1 PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007 Category Management PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007 CV Martin vom Stein Studies: • 1996: University Saarbrücken, Germany, Master in Business Administration • 2005: Management Development Programme (PDD), IESE, Barcelona Professional: • 1996: Sales Representative at Henkel Ibérica • 1997: Brand Manager, Marketing Dept. at Henkel Ibérica • 1999: Category Manager, Sales Dept. at Henkel Ibérica • 2000: International Category Manager, Henkel Germany • 2002: Director CM, Sales Dept. at Henkel Ibérica Personal: • Married, 1 daughter of 2 ½ and 1 son of 5 months
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
CategoryManagement
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
CV Martin vom Stein
Studies: • 1996: University Saarbrücken, Germany,
Master in Business Administration• 2005: Management Development Programme (PDD), IESE, Barcelona
Professional: • 1996: Sales Representative at Henkel Ibérica• 1997: Brand Manager, Marketing Dept. at Henkel Ibérica• 1999: Category Manager, Sales Dept. at Henkel Ibérica• 2000: International Category Manager, Henkel Germany• 2002: Director CM, Sales Dept. at Henkel Ibérica
Personal: • Married, 1 daughter of 2 ½ and 1 son of 5 months
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Agenda
Introduction• Evolution of the FMCG sector• Determinants of the FMCG sector
Definition of Category Management• Concept and application in the FMCG sector
Explanation of the Category Management process• The 8-step model
Latest trends and evolution of Category Management
CM Measurement
Learnings, Q&A
Case Study
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
1. Introduction
3
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
What do we know about Category Management ?
(Open round contributions)
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
What do we know about Category Management ?
ECRAssortmentPlacementPromotion
Price
Shopper
Collaboration
Globalisation CRM
Trade Marketing
FMCG
Manufacturer and RetailerPOS Data
EAN
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
The FMCG market
The primary characteristic is the existence of 4 entities in the market:
Consumer Shopper
Retailer Manufacturer
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
What does the consumer do ?
The consumer looks for convenience:
• Not perceivable: • Satisfy subjective and objective needs• Immediate fulfilment of a desire• Time management
• Perceivable: • Conveniencie in the use of a product• Healthier and more wholesome products• Products adapted to age (society is ageing)• Innovation
• The consumer decides the products he wants depending on qualitative andquantitative criteria
5
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
What does the shopper do ?
The number of visits declinesHe spends more
He looks for the most economic
2,10,2
2.0
17,4
2,4
21,3
26,4
2,21.0
3,6
7.6
1,8
24,5
29,8
0,80,11.0
11,8
1.0
12.013,5
0
3 5
Buys at discount chainsBuys PL
Western Europe‘Big-5’
Other WesternEurope
Central/EasternEurope
U.S. ChinaAsia-Pacific Latin America
Food & beveragesHousehold carePersonal care
Shopping trips PL Share per region
• The shopper determines the turnover of the FMCG sector, but is more and more selective in his attempt to optimise the quality of life / price ratio
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
What does the retailer do ?Concentration, but still very national
Turnover in Bn. € Nº of countries per retailer
• The FMCG sector generates 3.700 Bn. € in turnover, but WalMart only achieves a 7,0 % share of it in few countries
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
What does the retailer do ?
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
• In general, manufacturers are more international, but the big retailers achieve a far bigger turnover than they do
Concentration, but they lose weight in comparison to retailers
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
The conflict between retailer and manufacturer
• Due to the negotiation power of the retailer, they achieve more and more of the total profit, but due to the competition amongst them, the consumer needs lessand less of his total spending power for FMCG products
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
MAT SEPT. 2004 MAT SEPT. 2005 Source: TNS Distribution 2005
Example: Distribution landscape in Spain
Hypermarkets
18,3 %Top 4 = 93 % WD
Supermarkets
16,9 %Top 12 = 53 % WD
Discount
14,1 %Top 4 = 99 % WD
Mod. Drug.
