CATEGORY MANAGEMENT IN SMALL SUPERMARKETS: AN OPPORTUNITY

FOR FOOD MANUFACTURERS IN EMERGING MARKETS

Matheus Alberto Cônsoli

Researcher and Partner at Marketing & Strategy Projects and Research Center
(MARKESTRAT)
Av. dos Bandeirantes, 3900. FEARP. Bloco C, sala 64.
CEP 14040-900. Ribeirao Preto – SP, Brazil.
Phone/Fax + 55 (16) 3456 5555
E-mail: consoli@markestrat.org

Leandro Angotti Guissoni

Phd Candidate at School of Business and Economics of Ribeirao Preto (FEA-RP/USP)
Researcher and Partner at Marketing & Strategy Projects and Research Center
(MARKESTRAT)
Av. dos Bandeirantes, 3900. FEARP. Bloco C, sala 64.
CEP 14040-900. Ribeirao Preto – SP, Brazil.
Phone/Fax + 55 (16) 3456 5555
E-mail: lguissoni@markestrat.org

Jonny Mateus Rodrigues

Master of Science Candidate at School of Business and Economics of Ribeirao Preto
(FEARP/USP)
Av. dos Bandeirantes, 3900. FEARP. Bloco C, sala 64.
CEP 14040-900. Ribeirao Preto – SP, Brazil.
E-mail: jonnymateus@hotmail.com

Abstract
Category management (CM) can be an important tool to strengthen the relationship between a
food manufacturer and a retailer. This process is often associated with large companies
employing CM process in large corporate retailers’ chains. In developed markets, large food
retailers are predominant. Whereas, in emerging markets, neighborhood supermarkets family-
owned, are still of importance. As global retailers are also growing their business in these
markets, independent supermarkets are struggling as the retail concentration has been
increasing over recent years. However, the way cities are structured in these markets (i.e.,
cities more concentrated in this developing environment than in some developed countries
such as the USA) and due to the support offered by some CPGs to the small retailers, once
they can have higher margins than selling to big chains, it is believed that independent stores
tend to play an important role over the next years in emerging markets. In this context,
category management can contribute to the relationship between food suppliers and small
retailers. Data for the study comes from a food manufacturer in Brazil that implemented a CM
process in small retailers. A quantitative analysis was conducted in order to analyze the effect
of the program on the food manufacturer’s sales and market share. Our analysis suggests an
overall positive effect of the program on sales and market share.

Keywords: Category Management, Food Retailing, Developing Markets, Brazil.

