Case Analysis

on

Managing the Competition: Category

Captaincy on the Frozen Food Aisle
Case Background
● Big City Grocers: A large retail chain with 20% market share
in ready-made meals in Industrial Midwest.
● Proposing category captaincy arrangement in Frozen Foods
Category with either Freezer Foods or TV Meals
● Brand Loyalty is 30% in Frozen Food category
● Concept of category Captain- Management of the shelf and
SKUs by the Manufacturer
● Big CIty was looking for one of its suppliers to take over the
category-management
● This contract can change the business environment in this
category

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How Aggressive Should Chen be?
● BigCity attributed to almost 20% of ready-made food sales in the region. Hence it was important
for Chen to have a control over this retailer as a Category Captain
● According to the study Chen read about, BDI increase of a brand as a Category Captain, was
almost twice when compared to the situation where your competitor is the Category Captain.
This means if Chen allows TV Meals to be the category captain, Freezer food’s BDI growth will
be almost half of TV meals’ BDI growth.
● Similarly assortment of your own brand as a Category Captain is expected to increase by around
10% and if Chen allows TV Meals to be the category captain, then Freezer foods will see almost
40% drop in its assortment
● If Chen lets TV Meals to become the Category Captain, profitability and shelf space of Freezer
Food is going to come down in contrast to TV Meals’ shelf space and profitability going up
● Job at stake
● To sum it up :- VERY AGGRESSIVE

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From Retailer’s perspective

•Specialist knowledge on that particular category

which manufacturer doesn’t possess
•No worry about out-of-stocks
•No capital tied up inventory
•No decisions to make regarding assortment
planning and pricing of SKUs
•Manufacturer are completely responsible for the
product with low sales

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From Brand/ Manufacturer’s perspective
•Decision making power with respect to assortment and SKUs
•Information about the competitors sales data and the overall category data.
• Pricing data – what retailers are charging other manufacturers
•Retailer location wise sales data – Profitable locations
•Control over the shelf space of the retailer
•Scope to improve the BDI for the manufacturer
•To strengthen the relationship with the retailer- A large account for the
manufacturer

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Manufacturer’s Offerings
•Revenue is the key metric in retailing business- Manufacturer
proposal should focus on revenue generation of the category
•Responsibility of logistics and filling of stock in the shelf
•Consumer behaviour insights of the category
• Consultancy and best service to the retailer along with the high
quality products
•Improving BDI and CDI, as they give the indication about the
success about the product
Factors that dampen the ability of the captain
to interfere with a competitor profits
● One of the ways in which a Category Captain can
dampen competitor’s profit is by reducing the shelf space
of the competitor which would in turn make the
competitor reduce their retail price to balance demand.
But, Category Captain cannot drastically reduce
competitor’s shelf space because 30% customers are
brand loyal and they’d want a better category assortment
or else overall demand of category would decrease.
● It can also lead to legal issues from the competitor and
retailer
● Competitor as a category captain for another retailer
would dampen your profits in retaliation
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Benefits & Challenges to the Consumer
•Benefits
1. Better assortment and variety of SKUs of category captain products
2. Enhanced service
3. No stockouts of products
4. Possibility of enhancement of shelf space of entire category;
increasing convenience and visibility for consumers
•Challenges
5. Not easy for consumers to try or switch different brands due to
lower availability of other brands
6. Lack of discounting on the category captain products
7. Decrease in consumer surplus over long term due to increase in
bargaining power of Category Captain over retailer

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THANK YOU