29,7 %Top 8 = 69 % WD
• It is very difficult to achieve a high level of distribution due to the fragmentedretail market in Spain
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
50 %Día
20 %Mercadona
70 %Mercadona
• The supermarket channel is fuelling market growth, mainly due to the expansionof discount chains like Mercadona and Día
• The Modern Drugstores also experiment higher growth
Source: Nielsen Bi-monthly 2005
41,3
2,5
8,8
13,0
17,0
23,526,8
8,4
41,5
2,3
8,1
12,5
18,6
23,826,8
7,9
42,2
2,1
8,011,9
20,223,5
27,0
7,3
1,6
7,2
5,1
15,7
1,4
6,3
4,0
8,5
Cum Super Supers < 100 m Supers 100 -400 m
Supers 400 -1000 m
Supers > 1000m
Hypermarkets Moderndrugstores
Trad. Drugstores
MAT 2003 MAT 2004 MAT 2005 Evol.
Example: Channel evolution in Spain
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
The beginning of FMCG Marketing
In the consumer goods distribution market, everything began to get more complicated when a new business model was created by reducing the valuechain in the 30s: the sales person is taken away!
Today, models that reduce the supply chain are once again fashionable: • Discount• Ikea• Zara (“lost fashion”)
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
What is this all about?
E E E
E
E E E
E
E E
E E
Attraction
Convenience
Complication
• If someone should buy, make it attractive, if we want him to be informed, make it convenient, if we want him not to come back, make it complicated!
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
… but this is pure logic, isn’t it?Yes, but…
Domino
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Hide-and-seek MemoryFree-climbing
… but this is pure logic, isn’t it?Yes, but…
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
3 reasons why the logic fails
Strict rules for small things, lack of orientation for the big ones• Departmental view in the store• Aisle responsibles copy each other• Many actors at the same point (various manufacturers and retailer)
The traditional is applied to something that has already changed• Category development (for example: you do not look for a yoghurt any more), new
payment and charging systems, personalised service, but automatical• Example: first supermarkets online do not charge transport
We are framed by the short-term commercial spirit• The “quick-pick” client => many decisions like in the stock market, you never know if you
took the right one => but after-sales impression is key• The trade terms and conditions of the distributors today produce irrational decisions due
to their “financing” effect• It’s better to think of charing at the check-out than of the shopper as a strategic asset• Example: Internet => the first visit decides whether you will come back or not
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
A propósito “espíritu comercial”Definición de una marca
Philip Kotler: “A brand, be it a name, a commercial brand, a logo or other symbol, is
essentially a promise of the selling part to consistently facilitate a conjoint of characteristics, benefits and services”
These characteristics include, in the case of Mass Market, the retail price• This is one of the main reasons for the debacle in the industry, because the
only way for a retailer to gain margin according to his size of business, hisadvertising effort etc. are the annual negotiations
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
1950
“Consumer Marketing”
Manufacturernational
Retailerlocal
Consumer
lists allproducts
distributes tofragmented
Trade
PUL L
Med
ia
“Buy me!”
1980
“Consumer Needs Marketing”
Manufacturermultinational
Retailernational
Consumer
lists allproducts
diversifies portfolioand distributes
to Trade
PUL L
Med
ia
“Buy this specific product for you!”
1995
“CustomerMarketing”
Manufacturermultinational
Retailermultinational
Consumer
sells similar products anddiscovers shopper needs
to convince Trade
PUS H
Con
sum
erpr
omo t
ion
“Buy one get one for free!”
PUSH
Trad
epr
omo t
ion
Shopper
selects top products
PULL
Med
ia
seeks best offer
2010
?
