and International reports followed.

Category Management Filled A Need

It Remains A Top Priority

Key Reasons why CM Has Worked

Brought consumer focus to Retail Marketing and Merchandising

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Key Reasons why CM Has Worked

Delivered superior results

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Retailer Revenue Growth

Retailer Profit Growth

Source: ECR Industry Report 2000

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Category Management Results

Why CM Hasnt Achieved Its Full Potential

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Why CM Hasnt Achieved Its Full Potential

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Trends Shaping The Next Generation of Category Management

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Retail Marketing - The Wave Continues

Space Management Scanning

ECR Category Management Best Practices

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Best Practices Have Evolved

Category Management Experience

2008 The Partnering Group, Inc.

Shopper and Category Development

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

The Philosophy & Objective Remain The Same

Shopper & Category Development

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

The Evolution of Best Practices Process

Initiative Development Plan Launch

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Best Practices Enhancements

Next Generation Category Management FMI 5-6-08

2008 The Partnering Group, Inc.

Best Practices Enhancements