category management ac nielsen
TRANSCRIPT
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1Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Consumer-Centric Category Management
Presented by Samir Bhaloo 27th April 2006International Business Consulting Manager, ACNielsenACNielsen Consumer 360 Norway, Simplifying Complexity
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
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
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
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
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Category Management is...
● 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
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Initial Eight-Step Category ProcessM
onito
ring
Obj
ectiv
es
1 - Category Definition
5 - Category Strategy
6 - Category Tactics
Implementation Program
2 - Category Role
Readiness
4 - Category Scorecard
3 - Category Assessment
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
In reality meant...
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
The process was integrated into the business
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
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
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
The evolution of Category Management
● Early 1990’s focus on data, forgot about the consumer
● Late 1990’s, 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
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
When a consumer purchases a category, consciously or sub-consciously, they are making decisions based on a number of choice alternatives
BrandPack Size
Flavour Diet vsNon-diet
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Consumer-Centric Category Review
Category Definition
Consumer Decision Tree
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
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
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Consumer-Centric Category Review
Demand Clustering
Demand Clustering is where Consumer Centric Category Management sets itself apart from the traditional methods. This
is where unique consumer groups are
identified and located and then stores are clustered to serve them based on future demand potential
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Assessment
Assessment
Choose store clusters with largest upside potential.
Quantify the opportunity by evaluating potential sales (based on consumer fit)
vs. existing sales. Clusters based on
demand gapping, which uses consumer demand
and demographics to quantify opportunity gaps based on store size and
sales potential
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
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
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
The Million Dollar Case Study: Step 1
Category Definition Category Review conducted for Cereals category.
Joe’s Foods defined the category to be reviewed and identified the
sub-categories.
The following segments were reviewed:- ready-to-eat; hot;
granola and natural; wheat germs and (hominy grits) oats
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
The Million Dollar Case Study: Step 2
Consumer Decision Tree
For Joe’s Foods, the first decision was that the consumer wanted to
buy cereal
The next decision was the type of cereal to buy. The “cereal type”decision is made before other
considerations like brand and size
Joe’s Foods current planogram had been developed based on brand
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
The Million Dollar Case Study: Step 3
Joe’s Foods used demand-based clustering to identify and locate
unique customer groups, clustering stores to reflect those
groups. Using Spectra’s Lifestyle/Lifestage Grid, several
unique groups of customers emerged
Demand Clustering
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
The Million Dollar Case Study: Step 3
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
The Million Dollar Case Study: Step 4
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
Assessment
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
The Million Dollar Case Study: Step 4
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Tips and Tricks - 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?
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
The Million Dollar Case Study: Step 5
Item Strategies are developed for each cluster. In this case, the high-, middle- and low-income clusters all have different “turf”
items.Item Strategies
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
The Million Dollar Case Study: Step 6
Once the item strategies for the category have been identified for
each cluster, the category role can be easily determined for each
clusterCategory Role
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
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
groupsImplementation stage has to added
dimension of keeping track of which strategies are to be applied
at which stores
Tactics
Scorecard
Implementation
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27Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Tips and Tricks
Simplifying Complexity
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Who are you talking to?
● The monkey or the organ grinder?● The decision making process appears to be getting longer,
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, Jan 28 2006)
● And more worryingly 32% believe 6 or more are involved(Source: Grocer Magazine, Jan 28 2006)
● Both are up significantly
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Fast Track Approach
Consumer: Targeting, Purchase hierarchy,
behavior etc. Retailer: Objectives,
strategy, 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.
Use account / cluster / store level
data to create detailed plans
Research
111
Formulate“Blueprint”
222
CreateMaster
333
CreatedDetailed
444
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Consumer: Targeting, Purchase hierarchy, behaviour etc.Retailer: Objectives, strategy, current approach
• Meal occasion• End use• Formula• Brands• Size• Price position• Recipe/flavor• End user• Format
Examples of category
segmentation parameters
CategoryCategory SegmentSegment Sub-SegmentSub-SegmentSub-CategorySub-Category
111
ResearchPurchasing Habits
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
What is Eye Level?
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Example of a Blueprint (generic)
Section 2. What is …
Template / guide to layout based on consumer researchFormulate “Blueprint”
222
TBCTBC
TBCTBC
CategoryCategory
TBCTBC
TBCTBCTBCTBC
TBCTBC
TBCTBC TBCTBC
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
● 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)
Formulate “Blueprint”You must know your store
222
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
Example of a Planogram
Section 2. What is …
Create MasterUse lowest level data to define SKU level approach
at total trade channel level or customer level, ideally at store cluster level
333
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business
●What are the different fixture types?
●What are the different fixture sizes?
●What are the different fixture dimensions – height, width, depth of base, segment,
shelves, pegs, etc.; spacing between shelves, etc.?
●What is the replenishment cycle of the fixture?
Create Detailed
444
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ACNielsen Consumer 360, “Simplifying Complexity”Samir Bhaloo, International Business Consulting Manager
Confidential & Proprietary ● Copyright © 2006 ACNielsen ● a VNU business