The evolution of FMCG Marketing
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Manufacturer
Retailer
Shopper
Consumer
• More concentration• More umbrella brands
• Strategic alliances• Reduction of sales force
• POS Management• 1to1 Marketing
• More concentration• Positioning consumer• Discount boom
• Assortment reduction• Price and place• More chain development
• Convenience (place, service)• Better selection, not wider
• Information through internet• Customised offer
• Expenditure reduction
• Top brands or price• Innovation
• Convenience in usage• Media coverage more expensive
Major trends
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
“Customer Management”
Manufacturermultinational
Retailermultinational
Consumer
Develops umbrella brandssatisfying all major
consumer needs throughfocussed consumer /
shopper investigation andhelps retailer to composethe correct assortment
PAR T
NER
ING
Cons
u mer
/ Sh
opp e
rin
vest
igat
ion
“Get what you expect by chosing ‘your’ ideal retailer!”
PUSHChannel benefits + promotion Shopper
PULLMedia +
Information (Internet)
Consumer needs investigation
POSIntegrated communication
platform
Shopper needs investigation
Chooses shopping typesolutions
Chooses brandsolutions
A new business model
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
• A fierce competition in the market with many multinationals on both the retailer as well as the manufacturer side
• 2 industries serving the same final client, the “consumer”• The war for the consumer at the moment only knows one front: the price• In the end: the consumer wins
Summary introduction
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
2. Category ManagementDefinition
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
4 P’s
Product Price
Place Promotion
Introduction
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
1st problem: You have to do it twice!
Introdcution
Retailer
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
Consumer
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
2nd problem: You will never know the reality aboutyour consumers! You have to guess…
Introduction
Consumersssss
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
3rd problem: Space costs money!
Introduction
Marca A
4 P’s
ProductProduct PricPric
PlacePlace PromoPromo
Marca A
4 P’s
ProductProduct PricPric
PlacePlace PromoPromo
Marca B
4 P’s
roductroduct PricePrice
PlacePlace PromotionPromotion
Marca B
4 P’s
roductroduct PricePrice
PlacePlace PromotionPromotion
Marca C
4 P’s
ductduct PricePrice
aceace PromotionPromotion
Marca C
4 P’s
ductduct PricePrice
aceace PromotionPromotion
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
4 P’s
ProductProduct PricePrice
PlacePlace PromotionPromotion
Category Management manages space!
Space in the consumer’shead
Space in the consumer’swallet
Space in the shelfSpace in the P&L of the
retailer and the manufacturer
Introduction = Management Summary
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Unpredictableconsumer
Saturatedmarkets
“Fierce”competition
Retail pricedecreases
Reduction ofconsumer spent
Legislativeregulation
Time pressurein the market
Economiesdon’t grow
Determinants of distribution
• We have to find integrated solutions between manufacturers and retailers
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
... ECR is the solution!
The current situation …
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Category Management is part of the ECR movement …
What is Category Management ?
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
The objective of Efficient Consumer Response (ECR) is
to find ways to create the environment and the tools
that allow retailers and manufacturers to work
together more effectively and efficiently and thus be
able to supply the consumer with a superior value in
products and services.
Definition ECR
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
In all markets there are attempts of collaboration between manufacturers and retailers to achieve higher efficacy
The first standardised model * of
Efficient Consumer Response (ECR)
is documented in the USA in is documented in the USA in FMI / The Partnering Group (Brian Harris)(Food Marketing Institute - Standard for CM)
*) Origin: Cooperation of P&G and Wal Mart on the Supply Side
How did ECR start ?
