Category Management Plan Example: Category Role
Attribute-Driven Category Role
In the last phase of the process we aimed to set the Category Definition and Segmentation. We deployed tools such as Markov Chain Analysis, and clustering to help us to better understand the products in the category as well as how customers make decisions about products. All of which lead to a surprisingly innovative looking attribute-driven Category Decision Tree which almost resembled a traditional decision tree – inverted.
In this phase, we build off this last work to place the category in context of the wider store strategy. We now need to determine what role the ice cream category will play for Jones Grocery, and as a result, how we interpret and implement what we have learned so far will be driven by this wider context, and the associated resources and priority that will be given to the ice cream category. Most importantly, this phase is about understanding how important the ice cream category is to Jones Grocery and how important it is to their shoppers.
The purpose of category role
The purpose of the category role designation is about retailer resource allocation, and therefore it is the decision of the retailer to make. A retailer must allocate their total resources, such as space, inventory, promotional dollars, and service levels, among all the categories in accordance with the retailer's overall merchandising strategy. A category's role, therefore, can have significant implications on how the category plan is implemented and is therefore a critical phase of the process.
In this phase, we will investigate the different types of category roles and their implications and then we will dive into what role ice cream will play at Jones Grocery, and set ourselves up for the next phase of the process.
Brand owners can involve themselves in this stage of the process by providing data comparing their category to other categories using various key metrics. But in the end, brand owners must recognize that under category management best practices, the role decision is ultimately the retailer's and therefore they should seek to, at best, support and to influence their retail counterparts.
The key question brand owners can help the retailer to answer is: If the retailer devotes incremental resources to category X, will it cause target shoppers to choose the store for the overwhelming share of their consumption requirements in the categories the retailer chooses to sell?
Some categories are more equal than others
To meet the goal of this phase, it is important to have a framework of category roles to help define the challenge. Generally, category management best practices determine that there are four core category role types, as outlined below. The key differentiating factors between the different roles are the "importance" of the category and the consequential size of "investment" in that category. Generally speaking, the more important a category is to shoppers and retailers' overall strategy, the more investment it will attract.
With this overall framework for understanding the impact of category roles, we can explore the following four core category role types:
- Destination category allows the retailer to position himself towards his target consumers and differentiate himself from competition. It aims to place a retailer as primary category provider and helps define the retailer as the store of choice by delivering consistent, superior target customer value. “I go to this store because they offer the best selection of X. This store offers better value in this category.”
- Routine category aims to provide consistent and competitive value for the consumer’s everyday needs and place the retailer as one of the preferred category providers. It helps develop the retailer as the store of choice by delivering frequent, competitive target consumer value. “I buy these products all the time for my daily needs, so I look for the store that offers me the greatest value and consistent shopping experience.”
- Seasonal category refers to products which are not purchased on a regular basis, but occasionally. Seasonal categories play a secondary role in delivering profit but can be used by a retailer to differentiate himself from competition during a certain period of the year.
- Convenience category completes the retailer's assortment of products that are not usually found on a routine shopping list. This category aims to guarantee one-stop-shopping and plays an important role in margin enhancement.
Jones Grocery category roles definitions
From the best practice framework of category roles, each retailer will then work to create their own interpretation of these roles according to their specific needs. In the case of Jones Grocery, the role definitions have been determined as outlined below. They represent different levels of importance to Jones Grocery as well as specifics around how Jones is going to divide the categories into these definitions.
Ice cream as a destination category
Given all of the above, Jones Grocery has decided to make the ice cream category a destination category. This means that they have decided to devote incremental assets to the ice cream category based on the following criteria:
- Ice cream’s presence in large baskets indicates that it is often considered as part of a planned purchase by large, valuable households. Therefore, if households are planning to visit the ice cream category as part of their regular shopping trips, Jones Grocery believes that by making ice cream a destination category can better cater to these shoppers and increase loyalty overall.
- Heavy buyers of ice cream are heavy buyers of other target categories. One of Jones Grocery's strategic pillars was to "target category-heavy buyers and Millennials," so making the ice cream category a destination aisle supports this strategic pillar.
- One of the other strategic pillars was to "build trust through transparency." Ice cream has high “clean label” penetration, particularly in the premium and super-premium brands. Investing in the ice cream category further supports this strategy.
- Ice cream is a staple of many family celebration “need state” occasions that makes it a strong category to invest in and own.
- In a Nielsen survey, a third of European consumers said they had eaten ice cream as a snack within the last 30 days. With snacking occasions growing and ice cream as a frequent snack across all family members and occasions, it is important to support this trend by investing more in the category and making it a destination category.
Destination = Additional Assets
Jones has decided to provide additional assets to destination categories, and as a result, destination categories may request:
- Additional space, especially end aisle display space
- Incremental placement in special occasion sectors of the Jones website and circular
- Incremental presence and featuring to high-value shoppers' e-mail program
- Inclusion in Jones “need-state” signage across all marketing vehicles
- An “A” feature in every circular printed and digital
- Rapid priority cut-ins of new items throughout the year
The plan for the ice cream category will leverage all these aspects of being a destination category.
Category role in an attribute-driven market
In an attribute driven CatMan 2.0 process the "category role" is influenced indirectly by the fact that attributes play a role in wider trends and consequently the Strategic Pillars as defined by Jones Grocery. The strategic pillars of transparency, and need state marketing, are influenced by an attribute driven market and as a result support the case for making Ice Cream a destination category and therefore attracting more resources. Although, there were no direct attribute driven impacts within this phase of the process, the end result of the plan will be significantly influenced by the macro trends that are heavily influenced by the attribute-driven market.
What's next? "What" assessment
In the next post in this series, we will look at the Assessment "What" step in the process. This phase seeks to understand who is buying the category and what are they buying. This is the sister phase of the Assessment "Why" phase, which seeks to understand why people are buying in a category.
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