Consumer-Centric Category Management

Presented by Samir Bhaloo 27th April 2006 International Business Consulting Manager, ACNielsen ACNielsen Consumer 360 Norway, Simplifying Complexity

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In the next 30 mins you will gain an insight into... ● What is Category Management and what it is not ● The Evolution of Category Management ● Consumer Centric Category Management ● Tips and Tricks

ACNielsen Consumer 360, “Simplifying Complexity” Samir Bhaloo, International Business Consulting Manager

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines

What Category Management is NOT
● Not just a grocery thing – ACNielsen has worked in over 20 different trade channels in Category Management` ● Not just a retailer thing – Manufacturer’s have significant advantage in going to market ● Not just a sales thing – requires new skills, processes and multifunctional support ● Not just an assortment review to get the right listing

ACNielsen Consumer 360, “Simplifying Complexity” Samir Bhaloo, International Business Consulting Manager

Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines

International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines ... ● Managing the business of a category with a plan ● A common sense approach to building and managing your business ● A disciplined process that has evolved over time ACNielsen Consumer 360. “Simplifying Complexity” Samir Bhaloo.Category Management is.

Category Definition 2 .Category Tactics Implementation Program ACNielsen Consumer 360.Category Scorecard 5 . “Simplifying Complexity” Samir Bhaloo.Category Assessment 4 .Category Role Monitoring Objectives 3 . International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .Category Strategy 6 .Initial Eight-Step Category Process Readiness 1 .

ACNielsen Consumer 360.In reality meant.. “Simplifying Complexity” Samir Bhaloo.. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .

The process was integrated into the business ACNielsen Consumer 360. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . “Simplifying Complexity” Samir Bhaloo.

International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . “Simplifying Complexity” Samir Bhaloo.The pitfalls of Category Management ● Too much coordination needed from too many departments ● Paralysis of Analysis – lost in data ● Sales People were asked to learn the intricacies of CM ● Manufacturers restricted their CM efforts to their largest retailers only ACNielsen Consumer 360.

.. “Simplifying Complexity” Samir Bhaloo. availability of data granularity on the consumer had increased –consumer panel data from households –named account data –new demographic data ● A new chapter was unfolding.making the process less product-centric and more consumer-centric ACNielsen Consumer 360. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .The evolution of Category Management ● Early 1990’s focus on data. forgot about the consumer ● Late 1990’s.

“Simplifying Complexity” Samir Bhaloo. they are making decisions based on a number of choice alternatives Pack Size Brand Flavour Diet vs Non-diet ACNielsen Consumer 360. consciously or sub-consciously. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .When a consumer purchases a category.

International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . “Simplifying Complexity” Samir Bhaloo.Consumer-Centric Category Review Category Definition Consumer Decision Tree ACNielsen Consumer 360.

“Simplifying Complexity” Samir Bhaloo. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .Category Definition split into 2 steps ● The consumer-centric category management splits Category Definition into two steps –Retailer’s Category Definition –Consumer Decision Tree ● Not all retailers are the same ● Market structure and preference segmentation are used to create the consumer decision tree ACNielsen Consumer 360.

Consumer-Centric Category Review Demand Clustering is where Consumer Centric Category Management sets itself apart from the traditional methods. “Simplifying Complexity” Samir Bhaloo. This is where unique consumer groups are identified and located and then stores are clustered to serve them based on future demand potential Demand Clustering ACNielsen Consumer 360. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .

“Simplifying Complexity” Samir Bhaloo. Quantify the opportunity by evaluating potential sales (based on consumer fit) vs. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . Clusters based on demand gapping. which uses consumer demand and demographics to quantify opportunity gaps based on store size and sales potential Assessment ACNielsen Consumer 360. existing sales.Assessment Choose store clusters with largest upside potential.

“Simplifying Complexity” Samir Bhaloo.The Million Dollar Case Study ● Retailer Joe’s Foods* was looking to use consumer centric management to increase sales ● The following case study details the steps Joe’s Foods took to turn a million dollars of opportunity into a million dollars of sales * Retailer name masked ACNielsen Consumer 360. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .

ready-to-eat.The Million Dollar Case Study: Step 1 Category Definition Category Review conducted for Cereals category. The following segments were reviewed:. wheat germs and (hominy grits) oats ACNielsen Consumer 360. Joe’s Foods defined the category to be reviewed and identified the sub-categories. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . hot. “Simplifying Complexity” Samir Bhaloo. granola and natural.

International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . The “cereal type” decision is made before other considerations like brand and size Joe’s Foods current planogram had been developed based on brand ACNielsen Consumer 360. the first decision was that the consumer wanted to buy cereal The next decision was the type of cereal to buy.The Million Dollar Case Study: Step 2 Consumer Decision Tree For Joe’s Foods. “Simplifying Complexity” Samir Bhaloo.

clustering stores to reflect those groups. “Simplifying Complexity” Samir Bhaloo. several unique groups of customers emerged ACNielsen Consumer 360.The Million Dollar Case Study: Step 3 Demand Clustering Joe’s Foods used demand-based clustering to identify and locate unique customer groups. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . Using Spectra’s Lifestyle/Lifestage Grid.