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Demand Management
Demand Strategy & Capabilities
Optimize Assortements Optimize Promotions
Optimize New Product Assortements Consumer Value Creation
EnablersCommon Data &Communication
Standards
Cost/Profit And ValueMeasurement
IntegratorsCollaborative Planning
E-BusinessBusiness to Business
Supply Management
Supply Strategy & Capabilities
ResponsiveReplenishment
Integrated DemandDriven supply
OperationalExcellence
The elements of ECR
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Demand Management
Demand Strategy & Capabilities
Optimize Assortements Optimize Promotions
Optimize New Product Assortements Consumer Value Creation
Demand Management
Demand Strategy & Capabilities
Optimize Assortements Optimize Promotions
Optimize New Product Assortements Consumer Value Creation
EnablersCommon Data &Communication
Standards
Cost/Profit And ValueMeasurement
EnablersCommon Data &Communication
Standards
Cost/Profit And ValueMeasurement
IntegratorsCollaborative Planning
E-BusinessBusiness to Business
IntegratorsCollaborative Planning
E-BusinessBusiness to Business
Supply Management
Supply Strategy & Capabilities
ResponsiveReplenishment
Integrated DemandDriven supply
OperationalExcellence
Supply Management
Supply Strategy & Capabilities
ResponsiveReplenishment
Integrated DemandDriven supply
OperationalExcellence
The elements of ECR
CategoryManagement
Supply Chain Management
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Demand Management
Demand Strategy & Capabilities
Optimize Assortements Optimize Promotions
Optimize New Product Assortements Consumer Value Creation
Demand Management
Demand Strategy & Capabilities
Optimize Assortements Optimize Promotions
Optimize New Product Assortements Consumer Value Creation
EnablersCommon Data &Communication
Standards
Cost/Profit And ValueMeasurement
EnablersCommon Data &Communication
Standards
Cost/Profit And ValueMeasurement
IntegratorsCollaborative Planning
E-BusinessBusiness to Business
IntegratorsCollaborative Planning
E-BusinessBusiness to Business
Supply Management
Supply Strategy & Capabilities
ResponsiveReplenishment
Integrated DemandDriven supply
OperationalExcellence
Supply Management
Supply Strategy & Capabilities
ResponsiveReplenishment
Integrated DemandDriven supply
OperationalExcellence
The elements of ECR
All communication standards that enable manufacturers and retailers to achieve superior profitability and efficiency through a framework of co-operation.
All methods and media used by manufacturers and retailers to integrate their IT systems and facilitate the communication flow.
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
PerformanceMonitoring
CollaborativePartnership
OrganizationalCapabilities
Information-Technology (IT)
BUSINESSPROCESS
STRATEGY
Key components
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Organisational alignment of the retailer and the manufacturer through multifunctional teams with a single interface that jointly define strategies which reduce inefficiencies and achieve category growth at the client (= Organizational Capabilities)
Joint analysis of relevant data to detect potentials and evaluate the achieved results (= Performance Monitoring)
Co-operation in the implementation to achieve the definied objectives with a collaborative attitude of both sides(= Collaborative Partnership)
Development and implementation of common methods and procedures to facilitate the exchange of information(= Information Technology)
The principles of collaboration
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
A cultural change from
CONFRONTATION
AD
MIN
ISTR
ATI
ON
AN
D S
YSTE
MS
MA
RKET
ING
SALESMAN
LOG
ISTI
CSA
ND
D
ISTR
IBU
TIO
N
MER
CHA
ND
ISIN
G
PURCHASER
MA
RKETING
INVEN
TORY A
ND
TRAN
SPORT
SPACE
MA
NA
GEM
ENT
AD
MIN
ISTRATIO
NA
ND
SYSTEMS
CO-OPERATION
SALESMAN
MARKETING
LOGISTICS
ADMINISTRATION
PURCHASER
MARKETING
LOGISTICS
ADMINISTRATION
TO
The principles of collaboration
22
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
„Category Management is an evolutionary management
concept operating function-wide. It leads to more
effectiveness and efficiency throughout the supply chain
by a better knowledge about consumer needs.”
Definition Category Management
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Definition category:A category is a distinct, manageable group of products that consumers perceive to be substitutable in meeting a consumer need. Some categories can be divided by in sub-categories, which identify complementary groups of products that all satisfy the same overall consumer need (i.e. Shampoo, Conditioner and Treatments).
A category consists of sub-ordinate segments:
Definition segment:A (sub-)group of products within the same category, which is clearly recognisable by the consumer, relevant for the consumer and forms one or more level(s) of the purchase decision tree.Segments are dynamic and may vary by country or channel.
