5 Category Management Barriers to Collaboration For Retailers /Suppliers

18 Nov 2013

by Michelle Patterson, Director of Training & Development, Category Management Knowledge Group

I’ve been asked a number of times this year for my “Insider Perspective” on the challenges facing retailers and manufacturers in their attempt to move to a more collaborative approach in their business.  More specifically, I’ve been asked for examples on how to overcome those barriers through capability development.   There are many great studies and papers available on the topic, most of which I’ve read, in areas like  Big Data, Retailer-Supplier Collaboration, and Shopper Insights, but the industry is crying for examples.

Category Management Knowledge Group (CMKG) has worked with thousands of students and hundreds of companies all over the globe that span retailer, manufacturer, broker, and merchandisers.  Our approach to category management training is all about application and examples, and so I’m flattered to be asked for our insider perspective.  So respecting confidentiality, there are many great examples that I can’t share.  However, the collection of examples can be summarized into my “top 5 pitfalls, and corresponding lessons”, with a couple of specific examples included.  I hope that you find them useful!
1.  …

Category Management: Addressing data gaps in a limited data environment

06 Nov 2013

Category Management on Limited DataIn category management, data is one of the key requirements (some other requirements are organizational alignment, collaborative mindset and technical tools/automation).  In today’s world, as manufacturers, retailers, brokers and consultants, we are bombarded with new and different data sources all of the time.  But ironically, at the same time, most organizations find themselves in one – or possibly many – “data-poor” scenarios.  In scenarios where there is limited data, some of the most common data gaps include:

market data (to answer the question “how is the retailer doing vs total market in this category?”),
consumer panel / household panel data (to answer the questions “who is the consumer shopping the category and in my stores?” and “what are the consumer shopping behaviors in this category?”), and
tactical data (to answer questions like “what was the share of promotional / shelving …

Measuring Value Delivery from Procurement and Category Management

30 Oct 2013

We have a guest blogger in today’s post.  Allison Ford-Langstaff works for Future Purchasing, a leading UK based procurement consultancy that focus on Category Management transformation. Future Purchasing have worked with many large organizations in the UK and Northern Europe including Diageo, Vodafone, Barclays, Nestlé and Novo Nordisk.

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Catgory Management ValueCategory Management is important and should be a key business priority but whether Category Management is new to an organization or is already established, it can only ever truly be a business driver if the value created is measured and presented effectively to internal decision makers.

The end results produced by Category Management activities via a strategic program are what matter most to business leaders and CPO’s. It is assessed through a range of metrics such as level of spend penetration, cost reduction and cost avoidance, supplier performance, reduced level of risk, better service and occasionally increased sales. This is how Category Management will ultimately be measured by the business.
Why is measurement so important?
Category Management is a means to an end and it is …

5 Requirements for Compelling, Fact-Based Presentations

23 Oct 2013

“Knowing how to deliver a good presentation is an important skill for everyone, whether they’re still students or the leaders of an organization. The knowledge that an individual possesses doesn’t make a difference if they don’t know how to convey those thoughts concisely.”  (The Globe & Mail (July 2013))

“Every presenter has the potential to be great; every presentation is high stakes; and every audience deserves the absolute best.” (Nancy Duarte, Slideology)

I couldn’t agree more with both of the statements above – developing and delivering compelling presentations are a necessary skill for everyone in business, and represents an opportunity in consumer packaged goods and retail for category management, sales, retail and marketing professionals.   I have seen countless examples of presentations that either looked great, but had no logic or flow; looked visually unappealing but had some great data and analytics hidden in the mess; or looked great and had logic and flow, but was poorly delivered.  Now’s the opportunity for change and to fine-tune your selling and development and delivery presentation skills!

