Next generation of category management

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Shopper & Category Development
The Next Generation of Best Practices Category Management
The Partnering Group
Dr. Brian Harris John Clutts

Hallmark Cards Inc.,
Wayne Strickland

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© 2008 The Partnering Group, Inc.

Retail Marketing - The Big Waves
ECR Category Management Best Practices Next Generation Store Designs ShopperMarketing

Space Management Scanning

Category Management

Today 2000

1995 1989

1975

1985

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© 2008 The Partnering Group, Inc.

Category Management
Concept introduced in the late 1980’s Category Management has had global acceptance since it’s introduction The 1995 US ECR Report documented the Best Practices definition and businessprocess

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© 2008 The Partnering Group, Inc.

Adoption of Best Practices Spread Quickly

Adoption 1993

Today

The Best Practice Model provided a Platform for Global Adoption.
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© 2008 The Partnering Group, Inc.

It Spawned Related Best Practice Reports
1997 - Category Management –Building Organizational Capability 1998 – Advanced Category Management – A Pizza Category Case Study 1998 – Category Management in a Direct Store Delivery Environment 1999 – Micromarketing – A Tool for Category Management

Many other US and International reports followed.
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© 2008 The Partnering Group, Inc.

Category Management Filled A NeedProducts were not viewed as consumer-centric categories Lack of a formalized business planning process Underutilization of consumer research, data, and tools Data mining was in its infancy No formalized & balanced view of business performance Non-collaborative supplier relationships
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© 2008 The Partnering Group, Inc.

It Remains A Top Priority98% of retailers and 89% of manufacturers consider Category Management critically important.
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© 2008 The Partnering Group, Inc.

Key Reasons why CM Has Worked
Provided foundation for strategic retail marketing
Categories as SBU’s Aligning Company to Company strategies Balanced portfolio of Category Roles Linking Category Strategies and TacticsBrought consumer focus to Retail Marketing and Merchandising
New Category Definitions and Structures Consumer-driven Strategies and Tactics

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© 2008 The Partnering Group, Inc.

Key Reasons why CM Has Worked
Provided a new and more effective model for collaboration through better information sharing Expanded organizationalcapabilities
New skills and talent Roles and accountability Scorecard-based performance

Delivered superior results
Retailers and Manufacturers Sales, Profits, and ROI

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© 2008 The Partnering Group, Inc.

Industry Results
Grew Sales Improved Profitability Increased Market Share Improved Operational Efficiency Optimized Store Assortments Createda basis to evaluate new items
11% 10%

Category Definition Category Review Category Role Category Assessment Category Scorecard Category Strategies Category Tactics Plan Implementation

Retailer Revenue Growth

Retailer Profit Growth

Source: ECR Industry Report 2000

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© 2008 The Partnering Group, Inc.

Category ManagementResults

Category Management is now standard practice at nearly every U.S. supermarket, convenience store, mass merchant, and drug chain. And its use is growing because it works – at least from a dollars-and-cents standpoint.

Sales growth attributed to Category Management + 14% Retailers & Wholesalers + 8% Suppliers
Source: Business 2.0, Feb 2003 & 2002 Cannondale Studies
Next Generation...
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