1 – Problem Statement and Objectives

Neighborhood supermarkets have been assuming an increasingly important role for

manufacturers’ suppliers of consumer products to succeed in emerging markets (Chatterjee et
al., 2011). Consumer packaged goods (CPG) companies have realized that they can achieve
higher margins selling to smaller formats stores in these markets, which leads to an
increasingly competition for their limited shelf space (Díaz, Lacayo, and Salcedo 2007;
Kertesz et al., 2011).
The question, then, is what activities a food manufacturer should develop in order to
stand out from competition in their category, which also competes in this retail format? Under
this challenging environment associated with smaller stores in emerging markets, answers to
this question may help practitioners.
Due to the strengthening of small supermarkets, the whole chain has been affected and
companies must try to adapt their demand chain management in order to protect their sales
and market share; thus, adapting marketing and supply chain competencies (Juttner et al,
2007) allow food manufactures to succeed in a high competitive market.
Competition for market power, profitability, sales and market share have increased
dramatically during recent years because retailers are making efforts to gain “mindspace”
aiming at being more successfully with final consumers, while CPGs, on the other hand, have
been trying to gain both, “mindspace” (e.g., awareness and preference) and “shelfspace” at
different retailers’ formats (Corstjens and Corstjens, 2007).
The focus of this paper is on channel push, and more specifically, on category
management programs. This topic is of importance, since some food companies in an attempt
to creating a positive effect on sales and market share, they are spending a share of their
marketing budget on push activities with retailers, such as category management (CM)
program.
CM may be an alternative for CPGs to balance the shift in power in their relationship
with retailers. A shift in power from manufactures to corporate food retailers has been
observed over the years (Planet Retail, 2010), which can lead to a decrease in the rates of
return obtained by manufactures as the bargaining power of retailers increases (Porter, 1974;
Ailawad et al., 1995).
On the other hand, marketers tend to analyze retail power from a supplier-retail
perspective. However, related to this shift in power, an important distinction was made by
Ailawad et al. (1995) who found that some retailers are gaining power over other retailers
(e.g., smaller supermarkets and mom-and-pop stores).
In this context, independent retailers that own small groceries or supermarkets in
developing countries, such as Brazil, are under an increasingly pressure and they need to
better manage the categories offered at their stores.
The marketing literature should not overlook the effect of an increasingly food retail
consolidation on independent retailers, that own smaller supermarkets and do not belong to a
chain, network or a large corporate retailer group. For practitioners, there is an opportunity for
their companies to provide these smaller supermarkets with higher level of services, helping
them to not lose sales to large retailers who are also competing in small formats of
supermarkets.
This opportunity is also motivated by the higher margins this channel can provide
(Díaz, Lacayo, and Salcedo 2007) and the fact that small retailers have a considerable share of
retail sales in emerging markets.
In this sense, this changes can be viewed as an opportunity for the food industry and
CPG companies, in order to help those independent retailers who have small supermarkets to
organize their store, enabling them to maintain their businesses running in a high competitive
environment, where they are competing with large retailers that have different formats and
sizes of stores.
For food manufacturers, one possibility in which this support can be addressed is by
providing services to some independent retailers, such as category management, in order to
help them to organize and drive results through an appropriate assortment, price,
communication and other in-store variables that have effect on their sales.
CM is a business process linked to the efficient costumer response (ECR) practice.
According to what was stated in a report published by the Joint Industry Project (1995) on
ECR, category management practices involves “the distributor/supplier process of managing
categories as strategic business units, producing enhanced business results by focusing on
delivering consumer value”. This practice became successfully recognized in the 90’s when
market leader CPGs such as Procter & Gamble and Coca-Cola applied it within large retailers
(Hutchins, 1997).
In an attempt to propose contributions on this subject, bringing category management
concepts to be adapted and applied in a small retailer environment, and due to its relevance in
a high competitive environment in Brazil, the research problem we address in this paper is
defined as follows: what are the effects of a category management program implementation
on the manufacturer´s sales and market share?
This is the central issue on which this research deals with. In this research, a
discussion is proposed in order to bring category management to the attention of researchers
and food manufacturers’ practitioners, considering the results analysis from the
implementation of this method within 180 small supermarkets in Brazil by a large FMCG
manufacturer.
Therefore, the objective of this paper is to analyze sales and market share outcomes of
a category management support provided by a large food manufacturer in to small
supermarkets in a developing country environment, considering the high retailer competition
and the market and consumer changes as previously presented in this paper.

