Category management is a process that involves analyzing category data to identify opportunities, setting objectives, and developing strategies and tactics to improve sales and profits. It requires moving from isolated projects to an ongoing way of working through continuous analysis, planning, execution and review. Key aspects include developing a joint category plan and KPI dashboard, prioritizing issues, agreeing on objectives and action plans, and regularly reviewing results to refine strategies. The goal is to optimize the "moment of truth" in-store experience and drive customer loyalty.

1. The moment of truth –
Putting category management into action –
At store level
1

2. Crash Course - Objectives
• To have a clear understanding of the values of working with category
management on store level
• Understand what it takes to move from project to process
• Get a clear understand of how to measure and manage sales and profit
effectiveness
• See the true value of working proactively whit P.O.S data
2

3. Subject Content Expected output
Understand Category The business to business to consumer market Give the participants a broad overwiev of the issues
management issues and opportunities in relation to category
and opportunities Category management models and steps management in FMCG
From continiuosly improvements to Joint
Category management – Focused at See the value of implementing category
partnership management the right way
Category A way of working in the FMCG industri – A Understand the category management could and
management from shift in pradigme should become a way of working and not a project
project to process retated to individual parameters
Group discussions at the table
From data to relevant Effective POS- data analyzes and tools Understand that managing kompleks data sources
business knowledge could become simple asking the right questions
Build on cases: using suffient tools
Market potential - Issues and opportunities
Reasons – Objectives Actionplan -
Implementation – Cockpit and review procces
Combined with 2 small workshops at the table
Focusing at understanding potential and
impostnat tools
Next step How to go from project to process What will be step 1 in your company
Group discussions at the tablefilling in a small
questionare
3

4. Category management issues and opportunities
1

5. The business to business to consumer market
CONSUMER MARKETING MANAGEMENT
Manufacture Chain POP Consumer
Mo
me
n
tru t of
th
TRADE MARKETING MANAGEMENT
2

6. The Business to Business to Consumer market
• We are actually selling 2 types of products!
• The consumer product – covering consumer needs
• The business product – covering business needs
3

7. The Consumer Product
The value is basically build on taste, feelings and perceptions
• Consumer evaluation
• Ability to create consumer loyalty
• Ability to create consumer trial
• Ability to create consumer knowledge
4

8. The Business Product
The value is basically build on facts
• Business evaluation
• Ability to create chain and store turnover
• Ability to create chain and store profit
• Ability to create chain and store profile and image
5

9. ECR & Category Management
E fficient
Though cooperation to fulfill
the needs of our common
C onsumer consumers – better, faster
and at a lower cost
R esponse
6

10. Category development
How can we grow the cake together – optimizing the moment of truth
Win for consumers Future potential
Today's Win for manufactures
Solutions =
Sales &
Profit
Win for chains and stores
7

11. Category Management
Category Management Category development
Right assortment
Right prices
Right promotions
Right place & space
Right NPI’s
8

12. Cooperation at several levels creates the best results
KAM/BUM Chain
Consumer
Sales Rep
Store/POP
/ Merch.
9

13. Cooperation around the moment of truth
External dialog
Category manager Internal
dialog
KAM/BUM Chain
Sales management
Internal
District management
dialog Consumer
Dialog
Store/POP
Sales rep / Merch Store / POP
External dialog
10

14. Knowledge and understanding becomes key to success
Knowledge sharing
creates synergy
Manufactures knows a Retailers knows a
lot but not enough lot but not enough
Efforts Results
Data / knowledge sharing is a must to create best practice solutions
11

15. Category management / category development – Put to work !
Category profit - One chain - Remarkable results in one category
+ 4,5 mio
12

16. Category Management process – ECR Best practice
Category Definition
Category Role
Category Assessment
Category Objectives
Category Review
Category Marketing
Strategies
Category Tactics
(initiatives)
Implementation Plan
13

