1. Category Management Case Study
Based on ECR Taiwan
Category Management Pilot Project

2. Case Study Agenda Objectives of the Case Study
Category Management Model
Work through the Cat Man Process, (Scorecard & Tactics)
Write a Category Plan

3. Objectives of the Case Study
Understand the Category Management Model.
Understand the linkage between the Steps in the Model by working through Cat Man Process.
Understand Practical Application of Category Management by Agreeing a Category Plan.

4. This Case Study Is the International Process.
Is based on real SKU’s and market, but Data detail is changed for confidentiality.

5. International Category Management Model
Shelving
Role
Definition
Assesment
Scorecard
Strategies
Tactics
Implementation
Review
Assortment
Pricing
Promotion

6. Handout Material - Pages 3 & 4
Category Definition
Category Role
(These are generally agreed by Supplier & Retailer management in advance.)

7. Category Definition & Structure
Pretreater
Cleanser
Fabrics
Care
Fabrics Cleanser
Fabrics-
Conditioner
Bleach
Main Wash
Delicate Wash
Rinse Softener
Ironing
Aids
Normal
Color
Conventional
Concentrate
Heavy Duty Liquid
Light Duty Liquid
Fabric Care

8. Case Study Focus - Fabrics Concentrate
Conventional
Main Wash
Concentrate
Fabrics Cleanser
Heavy Duty Liquid
Delicate Wash
Light Duty Liquid
Rinse Softener
Fabrics
Care
Ironing
Aids
Fabrics-
Conditioner
Normal
Bleach
Color
Pretreater
Cleanser

9. Category Role
Signature /Destination
Priority
Basic / Routine
Occasional/Seasonal
Fill-in / Convenience
The Category is Priority because of it’s importance to Sales and Profit, plus it’s competitive importance.

10. Category Assessment
What is the current performance of the Category and Segments?
How does the performance compare to the Market?
What are the Opportunities for Improvement?

11. Category Assessment (Page 5)
Loss of Share
Worse than Total
Retailer Sales
Profit Maintained

12. Category Segment Assessment (Sales)
Under-performing Segments

13. Category Segment Assessment (Profit)
Clear Opportunities for Improvement

14. Category Assessment (Retailer Performance in Market)
Size of Bubble equals Size of Segment
Opportunity Gaps (LH)
Winners (HH)
Questionable (LL)
Sleepers (HL)
Only one clear “Winner” segment,
(and it’s small).

15. Category Assessment (Four Largest Segments)
Opportunity Gaps (LH)
Winners (HH)
Questionable (LL)
Sleepers (HL)
…but, Clear opportunities to Increase Sales!

16. Category Scorecard
What are the overall “Top Line” targets for the Category?
These must be discussed and agreed with the Senior Management.

17. Category Scorecard (Page 8)
Overall Management Goal for the Category
$448.6m
5.3%
$35.0m
7.8%
This is 16.5% growth, but this Retailer wants
Growth & Market Share.

18. Segment Scorecard (Page 9)
Repeat the exercise for each Segment.
$120.0m
5.3%
$4.9m
4.1%
Should we try and retain share in Segments with more
than “Fair Share”?
DEFINITELY YES!
But not at the expense of Margin!

19. Category Strategies (Page 11)
We assign different Strategies to each Segment
to ensure we have a balanced Business Plan.

20. Category Strategies (Page 11)
Balanced Profit.
We use a different mix of Strategies,
for each Category Role.

21. Assign Strategies to Segments. (Page 12)
Segments with high shares are used for Profit
Generation.
High Unit price and “Related Sale” segments
are used for Transaction Building.

22. Category Tactics.
Based on the Role, Scorecard and the Strategies, we now confirm the Tactics to use in each area;
Ranging
Pricing
Promotion
Shelving

23. As a PRIORITY Category, we should stock a BROAD RANGE of SKU’s.
Ranging Tactics
As a PRIORITY Category, we should stock a
BROAD RANGE of SKU’s.