2 – Methodology and Procedures

First, a review of the academic literature in regards to category management and retail
management was undertaken aimed at extracting potential ideas in order to design a adapted
method of category management, traditionally applied to large retailers, that would makes it
possible to be applied in small supermarkets who belong to independent retailers, considering
their features in Brazil.
After that, the method was applied by a large food manufacturer within 180 small
supermarkets from July 2008 to April 2010. This implementation process was executed by
their sales force and merchandising team and monitored during its course, in order to improve
the initial method and to generate contributions to this research.
Finally, a quantitative analysis was conducted in order to analyze the effect of the
program on the food manufacturer’s sales and market share, which is the focus on this paper.
In this sense, data analysis was conducted on a data base of sales and market share of
the company in Brazil, with data ranging from July 2008 to June 2010. Specifically, we
evaluate the company performance of an initiative implemented at small supermarkets. The
initiative involved a category management review (store layout, assortment, product shelf
position, product visibility, promotion and price) as well a continuous service support to assist
supermarket owners provided by one large food manufacturer.
The initiative was implemented according to phases, including a different set of stores
at each phase. All stores were small supermarkets with 1 to 4 checkouts of independent
retailers. Table 1 presents main information of the initiative implementation.
 Table 1
Data scope and sample features
Variable Group 1 Group 2 Group 3 Group 4
Project Implementation Jul/2008 to Jan/2009 to Jul/2009 to Jan/2010 to
Period Sep/2008 Apr/2009 Nov/2009 Apr/2010
# of Stores 8 (pilot project) 21 70 81
Range Period of Analysis Jul/2008 to Jan/2009 to Jul/2009 to Jan/2010 to
Jun/2010 Jun/2010 Jun/2010 Jun/2010
Previous period for Jul/2006 to Jun Jan/2007 to Jul/2008 to Jan/2009 to
Comparison (pre project) 2008 Jun/2008 Jun/2009 Jun/2009
Source: Developed by the authors.

Regarding the period of analysis, the variables used were the company’s sales volume
to supermarkets and market share. The data were analyzed for the project stores and the
control group (all remaining stores 1-4 checkouts served by the company, roughly 2,500
stores).
The data analysis was also broken down by product line were Category 1 refers to no
alcoholic beverages and Category 2 to alcoholic ones. Additionally, we evaluated results
considering the focal company data (Company), the main competitor (Competitor 1) and
secondary brand’s competitors (Competitor 2). It is important to note that for category 1, the
focal company is the market leader and the competitors are market followers. However, for
category 2 competitor 1 is the market leader.
In order to have a comparison base, all data was transformed in a 100 base sequence,
departing from the first month considered in the period range analysis equal 100.
Next, to analyze sales and market share effects as results of the category management
and service support initiative (“the project”) we performed variance analysis (ANOVA) in
three different set of groups. In the first one, sales differences in the project stores considering
pre- and post- implementation data. Secondly, we focus on project stores and control group
data. Finally we compared sales differences in the control group stores considering pre- and
post- implementation data to check comparative performance. Another set of variance
analysis were also performed comparing the company market share evolution to competitors
in the same period.
Finally, to identify and compare sales growth differences we also conducted a
regression analysis using the historical data for the four groups taking the regression
coefficient as sale slope compared to baseline data.
These procedures make it possible to analyze and validate the following hypotheses:
 H1: The implementation of relationship marketing programs based on category
management support at small supermarkets has a positive and significant
impact on company’s sales performance.
 H2: The implementation of relationship marketing programs based on category
management support at small supermarkets has a positive and significant
impact on company’s market share.

3 – Channel Environment in Emerging Markets

The 2011 A.T. Kearney Global Retail Development Index shows that developing
countries represent 42% of global retail sales and local competition in these countries is
stronger that it appears.
The earlier expansion of the supercenter format has boosted significant changes for
developed markets bringing the so-called with “one-stop-shopping” approach, combining
food items, non-food items and ancillary services. However, in emerging markets the entry of
global retailers has happened after they had established their business in developed markets.
To illustrate this move and taking Wal-Mart as an example, since it is believed that the
retail concentration in the US was accelerated by this major player (Singh, Hansen and
Blattberg 2006), while in the US the first Wal-Mart supercenter was opened in 1988, it was
not until the year of 1995 that Wal-Mart entered in the Brazilian market and only in 1996 in
the Chinese market (Rocha and Dib 2002; Singh, Hansen and Blattberg 2006).
The level of food retail concentration in emerging markets is lower than in developed
markets (Stiegert and Kim 2009). As a consequence, in these markets, the relationship
between manufacturers and store owners are still of importance, since small supermarkets still
have a significant share of sales; thus, it can be the key for multinationals and regionals CPGs
to explore this possibility, having better margins and less dependency on big chains.
Some specific contrasts must be considered for CPGs when comparing their approach
to developed and developing markets, which also helps to justify the category management
employed by a food company in one emerging market and the importance of this research.
Table 2 describes some of these contrasts.

