plcb category management review october, 2007 james short director of marketing pennsylvania liquor...
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PLCB Category PLCB Category Management ReviewManagement Review
October, 2007
James ShortDirector of Marketing
Pennsylvania Liquor Control Board
NABCA Best Practices Summit
AgendaAgenda
Evolution of PLCB Category Management
Listing Calendar
De List / Store Freeze Methodology
Clustering Solution
Future Goals
TimelineTimeline
PLCB Fields Category Management Proposals (02/07)
PLCB Partners with Future Brands / Gallo (03/07)
Analysis of Current Solutions / Systems (04/07)
Two year Project Goals Established (04/07)
Vendor Partners Re-Locate to PA Market (08/07)
LISTING CALENDARLISTING CALENDARSIX MONTH REPEATING CALENDAR
Two Listing Periods- Similar to National Accounts
- Conducive to Supplier Planning
Reduction From Seven Listing Periods
Shelf Sets Produced Concurrently
De-List Filter MethodologyDe-List Filter Methodology
RetainIf Segment Share for
$ Sales > or = 5%Retain top 95%
of Segment
Assortment Criteria Purpose
Retain If Periods Active < or = 14 Retain New Items
RetainIf Segment Growth > or = 5%
and Item Growth > or =75% Segment Growth
Retain Growing Items in Growing Segments
Retain If Item Growth > or = 20%Retain Large Growth
Items
Yes
Yes
Yes
Yes
No
No
No
No
Retain If Profit / Store > or = $250Retain Profitable Items Regardless of Growth
No
Yes
Freeze AnalysisExamine Code for Possible Freeze
Next Page
Spirits Freeze MethodologySpirits Freeze Methodology Codes analyzed at store level to determine $ Profit Delivered Code is retained if it meets a $ Profit threshold $ Profit Threshold for an Account is Determined by the TTL $ Sales of the Store
1. Large Stores – Avg. Retail $16.15 Avg. Profit $4.84 1.5 Bottles per wk = $7.26 x 52 wks =$375 2. Med. Stores – Avg. Retail $14.98 Avg. Profit $4.49 1 Bottle per week $4.49 x 52 wks = $230
3. Small Stores – Avg. Retail $14.67 Avg. Profit $4.40 ½ Bottle per week $2.20 x 52 wks =$115
< $1 Million > $3 Million$1 Million –
$3 Million
TTL Store Sales TTL Store SalesTTL Store Sales
$ Profit Needed to be Retained as Optional
$115 $375$230
Next Page
Freeze MethodologyFreeze Methodology
Code Meets Established Minimum $ Profit / Store
RetainRetain Profitable Codes
in Correct StoresYes
No
Freeze Code at Store Level
TTL $ Profit Where Codes are Retained > $15,000
RetainListing
Retain Profitable Codes for PLCB as Whole
Yes
No
Final Assortment Decision to Delete
Former ClustersFormer Clusters Cluster 1 – Wine Enthusiasts
- 62 stores
- Warehouses 1 & 2 only
Cluster 2 – Premium Wine Development- 72 stores
- All Warehouses
Cluster 3 – Popular Wine Development- 105 stores
- All Warehouses
Cluster 5 – Metro Ethnic- 36 stores
- Warehouse 1 only
Cluster 4 – Mainstream Spirits & Low Tier Wine - 38 stores
- Warehouse 1 only
Former ClustersFormer Clusters Cluster 6 – Brown Goods & Low Tier Wine
- 117 stores
- Warehouses 2 & 3 only
Cluster 7 – Brown Goods Development- 151 stores
- Warehouses 2 & 3 only
Cluster 8 – Urban Ethnic- 36 stores
- Warehouses 2 & 3 only
Why We Changed?Why We Changed?
Less is more- Greater store similarity (Demographics)- Less variance in category performance
Increased Efficiency - Core Assortment- Marketing Plans
Clusters no longer defined by warehouse
HH Income / Cost of Living by Region
ObjectivesObjectives
Core ListCore List Marketing PlansMarketing Plans
i.e. Distribute and Promote the Correct Codes Distribute and Promote the Correct Codes in the Correct Storesin the Correct Stores
Clustering ProcessClustering Process
Demographic Data Pull
Demographic Analysis - Original Cluster Designation
Step 1Step 1
Store Specific Demographic Data Adult Population Referenced Against Total Pennsylvania
Indices Generated For Income Education
Lifestyle Ethnicity
About the Demographic Data…About the Demographic Data…
Primary Indicators of Consumption Patterns
Secondary Indicators of Consumption Patterns
ProcessProcess
Sales Data Pull- By Store / Code
Sales Data Analysis - Secondary Cluster Designation
Step 2Step 2
AnalysisAnalysis
DEVELOPMENT INDICES DEVELOPMENT INDICES GENERATED FORGENERATED FOR Price Segmentation Display Category
Hierarchy of Analysis
3. Demographic Data
2. Category Development
1. Price Segmentation
5 Clusters Identified5 Clusters Identified Cluster 1 – Upscale Metro / Suburban (105 Stores / 26.5% TTL $ Sales)
- Avg. Household Income - $91K
- Education Level - 41% College Graduation Rate
- Ethnicity – No Statistical Significance
- Key Price Segmentation – Super Premium
- Display Category Drivers – Specialty, US Cab, US Chard, Scotch, Tequila
Cluster 2 – Mid-Scale Suburban (122 Stores / 25.7% TTL $ Sales)
- Avg. Household Income - $70K
- Education Level - 29% College Graduation Rate
- Ethnicity – No Statistical Significance
- Key Price Segmentation – No Discernable Driver
- Display Category Drivers – No Discernable Driver
Cluster 3 – Rural / Blue Collar (226 Stores / 31.0% TTL $ Sales)
- Avg. Household Income - $55K
- Education Level - 21% College Graduation Rate
- Ethnicity – 93% Caucasian
- Key Price Segmentation – Value / Standard
- Display Category Drivers – Economy, Box, Beverage, Blended, Canadian
Cluster OverviewCluster Overview
Cluster 4 – Rural / Low Volume (102 Stores / 5.4% TTL $ Sales)
- Avg. Household Income - $49K
- Education Level – 15% College Graduation Rate
- Ethnicity – 97% Caucasian
- Key Price Segmentation – Value
- Display Category Drivers – Blended, Bourbon, Canadian, Beverage, Economy, Box
Cluster 5 – Metro / Ethnic ( 66 Stores / 11.5% TTL $ Sales)
- Avg. Household Income - $47K
- Education Level - 20% College Graduation Rate
- Ethnicity – 38% African-American
- Key Price Segmentation – Value
- Display Category Drivers – Brandy/Cognac, Gin, Beverage, Economy, Flavored Wine
Future GoalsFuture Goals Develop Category Adjacency Methodology
- Vendor Partner Consumer Research Driven
Future GoalsFuture Goals Generate Category Specific Shelf Set Template
- Bring in 3rd Party Validators
Future GoalsFuture Goals Implement Store Specific Shelf Sets Bi-Annually
- Generate Using Store Level Sales - Will Allow for “right-sizing” of Categories