17. The “joint” Category Management model
• Alignment – Go/No go
Joint basic plan • Joint objectives
• Priorities
Retailer strategy definition • Cooperation
Category definition and structure
Tactics assessment
Tactics optimization
Store Development
Communication
Store Lay out
program
Assortment
Category review
• Specific objectives
Promotion
Space
Price
• Strategy
• Action
Category management
&
implementation plan
14

18. Assess and develop co-operation
Focused
Category Limited cooperation at
management (low priority) Partnership
Advanced Focused
Investment Customer at
by management
Manufacture Improvement
(Human
Resources and
Financial)
Basic Focused
Customer
Limited cooperation
at (low priority)
management
Discounts
Traditional negotiations Key Supplier cooperation Category Management
15
Investment by Retailers

19. Continuously focusing at improvements
Tactics assessment
Tactics optimization
Store Development
Communication
Store Lay out
program
Assortment
• Specific objectives
Promotion
Space
Price
• Strategy
• Action
16

20. The Classic category development dilemma 1 -
Contribution formula
X X X =
Hvor mange forbrugere
How
kommer i butikken ?
How How Which Store
many? often? much? profit? profit
• Are we going to increase traffic, attract the ideal shopper profile and perhaps
more loyal shoppers?
• Are we going to guarantee a more effective use of the shopper-flow by raising
the average basket (or profit)?
17

21. Clarify areas of alignment
Manufacture Chain / POP
1. 1.
2. 2.
3. 3.
4. 4.
18

22. Focused at partnership and cooperating around category development
Banner/Chain X
Situation today Situation year 1 Situation year 2 Situation year 3
Business as usual Preffered partner adding volume Preffered partner adding value Increased customer loyalty
% Turnover Profit % Turnover Profit % Turnover Profit % Turnover Profit
Total category turnover 100 10000 1800 100 11000 1980 100 11000 2145 100 11000 2178
Preffered partner share 30 3000 600 30 3300 660 30 3300 825 35 3850 963
Competitor 1 20 2000 400 20 2200 440 20 2200 440 18 1980 396
Competitor 2 10 1000 200 10 1100 220 10 1100 220 8 880 176
Private label 40 4000 600 40 4400 660 40 4400 660 39 4290 644
19

23. Category management = Category development
Yes we know that it is a valuable opportunity
The key challenges are clear
It only works when you can go from project to process, Category
management has to become the way you run your business.
Category management is not brand management
Category management involves many employees at several levels at your
Company, requires a sufficient management and knowledge sharing structure –
Billions of data is involved
You need true cooperation throughout the whole value chain
It is only working when it is working at store level
If it is not working for you, you are probably making it to academic
20

24. The moment of truth –
Putting category management into action –
At store level
21

25. Crash Course - Objectives
• To have a clear understanding of the values of working with category
management on store level
• Understand what it takes to move from project to process
• Get a clear understand of how to measure and manage sales and profit
effectiveness
• See the true value of working proactively whit P.O.S data
22

26. Subject Content Expected output
Understand Category The business to business to consumer market Give the participants a broad overwiev of the issues
management issues and opportunities in relation to category
and opportunities Category management models and steps management in FMCG
From continiuosly improvements to Joint
Category management – Focused at See the value of implementing category
partnership management the right way
Category A way of working in the FMCG industri – A Understand the category management could and
management from shift in pradigme should become a way of working and not a project
project to process retated to individual parameters
Group discussions at the table
From data to relevant Effective POS- data analyzes and tools Understand that managing kompleks data sources
business knowledge could become simple asking the right questions
Build on cases: using suffient tools
Market potential - Issues and opportunities
Reasons – Objectives Actionplan -
Implementation – Cockpit and review procces
Combined with 2 small workshops at the table
Focusing at understanding potential and
impostnat tools
Next step How to go from project to process What will be step 1 in your company
Group discussions at the tablefilling in a small
questionare
23