Table 2
Grocery Channels in Developed and in Emerging Markets
Feature of the Implications for CPGs to
Developed
Grocery Emerging Markets Manage Brands in
Markets
Channels Emerging Markets
- Corporate are more representative, however
Sales people should be
Corporate Stores that there are lots of family owned and operated
prepared to deal with both,
Chains belong to stores with significant share of retail sales in
professional buyers and non-
versus Corporate some categories and regions
professional buyers. Thus,
Individual groups are - Due to some features from these markets
services that may strengthening
ownership and predominant (i.e., structure of cities and the search for a
the relationship between
Independent more convenient shopping), independent
brands and store owners are of
Stores stores that are conveniently located in
importance at smaller stores
neighborhoods tend to still last over the years
There are big stores, but smaller stores are
Smaller stores have a more
more convenient located to shoppers. Even
limited assortment breadth and
big chains have made some moves into
shelf space. Food
opening smaller sized stores in neighborhood
Big stores High level of manufacturers should develop
locations (e.g.., Carrefour Bairro; Extra
versus concentration specific marketing programs in
Supermarket and Extra Fácil from Pão de
Small Stores of big stores order to overcome competition
Açúcar Group)
with other companies in order
to have their products available
at smaller stores.
Source: Developed by the authors based on Rocha and Dib 2002; Singh, Hansen and Blattberg 2006; Stiegert and Kim 2009; Deloitte 2010;
Cleeren et al. 2010.

Establishing a relationship with neighborhood supermarkets are of importance for

CPGs, because in this retailer format often the store owner makes the decision of assortment,
shelf-space, price, and in-store marketing. Considering the purpose of a CM process, it may
strength the relationship between supplier-retailer at neighborhood supermarkets, once a
supplier will help the retailer to manage their category. In this research, we analyze whether
this initiative have effect on sales and market share using data from Brazil.
With regards to retail concentration in Brazil, over the time there has been a
consolidation of retailers who have become more powerful such as Wal-Mart, Carrefour and
Pão de Açúcar Group - Brazil’s leading retailer, jointly owned by a Brazilian group and by the
French retailer Groupe Casino – which have led them to an increasingly buying power over
manufactures.
 However, neighborhood supermarkets are still important in the country. According to
Nielsen (2007), Brazilian small supermarkets that have one through four checkouts were
responsible in 2003 for 11% of the total sales to final consumers among all types of food
retailers. In 2007, this share increased to 13%. In 2008, small supermarkets’ sales increased
by 2,3% compared to the previous year and in 2009 sales increased by 7% comparing to 2008
(Nielsen, 2010).
Other important reasons have motivated us to conduct this research in Brazil. This
country is a market with roughly 190 million people, and has experienced steady growth with
low inflation for over 15 years and many global businesses are enthusiastic about the country,
considering that it will host the 2014 World Soccer Cup and the 2016 Olympics.
Since 2003 they have lifted over 40 million Brazilians out of poverty and into the
middle classes (The Economist, 2011). Moreover, the country is on its way to become the
world’s fifth consumer market and in 2030 it is expected that 60% of its population will
belong to the middle class having an annual household income of USD 12-50k/year (in 1992
this share was 32.5% and in 2010 this was 50.8%).
To reach Brazilians, CPG companies should be prepared to adapt their marketing
strategy considering a wide range of retail stores and the importance of neighborhood stores,
because this format is the one with more penetration from different social economic classes. A
study by McKinsey & Company (Kertesz et al., 2011), using data from LatinPanel and
Nielsen, it shows that neighborhood supermarkets have in average 29% of consumers from
classes A/B, 38% from middle class, and 33% from classes D/E.
The importance of this channel and, consequently, of the category management
program implemented by a food good that we analyze in this research, also relies on the
increasingly middle-class population because this channel has a high penetration in this class.

