Category Management
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Category Management Category Management approach usually applied in a trade chain
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Transcript of Category Management
Category ManagementCategory Management approach usually applied in a trade chain
What is Category Management?
Category Management is a retailing and purchasing concept in which the range of products purchased by a business organization or sold by a retailer is broken down into discrete groups of similar or related products; these groups are known as product categories. It is a systematic, disciplined approach to managing a product category as a strategic business unit.
Brian F.Harris
Why?
1970 • Small stores• Less than 400 feet squares• 200/300 SKUs• Growing consumption• Unstructured chains
2015 • Multi format stores• More than 30.000 feet squares• More than 20.000 SKUs• Oversupply• High competitiveness
So..
• In a competitive business just organized and proficient chains will stay on the market.
• A huge complexity behind the workflows impose to approach the business considering each category as a single business, in order to decrease the whole complexity.
• So it's important ensure a managing system for each category through strategies of pricing, promotion, assortment and exposure aiming achieve results of sales and margins.
Steps:
DefinitionDefinition
RoleRole
EvaluationEvaluation
TargetsTargets
StrategiesStrategies
ActionsActions
Assign a specific role for each category, considering our customers needs and behaviours.
Evaluate gap and opportunities for our categories compared with the market
Set a clear and achievable target for each category in terms of sales and margins, considering market trends.
Set strategies of Assortment, Price, Promotion and Visual Merchandising in order to achieve sales and margins targets
Apply strategies and processes.
Ensure a correct execution for each strategy and a total engagement of every department in the processes.
ExecutionExecution
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Define segmentation and products for each category.
Definition
DepartementDepartement
FamilyFamily FamilyFamily FamilyFamily
CategoryCategory CategoryCategory CategoryCategory
SegmentSegment SegmentSegment SegmentSegment SegmentSegment
Brand
Formati
Referenze
Brand
Size
SKUs
DefinitionDefinition
RoleRole
EvaluationEvaluation
TargetsTargets
StrategiesStrategies
ActionsActions
ExecutionExecution
Cat
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Cat
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Definition:
Departement Families Categories
Alcoholics Spirits Flavoured Spirits
Brandy
Vodka
Whisky
Rum
Gin / Genever
Tequila
Wine Still Light Wine
Sparkling Wine
Fortified Wine
Light Aperitifs
Other Wines
Beer Alcoholic Beers
Non-alcoholic Beers
Cider
SegmentCanadian Whisky
Irish Whiskey
Other Whisky
Scotch Whisky
US Whiskey
Definition:
WINE
STILL SPARKLING FORTIFIED
RED WHITE
Light GrapefruitFloral
Light Herbal Grassy
Rich Creamy Nutty
VermentinoVerdicchioGreco di TufoPinot Blanc…
Sauvignon BlancVerdejoGruner VeltlinerChevemy…
ChardonnaySoaveCote de BeauMacconais…
Light CitrusLemon
Pinot GrigioGarganegaFianoSilvaner…
MediumPerfum Floral
TokajiViognierRoussanneMarsanne…
Definition:
EAN code is a European Barcode (UPC in USA)
Is printed over the products and is read by POS.
May be 13 or 8 digits
Definition:
So, the first step is to understand characteristics and values of the Category focusing our attention in each segment, in order to define specific strategies for similar groups of products.
