Which Opportunities Match Your Priorities for the Year?
With change comes opportunity. And there are tons of changes happening in category management unfolding as you read this post. Most are being driven by CatMan 2.0™, and the commitment of Retailers like Walmart who are demanding more advanced solutions and approaches both internally and from their Vendor community.
So where are the biggest changes and what are the opportunities for YOU?
Update your Category Management Process
The category management process has changed to reflect more complex and granular data, more complex technologies, a more complex Shopper, and an evolving retail Omni-Channel.
According to CatMan 2.0™ there are 3 key areas that have changed:
- Inclusion of internal alignment as a pre-step at the beginning of the process.
- Addition of Shopper Insights into the Category Assessment step.
- Incorporation of Shopper Marketing as a 5th tactic
There’s also been a confirmation that Shopper Insights and Shopper Marketing need to be included in (and not separate from) category management.
Opportunity #1: To anticipate how these decisions will impact you, your team and your organization, proactively determine which of the changes most directly affect your current approach, and develop plans that better reflect how the industry has evolved over the past 30 years.
Improve Your Category Assessments, Analysis, Business Reviews
Increased granularity of data, new & evolving data sources, improved software and data mining tools and integrated data solutions have increased the need for more advanced category analysis work in 3 areas:
- Category reviews/business reviews: CatMan 2.0™ calls this the “analytic pathway”, but essentially, the opportunity is to enhance existing category reviews with a more advanced approach that also focuses on Shopper (ie. activity-based costing, retail store cluster analysis, simulation tools, and modeling techniques).
- Integration of Shopper Insights into the category assessment: The truth is that the WHAT, the WHY, and HOW TO ASSESS the Shopper’s needs are so intertwined, that they must be addressed and evaluated together. What this means for your organization on a strategic and day-to-day basis will vary widely depending on your access to Shopper insights, data and other factors.
- Develop Shopper-focused scorecards: Category scorecards are a “must have” for category plans for both Retailers and Manufacturers, because every plan needs objectives by which organizations can measure success. With the more advanced reviews and the integration of Shopper insights into the assessment, it’s important to delve into ways to develop more advanced scorecards.
Opportunity #2: To define overall corporate strategies to reflect a more advanced category management approach for your business. This will help set new guidelines and strategies for category management, and will also help create internal alignment identified as part of Opportunity #1.
Incorporate Shopper-Focused Metrics and Advanced Technologies Into Your Assortment
Listings/Delistings. Distribution opportunities. Store cluster / store specific assortments. Shopper-focused category decision trees.
Assortment is where many teams and organizations spend large amounts of analytic time and attention, but if products never make it to a Retailer’s shelf because they don’t suit the Shopper’s changing needs, all of that time and attention is wasted.
The future of Assortment Analysis will determine how to fit innovation into the product range through new data sources, technologies and analytics.
This will include focus on transferable demand, category decision trees, demand-based clustering and assortment localization, innovation and a review of some of the latest and greatest assortment technology and tools available.
Opportunity #3: To evaluate the assortment opportunities for your organization, with consideration for advanced data & tools, and best in class approaches and processes.
Build More Strategic-Focused Shelf Strategies and Processes for Advanced Solutions
Shelf space optimization. Category adjacencies. Shelf layouts. Store cluster / store specific planograms. Shopper-focused category decision trees.
It goes hand in hand with assortment, as changes in one affects the other. Once again, the new data sources, technologies and focus on Shopper require changes that need to be reflected in more advanced space management work.
You need to learn about the importance of internal preparation and requirements for effective space management, including advanced data sources, item level databases, technologies, analytics and processes to reflect Shopper-focused, and future-thinking approaches to space management (e.g. retail store clustering, localized planograms, category decision trees).
Opportunity #4: To determine how to advance in Space Management to better reflect the needs of the Shopper and your business using advanced data and technology.
Overcome Issues and Challenges and Identify Opportunities Through Advanced Pricing Analytics and Solutions
Price elasticities. Shopper expectations and value perceptions. Promotional pricing.