4 – Conceptual Background

Shopper Marketing and In-Store Marketing

A traditional belief states that more than a half of the purchases at the point-of-sales
are unplanned (Kollat and Willett 1967; Underhill, 2000) and researchers have agreed that
unplanned purchases are more representative due to consumers’ susceptibility to in-store
stimuli and due to some situational factors such as time available for shopping (Park, Iyer,
and Smith 1989; Stilley, Inman, Wakefield 2010). Beatty and Ferrell (1998) concludes that in-
store marketing can make the shopping more efficient by helping the shopper to find his or
her planned items more quickly.
These previous finding helps to explain why there has been an increasingly importance
attributable by marketers and scholars to in-store marketing activities over the recent years.
Food companies should make their products available and, at the same time, stimulate
consumers’ preference; thus, integrating in-store and out-of-store stimuli. This can be done
through several different ways and it is important to consider what is known as path to
purchase.
According to In-Store Institute and The Partnering Group (2010), the path to purchase
can be viewed as the following stages in which shoppers may be influenced by either
manufacturers or retailers: firstly, when shoppers are planning what they want or need and
where they go to shop; thus, awareness is an important variable and this happens out of the
store.
Secondly, when shoppers step into the stores, they are concern about what to consider
and what to buy, so in this case the manufacturers and retailers’ activities that allow their
brands to attract, engage, motivate and purchase are important and can be influenced inside
the store. Finally, the last stage which is linked to the first stage is the consuming, involving
the experience with the product, evaluation and recommendation.
In this context, the focus of shopper marketing concept must be attributable to
someone while choosing a product before effectively purchase it for him, her or someone else
to use and consume, arguing that the shopper is not necessarily the consumer (Deloitte
Research, 2007), thus, that is why differentiating consumer marketing and shopper marketing
it is important when analyzing the fast-moving consumer goods industry.
In the Journal of Marketing this concept has started to be considered (Bell, Corsten
and Knox 2011) and in the Journal of Retailing this concept has been recently reviewed and
defined, confirming its importance. According to Shankar et al. (2011, p. 29), shopper
marketing concept “refers to the planning and execution of all marketing activities that
influence a shopper along, and beyond, the entire path-to-purchase”.
The path-to-purchase concept explores the importance of taking into account
“preshopping” factors that may influence shopping behavior, including out-of-stores factors
such as prior marketing exposure, among others.
Category management process plays an important role in this context, because it can
strength the supplier-retail relationship, and it contributes to an improvement on the in-store
marketing, which can lead customers to have a better shopping experience.

Category Management

According to Gooner, Morgan, and Perreault Jr. (2011, p. 18) “in increasingly
competitive markets, managers and scholars must rethink traditional approaches to creating
and capturing value, including how inter-organizational relationships are handled”. For CPGs,
category management is often considered a breakthrough in trade practices (Dussart 1998)
and offer conditions to strengthen the relationship between a food supplier and its marketing
channels, bringing positive elements to supplier-retailer interaction (Lindblom and Olkkonen
2008).
It is interesting though that there is a lack of research on category management (Dhar,
Hoch, and Kumar 2001; Gruen and Shah 2000; Gooner, Morgan, and Perreault Jr. 2011).
Thus, “managers have no comprehensive evidence-based guidance regarding whether more
intensive retail CM pays off and little insight into the costs and benefits of using a lead
supplier to help their retail CM efforts” (Gooner, Morgan, and Perreault Jr. 2011, p. 19). This
paper contributes to provide both scholars and practitioners with some answers that have been
asked with regards to the role of category management and its effects on brand sales and
market share.
A shift from brand management to a category management approach is of importance
because consumers’ decisions of one product may have an impact on other products in the
category (Dussart 1998). As a category management process offers conditions to manage
product categories as business units, the interests from food manufacturers, retailers and
shoppers can be combined and integrated in order to deliver value for both of them.
The advent of CM is associated with the ECR, and it has emerged as one of the most
popular business process from ECR (Dussart 1998). In the United States, this practice is
related to the emergence of new principles of collaborative management along grocery supply
chains (Lindblom and Olkkonen 2008), and it was recognized as an important business
process in the early 1990s.
CM tatics deal with assortment, pricing, space allocation, and in-store promotional
activity (Lindblom and Olkkonen 2008). As these elements have a large influence on brand
sales and market share, a CPG should implement this process to improve its competitiveness.
Moreover, this practice has been largely associated with the relationship between supplier and
a big retail chain, improving both, in-store marketing and the relationship with retailers.
This research is important because differently than traditional research on category
management, because our data came from a CM process implemented by a food CPG
company at small supermarkets that do not belong to big chains, which are still important in
this kind of market.