2 basic concepts of Category Management
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
* Based on: Best Practices Report / ECR Europe
BUT: It is not a project to improve categories!
retailer/supplier (business) process of managing categoriesas strategic business units, producing enhanced business results by focusing on delivering consumer value
concept of closer, long-term co-operation between retailerand manufacturer
The CM process
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Philosophy = Integrated co-operation
Model = transparency + efficacy
Tools = data base, Consumer Panel data, spacemanagement
Information = triggered by data = market environment
Organisation = “independent consultants”
Key factors of Category Management
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
MANAGEMENT of CATEGORIES
1. Planning
2. Execution
3. Measurement
Products in competitive environment
Marketing-Mix
Distribution and rotation
Shopper and consumer
How to exploit business potentials together toimprove customer satisfaction?
What does Category Management imply ?
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Manages the portfolio at his client through a transformation process of the overall marketing-mix into a customised marketing plan for the client
DISTRIBUTION and ROTATION
Internal External
Develop the business via a directrelationship with our clientscollaborating in a categorymanagement process
Develop the business in co-operationwith other departments within the company (Marketing, Trade Marketing, Sales)
La misión de la GpC para un fabricanteWhat does the manufacturer do ?
25
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
BMProcess
BMProcess
SalesProcess
SalesProcess
ClientProcess
ClientProcess
Distrib.Process
Distrib.Process
Inlet Outlet Shopper Consumer
... but the business is generated by the shopper in the store
Brand Management specialises in the role of a client as a consumer
Sales specialises in the distribution towards the client
Internal business process:
How to adapt internal processes ?
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
SalesProcess
SalesProcessSalesProcess
SalesProcess
ClientProcess
ClientProcessClientProcess
ClientProcess
Distrib.Process
Distrib.ProcessDistrib.
Process
Distrib.Process
Inlet Outlet Shopper Consumer
Marketing-Mix has to address these variables
“Only a shoppercan lead us tothe consumer”
2. Rotation(assortment in store)
1. Distribution(launches)
Focus of the CM process
26
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Increase Market sharefor his stores
Increase Market sharefor his products
Retailer =chains
Manufacturer = marcas
= or ≠... has to be overcome by more integration!
Conflict between manufacturer and retailer
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
CMProcess
Integrated process = VALUE CHAIN
The task of CM: to be the integrators!!!
BMProcess
BMProcess
SalesProcess
SalesProcess
ClientsProcess
ClientsProcess
Distrib.Process
Distrib.Process
Inlet Outlet Shopper Consumer
The optimised process
27
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Why Category Management and Key AccountManagement
• To better understand the point of view of the retailer / manufacturer
• To be able to “sell” the service of our organisation towards the client to his main contact
• To find common and quantitative criteria between the retailer andthe manufacturer => collaborative model• To have a common language to increase the levers of the business
• To develop the portfolio with a strategic orientation towards the client and his potentials
• To adopt a balanced mix of measures and activities at the clientwithout endangering the total business
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
POSITIVENEGATIVE
KAM
Retailer
This is the product!This is the price!This is the listing fee!These are the promotions!
KAM
Retailer
We are talking about your cosmetics business...One of the most important categories within cosmetics are deodorants...Consumers in this category search for...Shoppers in this category search for...Your problem in this category compared to your competitors is...Our new product solves this problem, because ...
Análisis categoría
Análisis cliente
Análisis marca
Surtido
Example in Sales
28
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Cross-categorycompetenceof retailer
= horizontalvision
Specific categorycompetence ofmanufacturer
= vertical vision
Retailer Category 1 Category 2 Category 3
Chain A
Chain B
Chain C
Why is collaboration possible ?
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
The same client in different roles
Clientof products / brands
from suppliers
Final client
Clientin channels / chains of
retailers
“Shopper”“Consumer”
Focus on the final client
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Market position
Organisation
Why do we need Category Management ?
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
• If we have a dominant market position, we truly do not have tonegotiate with nobody
• If we have a weak position, it will be difficult that channels withless assortment will take us into account
Why the market position ?
