category management ac nielsen

1Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business

Consumer-Centric Category Management

Presented by Samir Bhaloo 27th April 2006International Business Consulting Manager, ACNielsenACNielsen Consumer 360 Norway, Simplifying Complexity

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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager

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

In the next 30 mins you will gain an insight into...

● What is Category Management and what it is not

● The Evolution of Category Management● Consumer Centric Category Management● Tips and Tricks

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What Category Management is NOT

● Not just a grocery thing – ACNielsen has worked in over 20 different trade channels in Category Management`

● Not just a retailer thing – Manufacturer’s have significant advantage in going to market

● Not just a sales thing – requires new skills, processes and multifunctional support

● Not just an assortment review to get the right listing

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Category Management is...

● Managing the business of a category with a plan

● A common sense approach to building and managing your business

● A disciplined process that has evolved over time

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Initial Eight-Step Category ProcessM

onito

ring

Obj

ectiv

es

1 - Category Definition

5 - Category Strategy

6 - Category Tactics

Implementation Program

2 - Category Role

Readiness

4 - Category Scorecard

3 - Category Assessment

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In reality meant...

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The process was integrated into the business

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The pitfalls of Category Management

● Too much coordination needed from too many departments

● Paralysis of Analysis – lost in data● Sales People were asked to learn the

intricacies of CM● Manufacturers restricted their CM efforts to

their largest retailers only

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The evolution of Category Management

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

● Late 1990’s, availability of data granularity on the consumer had increased–consumer panel data from households–named account data–new demographic data

● A new chapter was unfolding...making the process less product-centric and more consumer-centric

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When a consumer purchases a category, consciously or sub-consciously, they are making decisions based on a number of choice alternatives

BrandPack Size

Flavour Diet vsNon-diet

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Consumer-Centric Category Review

Category Definition

Consumer Decision Tree

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Category Definition split into 2 steps

● The consumer-centric category management splits Category Definition into two steps–Retailer’s Category Definition–Consumer Decision Tree

● Not all retailers are the same

● Market structure and preference segmentation are used to create the consumer decision tree

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Consumer-Centric Category Review

Demand Clustering

Demand Clustering is where Consumer Centric Category Management sets itself apart from the traditional methods. This

is where unique consumer groups are

identified and located and then stores are clustered to serve them based on future demand potential

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Assessment

Assessment

Choose store clusters with largest upside potential.

Quantify the opportunity by evaluating potential sales (based on consumer fit)

vs. existing sales. Clusters based on

demand gapping, which uses consumer demand

and demographics to quantify opportunity gaps based on store size and

sales potential

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The Million Dollar Case Study

● Retailer Joe’s Foods* was looking to use consumer centric management to increase sales

● The following case study details the steps Joe’s Foods took to turn a million dollars of opportunity into a million dollars of sales

* Retailer name masked

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The Million Dollar Case Study: Step 1

Category Definition Category Review conducted for Cereals category.

Joe’s Foods defined the category to be reviewed and identified the

sub-categories.

The following segments were reviewed:- ready-to-eat; hot;

granola and natural; wheat germs and (hominy grits) oats

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Consumer Decision Tree

For Joe’s Foods, the first decision was that the consumer wanted to

buy cereal

The next decision was the type of cereal to buy. The “cereal type”decision is made before other

considerations like brand and size

Joe’s Foods current planogram had been developed based on brand

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Joe’s Foods used demand-based clustering to identify and locate

unique customer groups, clustering stores to reflect those

groups. Using Spectra’s Lifestyle/Lifestage Grid, several

unique groups of customers emerged

Demand Clustering

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The next step was to choose store clusters with the largest upside potential in which to develop a

unique marketing plan at the end of the category review

Assessment

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Tips and Tricks - Assessment

Assessment is “Business Question Driven”● Why do Consumers buy the category?● Who buys the category?● When do Consumers buy the category?● How do Consumers buy the category?● Where do Consumers buy the category?

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

items.Item Strategies

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Once the item strategies for the category have been identified for

each cluster, the category role can be easily determined for each

clusterCategory Role

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The Million Dollar Case Study: Step 7-9

Once the item strategies for the category have been identified, the

category role can be easily determined for each cluster

Scorecarding adds three more dimensions so that progress

against goals can be measured for each of the targeted consumer

groupsImplementation stage has to added

dimension of keeping track of which strategies are to be applied

at which stores

Tactics

Scorecard

Implementation

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Who are you talking to?

● The monkey or the organ grinder?● The decision making process appears to be getting longer,

category management is re-emerging● And opportunities to get a listing are becoming less and more

controlled – key times to get product launched● With more people from retailing getting involved● 46% of head office personnel now believe 2-3 people are

involved (Source: Grocer Magazine, Jan 28 2006)

● And more worryingly 32% believe 6 or more are involved(Source: Grocer Magazine, Jan 28 2006)

● Both are up significantly

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Fast Track Approach

Consumer: Targeting, Purchase hierarchy,

behavior etc. Retailer: Objectives,

strategy, current approach

Template / guide to layout based on

consumer research

Use lowest level data to define SKU level

approach at total trade channel level or customer level.

Use account / cluster / store level

data to create detailed plans

Research

111

Formulate“Blueprint”

222

CreateMaster

333

CreatedDetailed

444

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Consumer: Targeting, Purchase hierarchy, behaviour etc.Retailer: Objectives, strategy, current approach

• Meal occasion• End use• Formula• Brands• Size• Price position• Recipe/flavor• End user• Format

Examples of category

segmentation parameters

CategoryCategory SegmentSegment Sub-SegmentSub-SegmentSub-CategorySub-Category

111

ResearchPurchasing Habits

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What is Eye Level?

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Example of a Blueprint (generic)

Section 2. What is …

Template / guide to layout based on consumer researchFormulate “Blueprint”

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TBCTBC

TBCTBC

CategoryCategory

TBCTBC

TBCTBCTBCTBC

TBCTBC

TBCTBC TBCTBC

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● Be in the high traffic aisles (aisles 1-4 in most supermarkets)

● Impulse products perform better in early aisles● Be near good aisle partners (tea and sugar, beer

and snacks)

Formulate “Blueprint”You must know your store

222

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Example of a Planogram

Section 2. What is …

Create MasterUse lowest level data to define SKU level approach

at total trade channel level or customer level, ideally at store cluster level

333

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●What are the different fixture types?

●What are the different fixture sizes?

●What are the different fixture dimensions – height, width, depth of base, segment,

shelves, pegs, etc.; spacing between shelves, etc.?

●What is the replenishment cycle of the fixture?

Create Detailed

444

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category management ac nielsen

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