Sales Force Execution

The category management process that we have analyzed in this research was
executed by the sales force, which works for the food manufacturer that has planned and
implemented this process at small supermarkets in Brazil.
As the sales force is strongly responsible for the execution of business strategy, it
needs to be integrated with the other marketing elements to generate a positive effect on brand
sales (Churchill et al., 2000), involving the category and product strategy, price,
communication and distribution. Both marketing and sales departments should work together
on a category management process, integrating planning and execution.
In a CPG company, salespeople have lots of tasks to accomplish while they are at the
point of sales. The more competitive is the marketplace for one category, the more support
and services must be provided by CPGs to their channels in order to make offers available to
final consumers, allowing them to win against competition. In this context, sales force plays
an important role in a CPG by establishing strong relationships with retailers.
For some markets and channels, sales force is responsible for activating point of sales
materials, or the so-called in-store materials, including temporary displays, racks, banners,
posters, among others in-store advertising possibilities, which, historically has been known
from important articles that CPGs “can use such tools as displays and promotion to gain a
competitive edge in retail outlets” (Quelch and Cannon-Bonventre 1983, pp. 162). These
materials can provide consumers with a better shopping during their path to purchase, as
previously discussed in the shopper marketing section in this paper.
In the category management process as occurred in the company we have analyzed,
the sales force, besides negotiating products and price, should help the store owners from the
selected in the project in order to organize the category’s assortment, activate point of sales
materials, provide some recommendations on lay-out and shelf-space for the category
including each individual stock-keeping unit (SKU).
Under this context, almost nothing has been addressed in the marketing literature with
regards to the effects of sales force execution at the point of sales, combined with a category
management practice in a small store environment.
Considering specifically the Brazilian food retail environment which is focused on this
research, our data and analysis allow to verify whether their execution specifically related to
this category management process, performed at independents small retailers, has generated
an effect on sales and market share.

5 – Results

Based on the procedures previously presented and discussed in this paper, Table 3
presents the main results of the analysis.
 Table 3
Main research regression and Anova results
Variance Analysis (P-Value) Group 1 Group 2 Group 3 Group 4
Anova pre-project x post-project 0.0674 0.9797 0.2824 0.02912
Anova project stores x control group 0.6748 0.0006 0.86 0.03568
Anova control group (pre-project x post-
proj.) 0.6975 0.0351 0.9086 0.3879

Regression Analysis: Sales Trend

(Coefficient;R2) Group 1 Group 2 Group 3 Group 4
Pre-project (project stores) 0.0005 ; 0.00 0.023 ; 0.20 -0.0145 ; 0.11 0.0237 ; 0.27
Post-project (project stores) 0.0029 ; 0.01 0.0173 ; 0.1 -0.0097 ; 0.04 0.0613 ; 0.59
Pre-project (control group) 0.007 ; 0.06 0.0208 ; 0.17 -0.0144 ; 0.12 0.0077 ; 0.04
Post-project (control group) 0.0062 ; 0.07 0.0175 ; 0.23 -0.0045 ; 0.01 0.0114 ; 0.08

Period Growth (initial period = 100) Group 1 Group 2 Group 3 Group 4

Pre-project (project stores) 88.9 148.4 95.5 106.6
Post-project (project stores) 123.9 128.12 101.3 140.5
Pre-project (control group) 110.8 144.8 94.5 102.5
Post-project (control group) 117.6 127.5 103.9 113.8