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
• Depending on the “natural evolution” of the organisation and the split between functions like Marketing, Trade Marketing and Sales there might be a historical need to overcome the departmentalbarriers
• Marketing: the “tunnel” vision of the Brand Manager• Trade Marketing: lack of orientation towards the client potential per category• Sales: sell the easy things, not what really develops the business in the long
run
Why the organisation ?
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Factors that influence the organisation of CM
• The resources necessary for an effective CM work in the organisation of a manufacturer depend on 4 key factors:
• Complexity of the portfolio:
• Nº of categories, nº of SKUs, portfolio strength of competitors etc.
• Market position:
• Leader, important player, secondary brand etc.
• Distribution landscape / clients:
• Strong concentration vs. fragmentation (for example Spain vs. France)
• Organisational structure and competencies of the team:
• ¿ Is there an active management of the total portfolio on marketing level or do we
sell what we have to each client ?
• ¿ Does the sales force analyse the competitive situation at their clients or are they
focused on their sales target ?
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Objectiveness in CM as a manufacturer
• Category Management is, in first place, a joint project between a manufacturer and a retailer with a long-term orientation• The manufacturer selected by a retailer to run a CM project has to ask himself
2 questions:
• How will the retailer react if I take advantage of my position as a category captain
and the results stipulated will not be achieved ?
• What would happen in the category at the retailer if one of my competitors ran the
project instead of me ?
• Both questions have to lead the manufacturer to the conclusion that
objectiveness / neutrality are key to generate a sustainable profit out of
the project on a mid-term basis
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
4. Benefits of Category Management
• Demonstration of additional competencies towards the importantretailers
• Better “global” vision of the category due to the different focusthan the Marketing one plus access to important client data
• Knowledge of the consumer in the category allows us to improvethe argumentation line of new launches in front of the client
• Rationalisation of the global portfolio of the manufacturer
• Link / interface in the data transmission, information andknowledge between Sales and Marketing
• Better understanding of the POS and its importance as communication media for the shopper
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
• CM is a specific tool within the traditional marketing-mix for the FMCG sector due to the specialisation of the two entities manufacturer andretailer
• CM is part of the ECR (Efficient Consumer Response) movement, which is divided in the Demand and Supply side
• CM has the primary objective to reach more efficiency and satisfaction in the supply of the final client with goods and services
• CM is based upon a collaborative concept between manufacturers and retailers in which both parts contribute with their specific knowledge abouth the final client in his 2 roles
• The need of usefulness of CM for an organisation depends on its position in the market and its organisational structure
Summary definition Category Management
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
3. Explanation of the CM process
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Category Management is a process model for defining
and steering categories on
Channel level
The model is explained in the “Category Management Best Practices Report” published by ECR Europe.
to optimise the retailer’s performance.
Client level
Definition of the CM model
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
The model describes the 8 sequential steps in a CM project. It consists of the following parts:
The 8 steps of the model
Category Assessment
Category Tactics
Category Strategies
Category Scorecard
Category Role
Category Definition
PriceAssortment Placement Promotion
Plan Implementation + Review
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
1. An analytical part(category definition, category role, category assessment) in which the major areas of improvement for the category performance are established.
