Retail Category Management Basics


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Category Management Basics

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Retail Category Management Basics

  1. 1. 09/02/09 <ul><li>Amit Kumar –Business Development Partner </li></ul>
  3. 3. Objectives <ul><li>Review Objectives & Agenda </li></ul><ul><li>Category Management Overview </li></ul><ul><ul><li>Why Category Management? </li></ul></ul><ul><ul><li>What is Category Management? </li></ul></ul><ul><li>Implementing Category Management </li></ul><ul><ul><li>Core Components </li></ul></ul><ul><ul><ul><li>Strategy </li></ul></ul></ul><ul><ul><ul><li>Business Process </li></ul></ul></ul>09/02/09
  4. 4. Agenda -- Continued <ul><ul><li>Enabling Components </li></ul></ul><ul><ul><ul><li>Organizational Capability </li></ul></ul></ul><ul><ul><ul><li>Information Technology </li></ul></ul></ul><ul><ul><ul><li>Collaborative Relationships </li></ul></ul></ul><ul><ul><ul><li>Scorecard </li></ul></ul></ul><ul><ul><li>Benefits of Category Management </li></ul></ul>09/02/09
  5. 5. Agenda -- Continued <ul><li>The Strategic Category Business Process </li></ul><ul><ul><li>Corporate Strategy </li></ul></ul><ul><ul><li>Category Definition </li></ul></ul><ul><ul><li>Category Role </li></ul></ul><ul><ul><li>Category Assessment </li></ul></ul><ul><ul><ul><li>Assessment Worksheets </li></ul></ul></ul><ul><ul><li>Category Profitability </li></ul></ul>09/02/09
  6. 6. Agenda -- Continued <ul><li>Category Management Strategies </li></ul><ul><li>Category Management Tactics </li></ul><ul><ul><li>Assortment Tactics </li></ul></ul><ul><ul><ul><li>Assortment Choices </li></ul></ul></ul><ul><ul><ul><li>Category Role Linkage </li></ul></ul></ul><ul><ul><ul><li>Assortment Analysis </li></ul></ul></ul><ul><ul><ul><li>Assortment Assessment Worksheets </li></ul></ul></ul>09/02/09
  7. 7. Agenda -- Continued <ul><ul><li>Pricing Tactics </li></ul></ul><ul><ul><ul><li>Pricing Choices </li></ul></ul></ul><ul><ul><ul><li>Category Role Linkage </li></ul></ul></ul><ul><ul><ul><li>Pricing Analysis </li></ul></ul></ul><ul><ul><ul><li>Pricing Assessment Worksheets </li></ul></ul></ul><ul><ul><li>Promotion Tactics </li></ul></ul><ul><ul><ul><li>Promotion Choices </li></ul></ul></ul><ul><ul><ul><li>Category Role Linkage </li></ul></ul></ul><ul><ul><ul><li>Promotion Analysis </li></ul></ul></ul><ul><ul><ul><li>Promotion Assessment Worksheets </li></ul></ul></ul>09/02/09
  8. 8. Agenda -- Continued <ul><ul><li>Shelf Presentation Tactics </li></ul></ul><ul><ul><ul><li>Shelf Presentation Choices </li></ul></ul></ul><ul><ul><ul><li>Category Role Linkage </li></ul></ul></ul><ul><ul><ul><li>Shelf Presentation Analysis </li></ul></ul></ul><ul><ul><ul><li>Shelf Presentation Assessment Worksheets </li></ul></ul></ul><ul><li>Integration Into Strategic Category Plan </li></ul><ul><ul><li>Strategic Category Planning Worksheets </li></ul></ul>09/02/09
  9. 9. Why Category Management? <ul><li>Consumer Trends </li></ul><ul><ul><li>Complex consumer demographics </li></ul></ul><ul><ul><li>Population growth rates have declined </li></ul></ul><ul><li>Competitive Pressure </li></ul><ul><ul><li>New store formats </li></ul></ul><ul><ul><ul><li>Warehouse clubs & mass merchandisers </li></ul></ul></ul><ul><ul><li>New product introductions </li></ul></ul>09/02/09
  10. 10. Why Category Management? -- Continued <ul><li>Economic Considerations </li></ul><ul><ul><li>Slow growth economy & low interest rates </li></ul></ul><ul><ul><ul><li>Companies pressured to improve financial performance </li></ul></ul></ul><ul><li>Industry Capability </li></ul><ul><ul><li>Shared business goals -- Focus on Consumer </li></ul></ul><ul><ul><ul><li>Shifting from internal optimization to maximizing consumer value </li></ul></ul></ul><ul><ul><li>Trading Partner Alliances </li></ul></ul><ul><ul><ul><li>Leveraging of resources between trading partners </li></ul></ul></ul>09/02/09
  11. 11. Why Category Management? -- Continued <ul><li>Empowerment </li></ul><ul><ul><li>Authority & accountability to front-line managers </li></ul></ul><ul><ul><ul><li>Pricing </li></ul></ul></ul><ul><ul><ul><li>Procurement </li></ul></ul></ul><ul><ul><ul><li>Promotion </li></ul></ul></ul><ul><li>Information Technology </li></ul><ul><ul><li>Distributors & Suppliers share data </li></ul></ul>09/02/09