Sales Performance x baseline Group 1 Group 2 Group 3 Group 4

Pre-project x post-project (project stores) 39.37% -13.67% 6.07% 31.80%
Project stores x control group 5.36% 0.49% -2.50% 23.46%
Control group (pre-project x post-project) 6.14% -11.95% 9.95% 11.02%

Variance Analysis P-Value ; Average

Variation % Market Share Group 1 Group 2 Group 3 Group 4
Category 1
0.0029 ; 0.1314 ; 0.0126 ;
Company Project x Company Total N/A 0.1119 0.0261 0.1177
Company x Competitor 1 (main 0.0008 ; 0.2796 ; 0.0269 ;
competitor) N/A 0.1281 0.0193 0.1009
Company x Competitor 2 (Secondary 0.0089 ; 0.0000 ; 0.0072 ;
Brands) N/A 0.0994 0.0988 0.1289
Category 2
0.0001 ; 0.0010 ; 0.0428 ;
Company Project x Company Total N/A 0.2090 0.1643 0.1904
Company x Competitor 1 (main 0.0000 ; 0.0000 ; 0.0272 ;
competitor) N/A 0.2707 0.2132 0.2087
Company x Competitor 2 (Secondary 0.0000 ; 0.0002 ; 0.0056 ;
Brands) N/A 0.3880 0.2166 0.2999

As can be seen, group 1 and 4 presented better sales performance while group 2 and 4
were better on market share growth. As we do not have market share historical data for group
1 (project pilot) its evolution could not be evaluated.
For group 1, we considered that there was a difference on sales performance on the
project stores pre x post Anova, at 10% of significance level (p-value = 0.0674). Moreover,
the regression analysis coefficients for post-project were higher than pre-project (0.0029 x
0.0005), but the control group performance coefficient post-project was quite lower than pre-
project (0.0062 x 0.007). In terms of sales volume, project stores sales increase was 39.37%
compared with pre-project data, and 5.36% compared with control group. Although, control
group performance was 6.14% higher post x pre-project. As only 8 stores are on this group,
we still considered the result as positive. As group 1 has the longest data set and has its period
analysis starting and finishing on winters, no inverse relation due to seasonality was identified
(as it is a beverage category).
Group 2 data set otherwise, has started late summer and finished on winter. In this
way, as company’s sales are expected to decrease in the winter, better results in this case are
those with lower sales reduction. We can see that control group sales decrease in the period
was 11.95% while project stores was 13.67%, opposite from what we expected. It can be
checked through project stores regression coefficients 0.0230 pre-project versus 0.0173 post-
project. Notwithstanding, as a market seasonality, the same sales behavior was identified in
the control group pre versus post-project (0.0208 x 0.0175). Additionally, there was a
significant difference (5%) both among project stores versus control group (p-value = 0.0006)
as well control group pre and post-project (p-value = 0.0351).
Interestingly, group 2 presented the best performance on market share analysis. All
variance analysis presented on Table 3 were significant at 5% level and market share of
category 1 increased 11.19% (project stores x company) and 12.81% versus the main
competitor. On category 2, were the company is not the market leader the results were even
better. Market share increase of project stores versus company was 20.9%, being 27.07%
compared with the main competitor and 38.8% when compared to secondary brands.
The results for group 3 present inverse relations as data set started on late winter, have
a full summer and finished on winter again. In this case, project stores performance were
better post-project as regression coefficient was lower (-0.0097) than pre-project (-0.0145)
with similar sales behavior on control group (-0.0045 post versus -0.0144 pre-project). We
also verified that while total sales pre versus post-project increased more in the control group
(9.95%) than in the project stores (6.07%). However, no significant differences were
identified through the variance analysis. Based on this we considered the results positive
corroborating with our hypothesis H1.
The market share analysis for group 3 presented a significant difference on company
performance for category 1 when comparing secondary brands’ competitors, with 9.88%
relative increase. For category 2, consistent with group 2, all variance analysis were
significant and market share increases ranged from 16.43% (project stores x company) to
21.66% (company x secondary brands’ competitors).
Finally, group 4 results presented positive effects on sales and market share. There
was a significant difference on sales performance pre and post-project (p-value = 0.02912) as
well project stores versus control group (p-value = 0.03568). Moreover, regression
coefficients for project stores sales and control group were higher on post-project analysis
(0.0613 x 0.0237 for project stores and 0.0114 x 0.0077 for control group). Again, market
share analysis were consistent with H2, being all variance analysis significant at 5% level for
category 1 and 2. Similar to previous groups, the performance on category 2 were the
company is not market leader was even better, mainly against secondary brands’ competitors,
showing that the implementation of relationship marketing programs based on category
management and service support besides increasing sales, seems to have a positive impact on
branding and shoppers decisions on retail level.
Table 4 presents a summary of the results addressed on the previous analysis. Based
on that we consider that H1, which relates the implementation of relationship marketing
programs based on category management and service support with sales performance partially
confirmed and H2, that relates it with market share as confirmed.
 Table 4
Summary of research results and hypothesis confirmations.
Stores Groups/Hypothesis H1 H2
Group 1 Confirmed N/A
Group 2 Disconfirmed Confirmed
Group 3 Confirmed Confirmed
Group 4 Confirmed Confirmed
Source: Developed by the authors