The 8 steps of the model
Category Assessment
Category Tactics
Category Strategies
Category Scorecard
Category Role
Category Definition
PriceAssortment Placement Promotion
Plan Implementation + Review
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
2. A strategic and tactical decision (category scorecard, category strategies and category tactics)
The 8 steps of the model
Category Assessment
Category Tactics
Category Strategies
Category Scorecard
Category Role
Category Definition
PriceAssortment Placement Promotion
Plan Implementation + Review
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
3. The analysis and implementation of the tactical plan, using methods and tools to for the placement in the store
The 8 steps of the model
Category Assessment
Category Tactics
Category Strategies
Category Scorecard
Category Role
Category Definition
PriceAssortment Placement Promotion
Plan Implementation + Review
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
• Score Card• Review
Project Agreement
Finally, the project is converted in a process through the continuous revision of the achieved results in a scorecard
The 8 steps of the model
Category Assessment
Category Tactics
Category Strategies
Category Scorecard
Category Role
Category Definition
PriceAssortment Placement Promotion
Plan Implementation + Review
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• General knowledge:• General market information• Corporate information• Brand roles
• Specific competencies:• Expertise in the general CM
process• Client-specific studies or
research• Specific marketing knowledge in
the distribution process
Requisites to manage the process
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
A clear definition of the category should be based on the perception of the consumer and replicate the different products of each segment. However, criteria like
- feasability- manageability and- clarity
have to be accounted for in each moment.
The category setting is the base for the precision of all decisions taken with the objective to be relevant for the consumer afterwards.
1. Category Definition
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
1. Category Definition
Definition category:A category is a distinct, manageable group of products that consumers perceive to be substitutable in meeting a consumer need. Some categories can be divided by in sub-categories, which identify complementary groups of products that all satisfy the same overall consumer need (i.e. Shampoo, Conditioner and Treatments).
A category consists of sub-ordinate segments:
Definition segment:A (sub-)group of products within the same category, which is clearly recognisable by the consumer, relevant for the consumer and forms one or more level(s) of the purchase decision tree.Segments are dynamic and may vary by country or channel.
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
1. Category Definition
Questions to answer:
What are the relevant categories ?What are the relevant segments ?What are the relevant products / brands in each segment ?
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
2 concepts help to define the category and its segments:
Hierarchy of needs: What does he need?Ranks the primary (= essential) and secondary (= optional) needsexpressed by the consumer of the category
=> Research: item batteries etc.
Decision tree: How does he buy it?Indicates the sequence of decisions made by the consumer consciously or inconsciously to finally purchase a specific product
=> induces the segmentation criteria=> Research: focus groups, shopper study
1. Category Definition
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Example: Hierarchy of needs – Hair colorants
1. Category Definition
0 20 40 60 80 100
Attractive
Easy to apply
Duration of desired colour
Compatibility with natural shade
Care for hair
Grey coverage
(Known) brand
(Economical) price
Natural ingredients
Attractive packaging
Others
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Example: Decision Tree – Hair styling
1. Category Definition
1. Precondition
2. Preference
3. Attitude
4. Preference
5. Performance Flexibility
• mousse• liquid
Hair type
Desired style
Consistency
Brand
Relevant levels of decision tree
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Group discussions
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Women, 16 – 25 years,Colorant users
Women, 28 – 39 years,Colorant users
Women, 40 – 65 yearsColorant users
Women, very interestedin colorant usage
16 – 65 años
Colorants (8 participants per group)
User structure: 12 Permanent6 semi-permanent6 demi-permanent
Non-users: very interested (high buying intention if person was better informed)
Users Potential users
Group setting
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
In-store studies
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
In-store investigation process
ObservationWith photo of the shelf, indicating the movements of the shopperTime, global behaviour
InterviewPurchase planning (planned vs. unplanned)Purchasing habits (frequency, search process etc.)Purchasing act analysis (vs. observation)Influencing factors in the purchasing actSpecific
E.g. comparison between stores / placementsBrand satisfactionPurchasing barriers etc.
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Dokumentation des Suchverhaltens:als erstes wurde beobachtetdanach ....
etc.