In last week’s blog posting, I talked about the “looks great” requirement, and the importance of having slides …

Category Management Presentations: Merging Art & Science

07 Oct 2013

I ran a live webinar last week on fact-based selling, based on our accredited eLearning course (you can view the recorded version of the webinar here).  It prompted me to write this week’s blog (and a few after this!), which is one of the areas where the science and art of category management meet:  the presentation.  The tendency in category management is to spend most of the time completing the analytics (after all, we are unbiased, objective and impartial, right?) and little time putting together a great presentation.  Regardless of how great the science behind your category review or analysis, you need to create and deliver an impactful visual story that connects with your audience.  Presentation and selling skills are even requirements towards category management certification with the Category Management Association.  Here’s what’s required to develop effective presentations in category management (as well as for most presentations!):

PowerPoint and slide skills – “looks great”
Presentation logic & flow – “connects with audience”
Goals & objectives – “has a clear purpose”
Presentation skills – “flawlessly delivered”
Fact-based selling skills – “fact-based”

It’s the combination of these 5 things that …

Category Management Training: What Drives “Value” in Training?

12 Sep 2013

by Michelle Patterson, Category Management Knowledge GroupCategory Management Value

“Value” has many definitions and interpretations – the Merriam Webster and Oxford dictionaries give eight!  It’s no surprise then that when asked to articulate the value of something in business, the results can vary dramatically.  The concept of “value” has been a hot topic in the industry as it relates to consumer-perceived value, and for us lately here at Category Management Knowledge Group, as it relates to evaluating the value of training for Category Management.  I’ve been asked many times in my career to articulate value:

The consumer perceived value of a premium product;
The value my category management team brought to the organization; or
The value a new technology or data source would deliver.

What remains consistent across any of these scenarios, and training, is the idea that value is derived as a relationship between cost and benefit, and cannot simply be defined as price.

Value = Benefits / Costs

Value ≠ Price

Cost is usually pretty straight-forward to define, and should include any upfront or ongoing monetary costs, as …

Category Management: Create Strategic Retail Store Clusters

04 Sep 2013

Category Management TrainingThere is an opportunity for Retailers to cluster (or group) their stores together based on consumer-focused attributes, instead of using some of the more traditional clustering approaches like store size and territory.  There are different demographics within each local community, and organizations need to understand the demographics in order to better meet the needs of a larger range of people.  This consumer-focused store cluster approach enables retailers to quickly identify clusters of stores with similar demand patterns, which also allow the retailer to focus on the most important target consumer segments for them.  It is also cited as one of the biggest Category Management opportunities in the industry.   Below are the steps to move to consumer-focused store clusters.
Define target consumer groups. 
Many retail and supplier organizations focus too much on the “average consumer” performance – and really – does the “average consumer” even exist?  How do you combine all these demographic variables ranging from an individual or family’s lifestage, their ethnicity, their generation (such as the Baby Boomers), and/or household income levels, to come up with an average consumer?  The opportunity is to better define the target consumer groups (which we won’t get into in this article).  Once this is done, the next step is for retailers to cluster their stores in with the target consumer that they have defined.
Cluster stores based on target consumer groups.
Category Management Training Many retailers already cluster their stores – but some in a much more traditional way.  Traditional clustering started many years ago, as retailers saw the need to look at their business based on store groupings – particularly for retailers who had hundreds of stores to manage.  Stores were ranked in terms of sales and grouped, usually by a percent of average sales across all stores.  The “A” stores were the stores that performed at a certain % above the “average store”; “B” stores were within a mid-range index of the average store, and so on.   “A” stores were the most important stores, because they represented the largest volume for the retailer.  This is an antiquated way for retailers to be looking at their business, because it fails to appreciate the consumer’s perspective.

The way that Retailers can move away from this more traditional approach is to change their store clusters to focus more on the consumer by considering some of the following variables:

Similar geographic locations and climate conditions can have a big impact on a variety of categories, based on something as simple as the climate within a region.
Store size is another physical attribute that can influence store volume significantly.
Attributes are based on the consumer – things like demographics, for example income, age or ethnicity.
Consumer purchase behavior is another attribute – loyalty can be measured – so a retailer may want to cluster their most loyal or heaviest buying consumers.