  12. 12. Category Management & ECR <ul><li>ECR (Efficient Consumer Response) creates an environment and tools which enable the distributor & supplier trading partners to work collaboratively to deliver superior value on the products and services they offer consumers </li></ul>09/02/09
  13. 13. Category Management & ECR -- Continued <ul><li>Category Management key component of ECR </li></ul><ul><ul><li>Provides strategic framework, business process and organizational framework within which collaboration takes place </li></ul></ul><ul><ul><li>Profound impact on each of the four ECR strategies </li></ul></ul><ul><ul><ul><li>Efficient promotion </li></ul></ul></ul><ul><ul><ul><li>Efficient Replenishment </li></ul></ul></ul><ul><ul><ul><li>Efficient Product Introductions </li></ul></ul></ul><ul><ul><ul><li>Efficient Store Assortments </li></ul></ul></ul>09/02/09
  14. 14. Definition <ul><li>Category Management is a distributor/supplier process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value. </li></ul>09/02/09
  15. 15. Basic Principles of Category Management <ul><li>Categories are managed as strategic business units </li></ul><ul><li>Categories are managed strategically through category plans and strategic roles </li></ul><ul><li>Category Managers control their share of company assets </li></ul><ul><li>Asset Returns measure performance and establish priorities </li></ul>09/02/09
  16. 16. Basic Principles of Category Management -- Continued <ul><li>Responsibility for category performance/ownership is clearly defined and not fragmented across organization </li></ul><ul><li>Category Management leverages distributor and supplier expertise for mutual benefit … neither party can do the job alone </li></ul>09/02/09
  17. 17. Six Components of Category Management <ul><li>Core Components (essential) </li></ul><ul><ul><li>Strategy </li></ul></ul><ul><ul><li>Business Process </li></ul></ul><ul><li>Enabling Components (assisting) </li></ul><ul><ul><li>Scorecard </li></ul></ul><ul><ul><li>Organization Capability </li></ul></ul><ul><ul><li>Information Technology </li></ul></ul><ul><ul><li>Collaborative Relationships </li></ul></ul>09/02/09
  18. 18. Strategy <ul><li>Categories are strategic business units </li></ul><ul><li>Overall company strategies provide a infrastructure for category level strategies </li></ul><ul><li>Strategies must be clearly understood throughout the Retailer’s organization </li></ul>09/02/09
  19. 19. Business Process <ul><li>A formal, disciplined set of activities designed to produce a specified output </li></ul><ul><ul><li>Development and implementation of Written Category Business Plans </li></ul></ul>09/02/09
  20. 20. Scorecard <ul><li>A tools that defines, measures and monitors the progress of Category Business Plans </li></ul>09/02/09
  21. 21. Organizational Capability <ul><li>Development of the organization’s core competency </li></ul><ul><ul><li>Through organizational structure </li></ul></ul><ul><ul><li>Roles/Responsibilities </li></ul></ul><ul><ul><li>Skill/Knowledge development </li></ul></ul><ul><ul><li>Reward Systems </li></ul></ul>09/02/09
  22. 22. Information Technology <ul><li>Critical elements of the Category Business Planning Process </li></ul><ul><ul><li>Need data-driven, fact-based analysis and performance measurement </li></ul></ul>09/02/09
  23. 23. Collaborative Relationships <ul><li>Relationships with suppliers who acquire unique perspectives, resources and skills </li></ul><ul><li>Common objective -- delivering superior consumer value more profitability </li></ul>09/02/09
  24. 24. Distributor vs. Supplier (Overlap & Differentiation) <ul><li>Supplier (Manufacturers & Brokers) </li></ul><ul><ul><li>STRATEGY </li></ul></ul><ul><ul><li>INFO TECH </li></ul></ul><ul><ul><li>ORG. CAP. </li></ul></ul><ul><ul><li>SCORECARD </li></ul></ul><ul><li>Distributor (Wholesalers & Retailers) </li></ul><ul><ul><li>STRATEGY </li></ul></ul><ul><ul><li>INFO TECH </li></ul></ul><ul><ul><li>ORG. CAP. </li></ul></ul><ul><ul><li>SCORECARD </li></ul></ul>09/02/09
  25. 25. Category Definition Category Role Category Assessment Category Scorecard Category Strategies Category Tactical Plans Implementation Plan Category Review The Strategic Planning Process CATEGORY MANAGEMENT PROCESS 09/02/09
  26. 26. Category Definition <ul><li>The trading partners need to define the new category with a name </li></ul><ul><ul><li>What is it? </li></ul></ul><ul><ul><li>What are the sub-categories? </li></ul></ul>09/02/09