Pricing is one of the most influential tactics within category management, as an important driver of sales and profit for the Retailer, but more importantly, of the Retailer’s overall portfolio strategy for attracting and keeping Shoppers.
It’s also one of the most complex tactics, and even more so with the evolution of online vs. in-store pricing. CatMan 2.0 states that “Understanding the overall effect on category profitability from the interplay between brand item pricing and category price segment deltas is one of the most important and most neglected areas of price understanding.”
You need to explore advanced data (and granularity of data) and technology and subsequent advanced pricing analysis, discuss Shopper pricing knowledge and expectations as it relates to price, review price elasticity and ways to isolate the most important variables, and address pricing issues and new challenges anticipated in the future.
Opportunity #5: Evaluate pricing opportunities for your organization, with consideration for advanced data & tools and what’s anticipated for the future.
Address Advanced Analytics, Approaches and Implications in Promotion for Retailers and Manufacturers
Shopper-based promotional analysis. Trade marketing. Payout.
Promotion is the key driver of incremental sales for Retailers and Manufacturers. According to CatMan 2.0, a promotion is an incentive aimed at influencing Shopper attitudes to cause a specific behavior.
Promotions have expanded beyond more traditional flyers and coupons to include websites, targeted emails, social media and Retailers’ mobile platforms and apps.
This has increased the complexity of promotional planning requirements, including advanced data and technology to address a more sophisticated approach.
Opportunity #6: Identify the gaps, determine the priorities, and evaluate the opportunities for your organization, with consideration for advanced data & tools, and best in class approaches and processes.
Add Shopper Marketing as the New Tactic in Category Management
Shopper marketing is the new addition to the tactics in category management, and requires some special attention to determine how to analyze the success of it alongside the other tactics.
There are opportunities to identify the requirements for successful Shopper marketing, and the importance of using Shopper insights to develop effective Shopper marketing solutions for retailers and their categories. You need to focus on development of successful Shopper Marketing programs using data and insights and ways for it to fit in the category management process.
Opportunity #7: Determine how to integrate Shopper Marketing as a tactic into your internal category management process based on your organizational needs.
Building an Organizational Structure and Strategy from the Inside Out
According to CatMan 2.0™, roles that are interdependent should be in the same organization and ultimately, Shopper insights and marketing belong within the category management framework.
Another requirement for change in your organization is the need for internal alignment. You should consider organizational design to reflect different types of companies, determine ways to increase internal alignment across an organization using a category management framework, review opportunities to measure ROI on category management, and look to the future of what’s to come for category management departments to reflect a more advanced and sophisticated approach.
Opportunity #8: Identify ways to improve your internal structure to best reflect the new approaches and requirements in category management.
Develop New CatMan Foundations Using a Shopper-Based Approach
It’s important to have well defined category foundations to provide the rules, guidelines and strategies for the category to set it up for success.
Some of your category management foundations need to be dusted off and refreshed to reflect changes captured in CatMan 2.0.
Explore ways to improve your internal category definitions and segmentation to reflect the Shopper, review different options for developing category decision trees and discuss their importance to the catman foundations, determine how to incorporate Shopper into assigning category roles and strategies, and develop some guidelines to help you establish foundations for your category(s).
Opportunity #9: Determine what may be the best courses of action for you to further develop these strategic foundations within your organization based on your biggest areas of priority and opportunity.
Deployment & Supply Chain:
Overcoming Obstacles and Achieving Success
The last step, but certainly not the least important one, in the category management process is deployment of the category plan.
A step that many of us tend to forget, or may not even really understand. Success of the entire category plan relies on compliance at store level.
You need to consider some of the biggest challenges in deployment, address the requirements for successful planogram compliance, develop ways to better align category management and supply chain, and understand the implications of changing Shopper, online and store specific initiatives on the supply chain.
Opportunity #10: Evaluate the opportunities for your organization, with consideration for ways to better connect category management with deployment and supply chain opportunities and improve compliance at store level.
Want to know more about 2.0 topics, directions, and solutions?