Category Management is a Continuous Process Category review Category definition Category assessment Category strategy & tactics Category performance measures Plan implementation Organize product groups and offerings based on specific consumer needs and relevant business requirements Design category product hierarchy down to SKU- Level Conduct full value chain analysis of situation: Customers (profile, purchase behavior) Market (trends, share, prices) Competitor performance, strategies, and tactics Analyze financial metrics Performance vs. target Trends Conduct SWOT Analysis across portfolio Assign role for each category based on customer perspective Develop role- driven strategies Relate to Pentagon and Triangle Brand strategy Product/ sourcing strategy Marketing/ pricing/ promotion strategy Assortment strategy SSF allocation Visual merchandising strategy Create balanced score card Specific and measurable Gain consensus on ratios and measurements Review score card consistency with Company strategy Role of categories Role of suppliers Horizontal function goals (e.g. brand management, CRM, marketing) Draw detailed action plans based on category roles and strategies Line strategies Receive approval from management Strategic fit with company's overall business plan Attainability of objectives and goals Potential conflicts Coordinate with suppliers Align organization and assign responsibilities Outline a critical path timeline

Category Definition Exercise Goal Begin to develop hypotheses on category definitions within business Questions to consider How do customers think about products? Main reasons for shopping, e.g. need, purchase occasion, decision tree Natural clusters, e.g item I went for, items to go with it, impulse items What capabilities are required to run products “clusters” successfully? How do best practice competitors approach the business? How do others in the industry define categories, e.g. vendors, trade groups/journals, syndicated data sources? Exercise Individually or in Groups Discuss and agree working definition of categories for today Write categories down on yellow post-it notes Group like categories together into larger groupings (e.g. divisions, business) Place post-its on flip chart to create merchandise hierarchy - one per business Identify any outliers or key gaps

Men’s Example of Product Hierarchy Business Sportswear Dresswear Furnishings Division Casual Pants Dress Pants Casual Tops etc. Suit Separates & Sport Coats Dress Shirts Acces- sories etc. Categories Casual Pants Dress Pants Knits/ Sweaters Wovens/ Flannels etc. Suits/ Blazers Sport Coats Dress Shirts Acces- sories etc. Lines Brand type National Brands Private Brands Brands Mycompany own Other Product type Year-Round Seasonal Product Wool Linen Item/SKU (color/size) Navy 43L Note: “Lines” reflect new line structure; “Etc.” includes underwear/hosiery, nightwear, thermal underwear, neckwear, activewear, swimwear, licensed apparel, shorts, seasonal tops (sweaters, flannels), workwear, and outerwear.

Category Management is a Continuous Process Category review Category definition Category assessment Category strategy & tactics Category performance measures Plan implementation Organize product groups and offerings based on specific consumer needs and relevant business requirements Design category product hierarchy down to SKU- Level Conduct full value chain analysis of situation: Customers (profile, purchase behavior) Market (trends, share, prices) Competitor performance, strategies, and tactics Analyze financial metrics Performance vs. target Trends Conduct SWOT Analysis across portfolio Assign role for each category based on customer perspective Develop role- driven strategies Relate to Pentagon and Triangle Brand strategy Product/ sourcing strategy Marketing/ pricing/ promotion strategy Assortment strategy SSF allocation Visual merchandising strategy Create balanced score card Specific and measurable Gain consensus on ratios and measurements Review score card consistency with Company strategy Role of categories Role of suppliers Horizontal function goals (e.g. brand management, CRM, marketing) Draw detailed action plans based on category roles and strategies Line strategies Receive approval from management Strategic fit with company's overall business plan Attainability of objectives and goals Potential conflicts Coordinate with suppliers Align organization and assign responsibilities Outline a critical path timeline

The CM category assessment includes a full value-chain analysis of both internal and external data Customer Competitor Financial Data: Draw Cross-shop Target Segments Attribute importance Performance vs. competitors Purchase occasions Brand strength Overall financial performance Market share/growth Productivity Space allocation Assortment Brand strategy Product strategy Visual merchandising Pricing / promotion Marketing / advertising Productivity (GMROI, GMROF) Category financials Brand financials Assortment level financials Market analysis Sample questions: Who are our customers? How and why do they shop at Mycompany? How do they view Mycompany? What are our competitors’ strategies? What are the best practices? How is our financial performance? What is our full potential?

Category Management is a Continuous Process Category review Category definition Category assessment Category strategy & tactics Category performance measures Plan implementation Organize product groups and offerings based on specific consumer needs and relevant business requirements Design category product hierarchy down to SKU- Level Conduct full value chain analysis of situation: Customers (profile, purchase behavior) Market (trends, share, prices) Competitor performance, strategies, and tactics Analyze financial metrics Performance vs. target Trends Conduct SWOT Analysis across portfolio Assign role for each category based on customer perspective Develop role- driven strategies Relate to Pentagon and Triangle Brand strategy Product/ sourcing strategy Marketing/ pricing/ promotion strategy Assortment strategy SSF allocation Visual merchandising strategy Create balanced score card Specific and measurable Gain consensus on ratios and measurements Review score card consistency with Company strategy Role of categories Role of suppliers Horizontal function goals (e.g. brand management, CRM, marketing) Draw detailed action plans based on category roles and strategies Line strategies Receive approval from management Strategic fit with company's overall business plan Attainability of objectives and goals Potential conflicts Coordinate with suppliers Align organization and assign responsibilities Outline a critical path timeline

Category Management is a Continuous Process Category review Category definition Category assessment Category strategy & tactics Category performance measures Plan implementation Organize product groups and offerings based on specific consumer needs and relevant business requirements Design category product hierarchy down to SKU- Level Conduct full value chain analysis of situation: Customers (profile, purchase behavior) Market (trends, share, prices) Competitor performance, strategies, and tactics Analyze financial metrics Performance vs. target Trends Conduct SWOT Analysis across portfolio Assign role for each category based on customer perspective Develop role- driven strategies Relate to Pentagon and Triangle Brand strategy Product/ sourcing strategy Marketing/ pricing/ promotion strategy Assortment strategy SSF allocation Visual merchandising strategy Create balanced score card Specific and measurable Gain consensus on ratios and measurements Review score card consistency with Company strategy Role of categories Role of suppliers Horizontal function goals (e.g. brand management, CRM, marketing) Draw detailed action plans based on category roles and strategies Line strategies Receive approval from management Strategic fit with company's overall business plan Attainability of objectives and goals Potential conflicts Coordinate with suppliers Align organization and assign responsibilities Outline a critical path timeline

Performance targets are assigned to every category based on several factors Alternatives Relevant factors Maintain performance in current role Improve performance in current role Target performance consistent with a different role Category Role Traffic Builder, Impulse, etc. Competitor and industry environment Growth, trends Relative market shares Customer/market context Target segment opportunities/threats Loyalty Capabilities Related products Brands Mycompany National/Private Management capabilities