The Million Dollar Case Study: Step 3 ACNielsen Consumer 360. “Simplifying Complexity” Samir Bhaloo. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .

International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .ACNielsen Consumer 360. “Simplifying Complexity” Samir Bhaloo.

The Million Dollar Case Study: Step 4 Assessment The next step was to choose store clusters with the largest upside potential in which to develop a unique marketing plan at the end of the category review ACNielsen Consumer 360. “Simplifying Complexity” Samir Bhaloo. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .

The Million Dollar Case Study: Step 4 ACNielsen Consumer 360. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . “Simplifying Complexity” Samir Bhaloo.

International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . “Simplifying Complexity” Samir Bhaloo.Assessment Assessment is “Business Question Driven” ● Why do Consumers buy the category? ● Who buys the category? ● When do Consumers buy the category? ● How do Consumers buy the category? ● Where do Consumers buy the category? ACNielsen Consumer 360.Tips and Tricks .

the high-. In this case. middle.and low-income clusters all have different “turf” items. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . “Simplifying Complexity” Samir Bhaloo. ACNielsen Consumer 360.The Million Dollar Case Study: Step 5 Item Strategies Item Strategies are developed for each cluster.

International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . “Simplifying Complexity” Samir Bhaloo. the category role can be easily determined for each cluster ACNielsen Consumer 360.The Million Dollar Case Study: Step 6 Category Role Once the item strategies for the category have been identified for each cluster.

The Million Dollar Case Study: Step 7-9 Once the item strategies for the category have been identified. the category role can be easily determined for each cluster Scorecarding adds three more dimensions so that progress against goals can be measured for each of the targeted consumer groups Implementation stage has to added dimension of keeping track of which strategies are to be applied at which stores Tactics Scorecard Implementation ACNielsen Consumer 360. “Simplifying Complexity” Samir Bhaloo. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .

Tips and Tricks Simplifying Complexity 27 .

Jan 28 2006) ● Both are up significantly ACNielsen Consumer 360.Who are you talking to? ● The monkey or the organ grinder? ● The decision making process appears to be getting longer. Jan 28 2006) ● And more worryingly 32% believe 6 or more are involved (Source: Grocer Magazine. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . category management is re-emerging ● And opportunities to get a listing are becoming less and more controlled – key times to get product launched ● With more people from retailing getting involved ● 46% of head office personnel now believe 2-3 people are involved (Source: Grocer Magazine. “Simplifying Complexity” Samir Bhaloo.

International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . Purchase hierarchy. strategy. “Simplifying Complexity” Samir Bhaloo. Retailer: Objectives.Fast Track Approach 1 Research 2 2 Formulate “Blueprint” 3 Create Master 4 Created Detailed Consumer: Targeting. current approach Template / guide to layout based on consumer research Use lowest level data to define SKU level approach at total trade channel level or customer level. behavior etc. Use account / cluster / store level data to create detailed plans ACNielsen Consumer 360.

“Simplifying Complexity” Samir Bhaloo. Purchase hierarchy. behaviour etc. Retailer: Objectives. current approach Examples of category segmentation parameters • • • • • • • • • Meal occasion End use Formula Brands Size Price position Recipe/flavor End user Format Category Category Sub-Category Sub-Category Segment Segment Sub-Segment Sub-Segment Research ACNielsen Consumer 360.1 Purchasing Habits Consumer: Targeting. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . strategy.

“Simplifying Complexity” Samir Bhaloo. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .What is Eye Level? ACNielsen Consumer 360.

“Simplifying Complexity” Samir Bhaloo. International Business Consulting Manager Section 2.2 2 Formulate “Blueprint” Template / guide to layout based on consumer research Example of a Blueprint (generic) Category Category TBC TBC TBC TBC TBC TBC TBC TBC TBC TBC TBC TBC TBC TBC TBC TBC ACNielsen Consumer 360. What is … Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .

International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . “Simplifying Complexity” Samir Bhaloo.2 2 Formulate “Blueprint” You must know your store ● Be in the high traffic aisles (aisles 1-4 in most supermarkets) ● Impulse products perform better in early aisles ● Be near good aisle partners (tea and sugar. beer and snacks) ACNielsen Consumer 360.

What is … Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines . “Simplifying Complexity” Samir Bhaloo. ideally at store cluster level Example of a Planogram Create Master ACNielsen Consumer 360.3 Use lowest level data to define SKU level approach at total trade channel level or customer level. International Business Consulting Manager Section 2.

segment. “Simplifying Complexity” Samir Bhaloo.4 Create Detailed ● What are the different fixture types? ● What are the different fixture sizes? ● What are the different fixture dimensions – height. etc. shelves. pegs.? ● What is the replenishment cycle of the fixture? ACNielsen Consumer 360. depth of base. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .. width. etc. spacing between shelves.

“Simplifying Complexity” Samir Bhaloo.ACNielsen Consumer 360. International Business Consulting Manager Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU busines .

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