  27. 27. Category Role <ul><li>The distributor (with supplier input) would define the overall role the selected category is going to play in the distributor’s total business </li></ul><ul><ul><li>How important is the category? </li></ul></ul><ul><ul><li>How to leverage the importance? </li></ul></ul>09/02/09
  28. 28. Category Role -- Components <ul><li>Destination </li></ul><ul><ul><li>To be the primary category provider and help define the retailer as the store of choice by delivering consistent , superior target consumer value </li></ul></ul><ul><li>Routine </li></ul><ul><ul><li>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 </li></ul></ul>09/02/09
  29. 29. Category Role -- Components Continued <ul><li>Occasional/Seasonal </li></ul><ul><ul><li>To be a major category provider, help reinforce the retailer as the store of choice by delivering frequent , competitive target consumer value </li></ul></ul><ul><li>Convenience </li></ul><ul><ul><li>To be a category provider and help reinforce the retailer as the store of choice by delivering good target consumer value </li></ul></ul>09/02/09
  30. 30. Category Assessment <ul><li>Comprised of accumulation of all appropriate consumer, distributor, supplier and competitor data for analysis relative to opportunities represented for the category chosen </li></ul><ul><ul><li>How is the category doing? </li></ul></ul><ul><ul><li>Versus Potential? Versus Goals? </li></ul></ul>09/02/09
  31. 31. Scorecard <ul><li>Establishment of the performance measures by which the category manager will measure the quality of the execution of the plan </li></ul><ul><ul><li>What are the goals & objectives? </li></ul></ul><ul><ul><li>How is the progress? </li></ul></ul>09/02/09
  32. 32. Category Strategies <ul><li>Assignment of specific strategies to key elements of the overall category </li></ul><ul><ul><li>What is the business plan? </li></ul></ul><ul><ul><li>How will it achieve the role & scorecard? </li></ul></ul>09/02/09
  33. 33. Category Strategy - Components <ul><li>Traffic Building </li></ul><ul><ul><li>Consumer Draw </li></ul></ul><ul><li>Transaction Building </li></ul><ul><ul><li>Increase the Register Ring </li></ul></ul><ul><li>Profit Generating </li></ul><ul><ul><li>Improve Category Gross Margin </li></ul></ul><ul><li>Turf Protecting </li></ul><ul><ul><li>Defend Sales and Share (other formats) </li></ul></ul>09/02/09
  34. 34. Category Strategy -- Components Continued <ul><li>Cash Generating </li></ul><ul><ul><li>Increase Category Cash Flow </li></ul></ul><ul><li>Excitement Creating </li></ul><ul><ul><li>Generate Sense of Urgency & Opportunity </li></ul></ul><ul><li>Image Enhancing </li></ul><ul><ul><li>Reinforce Retailer’s Desired Image </li></ul></ul>09/02/09
  35. 35. Category Tactics <ul><li>Specific activities supporting the category strategies which would include item variety, everyday and feature price targets, shelf presentation, etc. </li></ul><ul><ul><li>What do we do to achieve the strategy? </li></ul></ul><ul><ul><li>Who does what? </li></ul></ul>09/02/09
  36. 36. Category Tactics -- Components <ul><li>Assortment </li></ul><ul><li>Pricing </li></ul><ul><li>Promotion </li></ul><ul><li>Shelf Presentation </li></ul><ul><li>Product Supply </li></ul>09/02/09
  37. 37. Plan Implementation <ul><li>Key Components of Plan Implementation </li></ul><ul><ul><li>Approval Process </li></ul></ul><ul><ul><ul><li>Strategic Fit </li></ul></ul></ul><ul><ul><ul><li>Scorecard Impact </li></ul></ul></ul><ul><ul><ul><li>Resource Allocation </li></ul></ul></ul><ul><ul><ul><li>Impact on Other Areas </li></ul></ul></ul><ul><ul><li>Assigning Responsibilities </li></ul></ul><ul><ul><li>Scheduling </li></ul></ul>09/02/09
  38. 38. Category Review <ul><li>Ongoing review and measurement of the progress of the plan toward the category role and scorecard, and modification of the plan when appropriate </li></ul>09/02/09
  39. 39. Conclusion <ul><li>The Staples & Grocery Retail industry is in a major state of transition. This change is a function of a complex mix of consumer, technological and market factors. </li></ul><ul><li>Category Management represents a business oriented approach to achieving business results -- both for distributors and suppliers </li></ul>09/02/09
  40. 40. Thank You Email- [email_address] , Website- Contact +91-9818995422,09785641086 Grow with Growing Industry 09/02/09