27. Category management from project
to process
1

28. The business to business to consumer market
Consumer marketing
Manufacture / Purchase /
Supplier Category Chain Store / POP Consumer
management
Mo
me
n
tru t of
th
Trade marketing
Copyright ® Gordios Retail Innovation A/S
2

29. Overall category management objectives
• Category development – Grow volume, Grow value, Grow loyalty
• Transform the strategic frames of the business plan to a category plan
which could and should be implemented a round ”the moment of truth”
• Use fact based decision process using sufficient tool’s managing bill of
complex data
• Continuously focus on best practice in store solutions – recognizing
different shopper behavior
Copyright ® Gordios Retail Innovation A/S
3

30. From projects to process
Category Definition
Category Role
On going analyses Dynamic planning Execution
Category Assessment
Potential Objectives Headquarter
Category Objectives
Issues Action plan Store / POP
Category Review
Category Marketing
Strategies
Reasons Cockpit Review
Category Tactics
(initiatives)
Implementation Plan
Copyright ® Gordios Retail Innovation A/S
4

31. Category Management proces
Joint ”plan” Analyses Planning Execution
1 4
Common Potential Objectives Head quarter
Platform
2 5
Issues &
Chain strategi Action plan POP
opportunities
3 6
Category role Reasons Cockpit Review
”Seldom” Very often
”Once”
Copyright ® Gordios Retail Innovation A/S
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32. Joint basic plan – Common understanding
• Retailer category strategies
• What, combined with objectives
• Category rolls
• Category definitions
• Structure and decision trees
• Best practice tactics – Tactograms etc.
• Assortment
• Place & Space
• Prices
• Promotions
• Communication
• NPI’s
• Overall implementation plan
• Process and responsibilities
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33. Step 1. potentiale
Category importance and chain potential
• Consumer perspective
• Category impact on primary target group
• Category trends and market options
• Category consumer positioning
• Business perspective
• How important is this category to turnover, profit and image enhancing
• Competitive overview with focus on complementary and substitute competition in
the category
Copyright ® Gordios Retail Innovation A/S
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34. Step 2. Issues
• What are the issues and opportunities optimizing this category on a day
to day basis?
• Prioritize business issues
• Profile, Consumer flow, Average purchase, Profit pr purchase
• Where do we see those issues
• At segment or brand level
• At HQ level / Chain level or individual store level / regions etc.
Copyright ® Gordios Retail Innovation A/S
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35. Step 3. Reasons
• What are the reasons to our “on going” issues and opportunities
• Focus on manageable variables
• Chain level ex:
• Assortment – Wide and depth, brands etc.
• Price levels – shelf and campaigns
• Promotions – Relevance, quantities, qualities
• In store space and place management
• Store level ex:
• Consumer flow
• In store placement of category and products
• Implementation quality
• Out of stock / shelf
• Local activities / local competition
• Regional demographical differences .
• In store attitude and merchandising
Copyright ® Gordios Retail Innovation A/S
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36. Step 4. Objectives
• What are the overall objective of the category
• Focus on the “contribution formula”
• What specific objective are we working with in relation to the
P’s
• Products (Assortment) price, place etc. the “engine”
• What is our potential
• Focus at the “spread” in store effectiveness
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37. Step 5. Solutions and action plan
• Which issues should be solved in which sequence –
Prioritizing against issues and objectives
• Which objectives should we have solving specific issues
• Which specific actions do we need to take and who will be
the “on going” responsible
• Create a dynamic action plan giving an overview of – What,
how, where, who and when
• Agree on a review/adjust sequence of meetings
Copyright ® Gordios Retail Innovation A/S
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38. Step 6. Cockpit, managing on going implementation and
review of the category development process
• Development and implement a joint cockpit
• Which KPI’s should we focus on developing the category – Sales and profit
effectiveness
• How often should we update our cockpit
• Who should have access to the cockpit
• Agree on review meetings
• Status on our action plan – Focus on exceptions and “red areas”
• Decide on needed adjustments to our plans
• Focus for the coming period
• Updating our best practice understanding if appropriate
Copyright ® Gordios Retail Innovation A/S
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39. KPI’s and Assessments
• Sales effectiveness
• Turnover / 1000 customer in the chain/store
• Profit effectiveness
• Turnover / 1000 customer in the chain/store
• Loyalty
• Loyalty to the chain / store – Number of potential customers who decide to buy in this chain / store
• Loyalty towards the supplier – Supplier category share of total category sales in the chain / store
• Category importance
• Category share of total chain / store turnover
• Category share of total chain / store profit
• Supplier importance
• Supplier share of total chain / store turnover
• Supplier share and total chain / store profit
Copyright ® Gordios Retail Innovation A/S
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40. Cockpit
Copyright ® Gordios Retail Innovation A/S
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41. KCRS case - chain scorecard
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42. Ex: Best practice tactogram – Developing the engine
Targets Strategies The supplier and the
4 P’s
Assortment Price Distribution Promotions
Merchandizing
Space and
positioning
Increased turnover Build customer Focus on top 10 of the Shelf prices on market Minimize space share Sharp price
flow category level or lower and use C positions promotions
Currently advertised
Multi sales and Develop a wide and Shelf prices on market Optimize shelf position Promotions on
complementary deep assortment level of top 20 – A positions for marginal and niche
sales covering all sorts of products. Relatively marginal products. products – Theme
demands of the high prices of marginal advertising
category and niche products Focus on great
activities
Increased earnings Profit maximization Focus on items with Optimize sales prices Disproportional space No price promotions
high contribution per for high-marginal only theme and idea
unit. products. promotions on high
Delist marginal issues A-position on the floor marginal products
and articles with low for high-marginal
contribution per unit products – No display
of products with low
contribution
Increased loyalty Image build-up Maximize assortment Shelf prices on market Optimize space based Use a wide palette of
focus on all what is in level of top 20 on the market position promotions
the category products. Relatively of the individual Advertise currently and
high prices of marginal products. Extra space where possible
and niche products for new products on A
positions
Events Focus on new Optimize sales prices Optimize space based Develop activities and
products from the on the market position events about new
whole world of the individual launches
products. Extra space
for new products on A
positions
Maintain loyal Develop a wide and Shelf prices of top 20 Optimize space focus Pay day promotions
customers deep assortment under the market price on the best positions focusing on stock
Copyright ® Gordios Retail Innovation A/S covering all sorts of for top 20 products loading
demands of the
category 16