Role:
Profit contribution(Margins,Contribution)
Loyalty Driver(Frequency, Sensibility of consumers)
Caffè
Te
Biscotti
Succhidi frutta
Pasta
VerduraSurgelata
Birra
PesceSurgelato
Gelati
Dolci
Routine Destination
Convenience Occasional
DefinitionDefinition
RoleRole
EvaluationEvaluation
TargetsTargets
StrategiesStrategies
ActionsActions
ExecutionExecution
Cat
ego
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Cat
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Role:
The Role of categories is set considering:- the importance for the customer (frequency, sales, price sensibility)- trade interests (margin, profit, contribution)
The role may be customized for:- area - store format- seasonality
Role:
Cookies
Sugar
Wine
Pasta Milk
Salt
Omogen
Aperitifs
Mozzarelle
Yougurt
Water
Beers
Oil
Tomatoes sauce
Champagne
Coffee
Bread
Loyalty Driver(Frequency, SensibilityOf consumers)
Profit contribution(Margins,Contribution)
Role:
Routine• Daily needs• Store Traffic
generator • Price Competition
Destination• Loyalty and sales• Need for
differentiation• Competitive
advantage
Convenience• Occasional needs • Niches• Service for
consumers
Occasional• Emotional
purchasing • New markets• Customer
Satisfaction
Loyalty Driver(Frequency, Sensibility)
Profit contribution(Margins,Contribution)
Evaluation:
Fair Share
Sales
Market share
DefinitionDefinition
RoleRole
EvaluationEvaluation
TargetsTargets
StrategiesStrategies
ActionsActions
ExecutionExecution
Cat
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Cat
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Evaluation:
Comparing internal and external data it is possible to find points of strength and points of weakness:- Market Share for each category (Fair Share);- Market Share for leader brands;- Market Share for private labels;- Frequency and Sales in cut prices;- Number of SKUs in each Category;- Price Average;- Margins;- SKUs opportunities in the market;
Targets:
CategoryCategory
SegmentSegment
CategoryCategory
SegmentSegment
CategoryCategory
SegmentSegment
+ 5%+ 5%
+ 11%+ 11% + 6%+ 6% + 3%+ 3%
+ 11%+ 11% + 6%+ 6% + 3%+ 3%+ + = + 5%+ 5%
Targets TreeDefinitionDefinition
RoleRole
EvaluationEvaluation
TargetsTargets
StrategiesStrategies
ActionsActions
ExecutionExecution
Cat
ego
ry F
low
Cat
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Targets:
We have to set targets in terms of gross margin (sales x margin%). Managing the sales mix is the best way to achieve our targets. So we need to influence the sales of every brand.
Strategies:
TRAFFICTRAFFIC
FREQUENCYFREQUENCY
PROFITPROFIT
PRICESPRICES
ENTHUSIASMENTHUSIASM
Strategies for increase the number of customers in the category
Increase the number and the ammount of purchasing for each customer
Keep a good profitability, through discounts and contribution
Increase net turnover through a bigger share of premium products.
Get more loyalty dispensing informations, tips, interactions
DefinitionDefinition
RoleRole
EvaluationEvaluation
TargetsTargets
StrategiesStrategies
ActionsActions
ExecutionExecution
Cat
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Cat
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Strategies:Every strategy should be declined in 4 kind of actions: Assortment, Price, Promotion, Exposure.Depending of the role we can identify:
Price: Medium competitiveness Price: High competitivenesscompared with compared with all the competitorsmain competitors
Promotion focus on cut prices Promotion deep cut prices
Exposure spaces in line with sales. Exposure overdimension the spaces.focus on margins. focus on the niches.
best areas.
Assortment number of products in line with the Assortment Number of products highermarket. specific role for cheaper than the market.products and private labels. Many premium brands and
exclusive ones.
Price: Less competitive than Price: Medium competitivenessmain competitors
Promotion No promotions Promotion few promotionsgood margin
Exposure Worst store areas Exposure correctly dimension the spaces.good areas.
Assortment narrow assortment Assortment narrow assortmentno private label private label in core segmentsno premium prices deep of premium prices
Ro
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De
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Co
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Oc
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Strategies:
Every strategy aims to decrease market share of unprofitable brands, improving share of profitable ones. How? Defining promotions, prices, and exposures in order to influence the consumer choice.
Actions:
ASSORTMENT
PROMOTIONS
VISUAL MERCHANDISING
PRICES
Number of products,Wideness of category,Deepness of category
mechanics, frequency, deepness
high competitiveness,medium competitiveness,low competitiveness
Category PlanDefinitionDefinition
RoleRole
EvaluationEvaluation
TargetsTargets
StrategiesStrategies
ActionsActions
ExecutionExecution
Cat
ego
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Cat
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ShelfExtra ShelfPromotional
Actions
ASSORTMENT Reviewed each 6 months allow you to drive seasonality and change of consumption
PROMOTIONSPlanned every year have a great impact on sales, so is very important in negotiation
PRICESEvery week we need to change our competitive positioning, comparing our price with the main competitors
VISUAL MERCHANDISING
After every Category Review (every 6 months) we need to set new exposures, both for shelf and extra-shelf.
Frequency of actions:
Execution
Category ReviewCategory Review
TestTest
Roll-outRoll-out
Monitoring
DefinitionDefinition
RoleRole
EvaluationEvaluation
TargetsTargets
StrategiesStrategies
ActionsActions
ExecutionExecution
Cat
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Cat
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