6 – Conclusions and managerial implications

Considering that “suppliers must move away from purely transactional relationships
with their retail customers and more towards a partnership based on shopper insights” (Planet
Retail, 2010, p. 1), the conducted research is relevant, once this is what the category
management program developed by one Brazilian consumer packaged company was about,
under which its results were analyzed creating conditions for a future discussion among
researchers and food manufacturer’s practitioners regarding this subject.
The present research is result of a specific large food manufacturer initiative focusing
on small supermarkets in Brazil. The overall project, besides the objective of increasing
company performance, was also seeking alternative ways to improve small supermarkets
competitiveness against large retailers and retailers’ networks.
It was implemented an initiative involving the category management review (store
layout, assortment, position in the shelf, visibility, promotion and price) as well a continuous
service provided by the manufacturer to support and assist supermarket owners in their
marketing management activities. In this way, the research problem addressed the
methodology to evaluate the effectiveness and results of the project as well analyze its sales
market share effects in a developing country environment.
Our results seems to be consistent with theory and marketing practices, were we could
confirm H1, excepting on group 2, showing a positive impact of category management and
relationship marketing on sales in the retail sector applied to small supermarkets reality.
Moreover, we confirmed H2 for all the three groups were data was available, were results
proved positive impacts of such initiative on company market share, mainly comparing the
company’s performance to secondary and cheaper brands.
Some additional remarks can be made. Firstly, sales increase is almost always
expected from any marketing initiative. In this case, even some results are not statistically
significant, all data set presented better sales results – as increase or lower decreases.
Secondly, the market share analysis rose some new insights were company performance
against secondary competitors was consistently higher than compared to the main competitor.
Moreover, the same result was verified for the product category which the company is not the
leader. It can be an indicator that this kind of initiative can leverage company performance in
those segments were advertising, sales promotion etc are not enough to leverage sales and
market share performance.
Thirdly, the previous discussion can indicate that focusing such category management
and relationship marketing initiatives on small supermarkets (that usually addresses lower
income costumers and/or convenience shoppers) can be an interesting strategy to improve
shopper experience, brand awareness and equity, capturing sales and market share without
massive sales promotions or price reductions.
Finally, as market share in the store projects increased compared to control group,
relationship marketing activities combined with category management implementation has
increased loyalty and improve the relationship with those retailers. It is consistent with current
marketing theory and was informally identified at some visits of the researches to selected
project stores.
Finally, some limitations of the present research can be related with the seasonal
nature of the market we addressed the research as well limitations of data and procedures
used.

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