43. Promotion and communication
Category RTEC/K-
Snacks
Date: 30.06.07
Segment Objectives Type of Split of Promotion Placement Pricing Amount of Comments
promotion investments material/ of promotions
In-store promotion
communication
All Family Drive FMIO (free Suppliers pay FMIO End gondola Soft 4 per year
frequency of mailing in POSM End price
purchase in offers) Cross category gondola+fruit reduction
HH with kids communicated 50/50 split of benefits department
from avg 2,5 in-store. price
to 2,8 times Cross reduction
per year by promotions
end of q1 with fruit
2008 manufacturer
K-snacks Build In-store Supplier pay Brand Traffic spots Normal 5 per year
penetration promotion for POS communication. Close to
to 10 % by focusing on material Demos. shelf
the end of Q4 communication
2008
Copyright ® Gordios Retail Innovation A/S
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44. Copyright ® Gordios Retail Innovation A/S
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45. Execution
• The category management mind ship
• A way of working
• Common knowledge and understanding – a key treads whole
• Same view on “development” and management
• You need a cockpit solution “to take off”
• Agreed and formalized review process
• Focus on exceptions and prioritize
Copyright ® Gordios Retail Innovation A/S
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46. Execution
• Focus on exceptions !!
• Reasons related to plan or execution
• Are we doing what we have agreed
• Do we understand the “engine” - Developing and implementing best practice
• Prioritizing focusing on utilizing the potential of what we have created
Copyright ® Gordios Retail Innovation A/S
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47. Group discussions
Are your company working with the category management mindset?
Do your company have “cockpit” solutions and are you working with the
same data base though out the value chain?
Do your company have and agreed process related to execution and review
process?
Discus what you see as the main barriers to develop common category
management results what it will take to create “excellence" in your opinion
Copyright ® Gordios Retail Innovation A/S
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48. From data to knowledge –
Using a cockpit solution developing the
category on a day to day basis
1