Each of these attributes can be significantly different at a category level, which in turn drills much deeper into understanding that all important consumer.  The thought of clustering at a category level can be a daunting task. Approximately 20 percent of a retailer’s categories generate 80 percent of its revenue.  Therefore, retailers should focus on strategic categories that significantly impact business. This can be driven by categories that are assigned a destination role, combined with a determination of which categories are dynamic, variable or static.  For example, a grocery retailer may view a category like “fresh meat” to be dynamic, which would benefit greatly from localized assortments.  A more basic category that may not vary as much on a store-by-store basis may be something like oral care.

A combination of robust consumer data provided by the supplier and a retailer’s store POS data will help to create some of the basic consumer clusters.
Knowledge of how to create different types of clusters using multiple attributes,  calculations like demand indexes, product demand indexes and sales indexes to create store clusters based on demographics, and an understanding of geodemographics and location intelligence.

Store ClustersOnce those clusters have been determined, the new insights and views of the data will help the Retailer to make business decisions based on key performance indicators applied to the different store cluster types.  This approach to store management by a category manager allows for a more focused approach and breaks down the stores in a retail chain by their potential.  Rather than trying to begin this project on a holistic level, it is important to start small, perhaps completing a pilot test in one or two categories, evaluating the results, and evolving from there.

 

Category Management Training: Dissecting Baseline and Incremental Sales

19 Aug 2013

Category Management TrainingIn last week’s blog, my category management training tip talked about the need for category management, sales and marketing professionals to have the skills to drill through basic data to move to insights, and then determine the recommended changes to drive action.  This approach helps in making more strategic day-to-day business decisions, through the ability to quickly pinpoint the business issue or opportunities, and then make changes using the tactics.  We reviewed some of the measures and benchmarks that should be considered, including comparisons across key consumer segments, and a breakout of baseline and incremental sales, to get an even deeper focus.  Now it’s time to learn how to drill one level deeper, using baseline and incremental sales, and considering the tactics that drive each of them.

Category Management TrainingBy adding in the baseline and incremental sales drivers into your analysis, you can determine the priorities and focus …

Category Management Training: Drilling Through Data

11 Aug 2013

Category Management TrainingCategory management, sales and marketing professionals should know how to quickly drill through data to move to insights, and then determine the recommended changes to drive action.  This will result in maximum efficiency and effectiveness of using some important category management data sources in day-to-day business decisions. Having the ability to do this is not all that difficult.  It just requires a good understanding of the data sources that are being analyzed, and some basic category management training on how to correctly interpret the numbers.  As an example, if you want to understand the biggest opportunities or issues happening within a brand, segment or category, it should start with a category review from a topline perspective – including market, channel and retailer comparisons, and with a breakout of key segment results.  The measures that are included in this topline review are important to consider – for example:

% change vs year ago shouldn’t be the only measure that relates to volume change.  By adding in ‘absolute volume change’ as an additional measure, it allows …

Category Management: Planograms Aren’t Just Pretty Pictures

06 Aug 2013

Category Management TrainingThe consumer packaged goods industry invests billions of dollars every year in effective sales, marketing and supply chain support for retail.  These investments focus primarily on things like  consumer advertising, marketing new products, distribution, data systems and technology, market research, and so on.  Space management determines how all of these other investments come together at the shelf  – where shoppers meet products “face to face” and most importantly, where purchase decisions are made.  In many cpg organizations, space management is left to the space management professionals,  with little consideration for how new products are going to fit in the planogram, and how the new items will affect the productivity of the total planogram for the retailer.

Merchandising is also regaining importance, especially within Category Management & shopper-centric merchandising models.  A combination of shifting demographics and changing industry dynamics, coupled with all of the new software and technologies available in the industry, is resulting in a shift in the thinking on merchandising best practices. There’s an opportunity for retailers …

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