Category Management Plan Example: Assessment "WHY" Phase
Following the Assessment "what" phase of the CatMan 2.0 process is assessment "why." In the previous phase, we identified 5 findings that will go on to inform the Ice Cream category scorecard for Jones Grocery. The assessment "why" phase of the process is a recent addition to the CatMan 2.0 process, which captures the need to include the perceptual and attitudinal analysis to the category. In essence, the assessment "why" phase of the category management process should answer the question, "Why is the category bought?"
Assessment "why" analytics and tools
We are using all the tools from assessment “what” augmented by the following:
- Label Insight attribute data across multiple other categories
- NPD menu census data
- Mintel new product audit
- "Health in America" study
- Millennial attitudes
- Food Allergies in America, by the FDA
- Longitudinal study of Out-of-Stocks, by Colorado State University
Critical assessment "why" findings with high-order attributes
These critical findings will be used to drive the scorecard, category strategies, and tactics. Those underlined represent findings that were either directly or indirectly informed by high-order attribute data.
- Health concerns are driving changes in the category
- Lactose intolerance (allergy) is a larger issue than previously understood
- Hormones in food have a particularly negative attitude
- Protein is a desired plus in the ice cream category
- Out-of-stocks explain some Jones business trends
1. Health concerns are driving changes in the category
Pairing Label Insight high-order attributes with purchase data can unlock growth-driving insights that inform strategy. For example, Free-From Artificial Ingredient and All-Natural Ingredient ice cream products are driving accelerated growth beyond total category. Growing and emerging trends in this category highlight whitespace opportunities for category decision tree and scorecard innovations, which, in turn, help to enhance both product and category growth strategies.
"Good Source of Protein" is just one of a number of high-order attributes that are driving outsized growth in the ice cream category. Fiber is driving even more growth! What’s key here is understanding that it's not about one-off, edge-case attributes capturing growth, but having the visibility to understand that there are a number of attribute-driven buying trends delivering growth. It's also not about spotting a long-range trend around a single unique attribute; it's about understanding where growth is happening and where your existing product can tap in, as it's formulated and sits on the shelf today!
- The data is very clear:
- The health-oriented items are growing at greater-than-total category rates
- By definition, they are gaining share in the category
- Jones' somewhat weaker representation of these health-oriented items in your assortment helps explain why share in the category lags competition.
2. Lactose intolerance is a large and growing problem
The FDA publishes a bi-annual report of the incidence of various allergies in the U.S. Lactose intolerance has one of the highest levels of any food allergy. Moreover, it is growing. Part of that growth is probably attributable to an increasing awareness of lactose intolerance among the population, especially new mothers. Another reason is genetic. Some ethnic groups such as Asians, Hispanics, and Native Americans suffer high levels (75%+) of lactose intolerance. Therefore, the growing Asian-American and Hispanic groups are probably driving the growth of lactose intolerance.
The Label Insight data shows that lactose-free items are under-represented in the Jones assortment. This same Label Insight data shows that these “no milk” items are growing rapidly in the category. This probably explains part of Jones' under-performance in the category. One final thought: Lactose-free items comprise 7% of the fluid milk category. We might expect that the ice cream category would attain at least these same levels. These items are now at less than 2%, suggesting a major growth opportunity for Jones, which they might meet with a private label entry.
3. Hormones in food engender especially negative attitudes
Understanding an attribute's impact on growth across a number of categories or even the whole marketplace can provide a key advantage to the category management process. "Free-from artificial flavors" is one of a number of high-order attributes driving sales growth across the store. Being able to see the attribute in the context of the total marketplace is the unique power delivered by Nielsen Product Insider.
- Ice cream is no exception:
- Health concerns are driving changes in many categories.
- Hormones are one of those attributes which health-conscious shoppers want to avoid.
- Unfortunately, Jones Grocery has fewer “no hormone” items in its assortment and as a result, these items have a lower market share in Jones Grocery.
- This seems to explain, in part, why Jones' overall share in the category is below that of its share in other food categories.
4. Protein a desired plus in ice cream
The Label Insight data shows that the items in the “protein group” continue to grow strongly in the category. This should not surprise because:
- Data from multiple sources, including Mintel's new product report, show that products with added or that are high in protein are among the fastest-growing new products in multiple food categories globally, especially here in the U.S.
- Some data from the “Health in America” report suggest that many “indulgent” categories such as ice cream use “high in protein” as an inducement for health-oriented shoppers to consume the category.
- This is especially true of Millennials and Millennial mothers who are fixated on maintaining high levels of protein in their children’s diet.
- Not surprisingly, the Label Insight data shows that the “high in protein” ice cream items are under-represented in the Jones assortment and also have a lower share. This accounts for part of Jones’ weak performance in the category.
5. Out-of-stocks explain some Jones business trends
Modeling has shown that Jones’ ice cream category is unusually susceptible to out-of-stocks. Here’s why:
- Ice cream is shelved in the valuable, limited space of a freezer.
- Jones has less freezer space than competitors devoted to ice cream, but more SKUs.
- This inevitably means that popular SKUs receive disproportionately less space than they deserve. Even a tiny SKU must receive at least one facing and that may be “too much” in proportion to its movement.
- This problem is exacerbated on promotion especially of larger brands and popular flavors. These SKUs tend to disappear rapidly in our model of the category and cause rampant out-of-stocks.
- This may partially explain why Jones’ “% sold on deal” is below competitors.
Assessment "Why" in an attribute-driven market
One of the biggest changes with CatMan 2.0 is the layering on of attitudinal and perceptional data to the process that reflects why a shopper buys a category. The high-level example above should indicate how important high-order attribute data can be to establishing the "why" behind the data. By definition, high-order attribute data can be an abstraction of how consumers understand and interpret various product data profiles. For instance, the same product can be perceived as "artificial color free", and "preservative free," two very similar but different perceptional data points. Through data modelling (such as Markov analysis demonstrated in the Assessement WHAT phase) it is possible to identify which "perception" is the most relevant in any given case.
In the next post in this series, we will look at the scorecard process. This stage seeks to leverage the research and analysis provided in the Assessment What and Why phases and to synthesize this in to actual sales objectives looking forward. This phase will critically define the strategies and tactics that will follow.