24. As a PRIORITY Category, we should adopt STRONGLY COMPETITIVE pricing.
Pricing Tactics
As a PRIORITY Category, we should adopt
STRONGLY COMPETITIVE pricing.

25. As a PRIORITY Category, we should adopt
Shelving Tactics
As a PRIORITY Category, we should adopt
QUALITY location, with a slightly higher
than average space allocation.

26. As a PRIORITY Category, we should BUILD
Promotion Tactics
As a PRIORITY Category, we should BUILD
sales volumes, using Major Brands and SKU’s.

27. Strategic Summary
Page 15 in the handout summarises what is agreed so far.
This is the Blueprint for managing the Category.
This is the reference for ALL actions and decisions as we work through the operational detail of the Plan.

28. Segment Ranging Review (Concentrates)
Page 16 details the SKU’s available in the market, what is stocked in the Retailers channel, the Retailer, and his Competitors.
Note that Competitor 1 has 19 SKU’s.
Is this too broad?
How much of the market is covered by the existing 14 SKU’s?

29. Segment Ranging Review (Concentrates)
Page 17 ranks the SKU’s by sales share for comparison between the Retailer and the Market average.
Note that 15 SKU’s covers 95% of the market.
3 SKU’s, (9,11,&12) are not stocked.
The retailer’ lowest 2 SKU’s are poor performers in the market.

30. Ranging Recommendation
Wulin 1.2k Primary
LanPao Con 2Kg
Color Care Con 1.2k Primary
2.6%
1.6%
1.5%
+3.09m
+1.90m
+1.78m
Wulin Con 1 Kg Refill
Tide Con. 39oz / 42oz
0.4%
0.1%
(0.47m)
(0.11m)
+6.19m
Additional Annual Sales of $6.19m,
5.3% increase on this year,
5.46% Market Share

31. Segment Promotion Review (Frequency)
Page 18 details the Promotion Frequency,Type and Price Point for the Retailer and his Competitors.
Note the difference in Frequency and Mix

32. There is no “perfect” answer! Clearly the “mix”
Promotion Frequency % % % % %
There is no “perfect” answer! Clearly the “mix”
needs adjusting to be competitive. Aligning
Brand Frequency to market share is a good start!

33. Segment Promotion Review (Price Point)
Page 19 outlines the
current Price Point
differential between
the Retailer and his
Competitors.
Almost all promotion
price points are higher
than the competitors.

34. Promotion Review Impact
In most cases, Price Elasticity and On-Sale Mix are not well understood. The recommendation is ESTIMATE the impact, and MEASURE the Actual Result for input to the next review.

35. Segment Pricing Review
Page 20 details the current pricing for the Retailer, and his Competitors.
While the Retailer is competitive against Comp 1, (a high/low retailer), he is not competitive on shelf for the major components of the segment.

36. ALL prices now competitive,
with NO margin loss!

37. Shelf Placement Review
Programs such as “Spaceman” and “Apollo” assist greatly.
Key elements are
Balancing “Days of Supply” on shelf.
Using Minimum Facings Rules and Maximum DOS to recommend deletions.
Allocating any “spare” space to SKU’s that support the Segment Strategy.

38. Balance the Plan
Each Tactical Decision has produced a change in Sales & Profit.
Add up the value of each change and compare with the original targets in the Scorecard section.
Adjust the plans.
Agree with Management that the result is acceptable.

39. Implementation.
Communicate the Objectives, Targets and Strategies to EVERYONE involved in implementation.
Set and AGREE implementation timing.
Do tests in-store for shelving changes.
Check, check, check that agreed actions happen!

40. REMEMBER: Category Management is a Process, NOT a task!
Review
After a reasonable period of time;
Check actual results against plan.
Analyze and understand variance to plan.
Start the process AGAIN by reworking the Category Assessment, and either confirming or revising the Category and Segment Targets.
REMEMBER: Category Management is a
Process, NOT a task!

41. Case Study Result