49. From projects to process
Category Definition
Category Role
On going analyses Dynamic planning Execution
Category Assessment
Potential Objectives Headquarter
Category Objectives
Issues Action plan Store / POP
Category Review
Category Marketing
Strategies
Reasons Cockpit Review
Category Tactics
(initiatives)
Implementation Plan
2

50. Category Management proces
Joint ”plan” Analyses Planning Execution
Common Potential Objectives Head quarter
Platform
Issues &
Chain strategi Action plan POP
opportunities
Category role Reasons Cockpit Review
”Seldom” Very often
”Once”
3

51. The full effect of Category Management isn’t proven until it works on
store level!
Category
development is
done store by store
4

52. Ranking analyses and the challenge of successful development
Relative effectiveness – Sales / profit
X+10% Goal
X The average of the chain in
the category
Stores
1 N
5

53. Tools and models in our cockpit
• Customer scorecard
• The contribution formula
• Ranking- and quadrant analyses
• Store descriptions
• Chain / Store action plans
• Using POS data, Nielsen and GFK as
main sources to common knowledge
6

54. Customer scorecard - catman@solution
7

55. What and where are the issues ?
• What is the issue ?
• What is the most important Issus ?
• Consumer flow, Shoppers, sales pr shopper, average purchase, profit etc. (%) ?
• Where is the issue ?
• At segment level/ brand level SKU level / Campaign level / Normal sales ?
• Head quarter / Chain / Region / Store level
• (indkøb/kæde) og/eller butiksniveau ?
8

56. Contribution formula
Number of
Number of Average Contribution
x x = Contribution
Shoppers sales ratio
Visitors
• are we to create customer flow / attendances?
• Attract the wanted customer profile
• More customers in the store or perhaps more loyal customers
• Ensure that the visiting customers buy ”customer hit-rate”
• are we to ensure a more effective use of the customer flow?
• by increasing the average sale per attendance (sell more or sell out)
• by getting a better earning on the sold units
• by increasing the sale on the goods with the best earnings
9

57. Focus on The Earnings of the Category / Store defining the issues and
opportunities
The turnover
Number of Average Contribution Contribution
attendances x sales x ratio =
• Increase number of • Sell more to the • Sell better
attendances in the customers in the
store store
• More custom-ers in • Have more • Sell goods of high
store / Increase ”cus- customers in store profit margin
tomers hit-rate” buy in the
department
• More loyal customers
/ more often • Buyers buy more +
extra/ more
• The right customers
expensive
• More loyal to
category
10

58. What is the issues ?
Turnover Contribution / purchase
Number of
Increase profit
customers
in store Avarge Contribution
x x = Contribution
purchase margin
Need more to Need to buy
Buy category More of category
How do we utilize the shopper flow
to sell more and to increase our profit
Buy improving our coverage of consumer
needs
11

59. What is the issue ?
• If the goal is to increase profit in store – what to analyse?
• Should we use this category to increase number of shoppers and their by
increase turnover and profit?
• Should we chose to optimize utilization of present shopper flow
• Increase number of shoppers in category
• Increase sales pr shopper
• Increase profit pr purchase
• Prioritize one issues and one goal
12

60. Where is the issue?
• Generel consumer level / Chain level
• Specifick shoper level / Regional level / local level (Few shops)
13

61. Ranking analyses - Category management
segments
Affectivity of sale
in the store
6.00
5.00 X
Description 1
4.00
Description 2
3.00
X
2.50 Description 3
2.00
Description 4
1.80 X
Description 5