Geschäft: Verweildauer in Min/sec:Proband ID:Datum/Zeit:
+
Allgemeines Verhalten des Probanden vor dem Regal Besonderheiten (zusätzliche interessante Auffälligkeiten):Geht gezielt auf einen speziellen Regalbereich zu Schaut/geht vor dem Regal hin und her
.................................................................................................� ja � nein � ja, einmal � ja, mehrfach � nein
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
2. Category role at the client
• Depending on the overall assessment vs. Other categories and the channel benchmark, the importance of the category for the specific retailer is defined
• The selection of the category role determines in a definite way allactivities and their intensity from thereon
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Penetration
Loya
lty
• In this graph the potential roles for the category are displayed, while the definite roles for the retailer might be different
• Category roles are set per channel
• The decision should be revised once a year
2. Category role at the clientDefinite roles
Low Medium High
High Competence Destination Destination
Medium Convenience Routine Destination
LowOccasional /
SeasonalConvenience Routine
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
DestinationTo be the most important supplier of the category, which offers consistent and above average value to many consumers = preferred supplier
CompetenceTo be the most important supplier of the category, which offers consistent and above average value to an important target group. This target group perceives the retailer with high competence in the category.
RoutineOne of the preferred suppliers of the category, which supplies consistent and competitive value to the consumer.
Occasional / SeasonalOne of the important suppliers of the category, which positions the retailer among a relevant selection, as it frequently offers competitive value to the consumer.
ConvenienceOne of the suppliers of the category, which positions the retailer as a complete offer at good value towards the consumer.
2. Category role at the client
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Why do we have to analyse the category ?
The performance of a category in a country or distribution channel is shown by qualitative and quantitative indicators to determine the potential role of the category without taking the specific situation of the retailer into account.
Once the category is analysed on a global level, the client analysis is necessary to evaluate the current performance in the category, comparing it with the performance of relevant competitors and the channel (= benchmarking). This is how the potential of the client can be valued in the category to be exploited as well as establishing the differences regarding the global client strategy.
3. Category Assessment
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
The 4 perspectives of the Category Assessment
3. Category Assessment
Consumer Information
• Segmentation• Shopper profile• Shopper behaviour• Attitudes towards the category• Relevance of the category of total expenditure
Retailer Information
• Weight category, segment, brand, products• Evolution category, segments, brands• Penetration, loyalty, closure• Shelf space available• Margin• Procedures with PL• Logistical variables replenishment store
• Introduction new products / trends• Logistical data products• Logistical efficiency• Promotional plan
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
3. Category Assessment
Questions to answer:
What is the performance of the category and its segments• In the country• In the channel
What is the potential role of the category in the channel?What is the performance of the client regarding his global strategy?What are the relevant competitors for the client?What is the behaviour of competitors in the tactical aspects?What is the performance of competitors in the category?
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Importance of the category in
the channel
Position of the category in the
channel(potential role)
Data to be analysed in general:
• Total category turnover and by segment- In total market- In the channel
• Data ad-hoc research (p.e. group discussions, shopper studies etc.)
• Penetration, loyalty, intensity- per category- per channel
3. Category Assessment
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
3. Category Assessment
Data of the retailer to be analysed:• Switch of shoppers between different stores
• Nº of SKUs and shelf prices per client
• Shelf space and shelf organisation per category and client
• Shopper profile
• Price positioning
• Nº and type of promotions per category and client
• Purchasing frequency per client
• Client evaluation by shoppers (specific studies)
• Penetration and loyalty per shopper in the category
Competitivesituation
Tacticalbehaviour: Potential ofthe client
Clientassessment
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
rinses
shampooH-tonicstreatments
gel/cream/wax
spray/lacq
settings
colorants
perms
0
5
10
15
20
25
30
0 20 40 60 80
ø shopper expenditure: Buyers of the sub-category in the channel
PenetrationBuyers of the sub-category in the channel
øsh
oppe
r ex
pend
itur
e in
€
Penetration in %
3. Account Assessment
PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Example: Nº of SKUs per competitor
0
50
100
150
200
250
300
Client X Hyper B Hyper C Hyper D Drug. A Drug. B
3. Account Assessment
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PÓS-GRADUAÇÃO EM DIRECÇÃO COMERCIAL – KEY ACCOUNT MANAGEMENT | 2007
Alternative methods to do the account assessment:
1) Enquiry:• Similar steps than in the best-practice model
2) Use of alternative data:• Trade journals, publications, empirical data etc.