62. Store ranking – Identifying under
performing stores
15

63. Creating store segments using quadrant analyses
Salgseffektivitet
1,6
05259 BILKA ESBJERG
1,4 05255 BILKA ISHØJ
1,2
05257 BILKA NÆSTVED
1 05254 BILKA ODENSE
05261 BILKA VEJLE
Salg pr 1000 exp.
05256 BILKA SLAGELSE
0,8
05265 BILKA VIBORG 05252 BILKA SKALBORG
05258 BILKA HOLSTEBRO
05262 BILKA KOLDING
05251 BILKA TILST
0,6
05263 BILKA HORSENS
05253 BILKA HUNDIGE
0,4
0,2 05264 BILKA ONE STOP, FIELDS
0
0 500 1000 1500 2000 2500
Salg i stk
16

64. Optimizing the 3P’s focusing on Assortment
performance / Promotion performance / Space & Place
Salgseffektivitet
1,6
05259 BILKA ESBJERG
1,4 05255 BILKA ISHØJ
1,2
05257 BILKA NÆSTVED
1 05254 BILKA ODENSE
05261 BILKA VEJLE
Salg pr 1000 exp.
05256 BILKA SLAGELSE
0,8
05265 BILKA VIBORG 05252 BILKA SKALBORG
05258 BILKA HOLSTEBRO
05262 BILKA KOLDING
05251 BILKA TILST
0,6
05263 BILKA HORSENS
05253 BILKA HUNDIGE
0,4
0,2 05264 BILKA ONE STOP, FIELDS
0
0 500 1000 1500 2000 2500
Salg i stk
17

65. Understanding store segments
The Stores are visited and described
18

66. Creating golden rules understanding best practice
”Golden rules”…
19

67. Retailnet Tandpleje mod DVH og Føtex
Case
20

68. Targit – Litas varegrupper – bemærk kun
SuperBest excl. ISO og Dreisler. Forrige 52 uger
21

69. RetailNet, alle varegrupper mod DVH og Føtex
Se valg
Case
22

70. WEB based store Plan
Store plan
• Operational store plan
• Analysis platform
• Store data (POS)
• SWOT
• Store evaluation
• Main problem
• Part problems
Chain: ___________________________ • Goals and objectives
Kardex: ___________________________
• Action plan
Store: ___________________________
• National efforts
Period: ___________________________
• Chain program
Consultant: __________________________
_
• Store efforts
Enclosure 1: Data from the store
Enclosure 2: Analysis charts with the placement of the store
Enclosure 3: Evaluation charts -/ platform
23

71. Category Management proces
Joint ”plan” Analyses Planning Execution
Common Potential Objectives Head quarter
Platform
Issues &
Chain strategi Action plan POP
opportunities
Category role Reasons Cockpit Review
”Seldom” Very often
”Once”
24

72. Workshop 1
Discuss and set up a list of variables which create different
“category potential” store by store understanding the ranking analyze
25

73. Workshop 2
Discus and come up with good ideas of how to use quadrant analyzes
working with category management.
26

74. Next Step –
How to go from project to process
1

75. • Please discuss your experience –
• What does it take to go from project to process
• Focus on how to get started
• Please fill the questioner and we will supply the result on our
homepage
2

76. 3

77. GordioS focus areas
Gordios
Knowledge Cube
Consulting People Training
Retail solutions
CoCoCo IRS
4

78. Gordios
We support our customers sales and marketing efforts
with a clear focus on the
retail market
• Consulting / We develop simple, and effective solutions which
deliver measurable results
• People – We make sure that you have the right team in your sales
and marketing operation
• Training – We coach and develop your sales and marketing peoples
competencies
5

79. Reference List - Selective
6

80. The presentations could be found at
www.forum.ecrnet.org – after 6 june 2008
www.gordios.ecr.com – after 29 may 2008
If you want access to a demo version of CatMan@Solution please hand in
your company card to Claus Nykjær or Erik Svendsen and they will mail
you an individual access code
7