Category Management Plan Example: Internal Alignment, Jones Grocery
Attribute-Driven Category Management Plan
The aim of this attribute-driven category management plan example is to demonstrate the implications of an attribute-driven approach across the CatMan 2.0 process. As outlined in the introductory post of this series, we will work through the 8 stages of the CatMan 2.0 process and at each stage, we will highlight where Label Insight high-order attribute data can augment the process for better results.
To ensure the credibility of this example, we collaborated with Mr. Gordon Wade, Director Emeritus of the CMA, whose infectious enthusiasm helped to make the compilation of this work a pleasure.
Jones' Grocery & Ice Cream
To perform this work, we had to create a fictitious grocery store and problem. Enter Jones Grocery, a middle-of-the-market grocery retailer with a challenge for lagging sales in the ice cream category. We chose this category because it's an important section of the store, and is undergoing a meaningful amount of fairly open disruption. And so we believed this would provide an intriguing category to evaluate through attribute-driven methodology.
Step 1: Internal Alignment
The first step of the CatMan 2.0™ process is Internal Alignment. This is a new step from the CatMan 1.0 process, which was added to address the issue of internal alignment required within retailer and manufacturers to be effective partners in developing category plans. The idea with this step is that it requires the identification and documentation of those issues around which both retailers and manufacturers must be aligned internally, in order to be effective partners in developing winning category plans.
Jones' Internal Alignment
In the Jones Grocery case, the executive management team required that the corporate strategic imperatives be considered as a foundation for the category management plan. Therefore, the internal alignment will follow the 5 corporate strategic imperatives outlined below, with the aim of exploring how each of these imperatives may be relevant to the category management plan execution.
- Building shopper trust through transparency
- Re-enforcing the value of health and wellness
- Targeting category-heavy buyers and Millennials
- Leveraging your shopper’s specific, multi-category “need states”
- Utilizing the most advanced data and analytics solutions
1. Building shopper trust through transparency
The first corporate strategic imperative is to build shopper trust through transparency. American shoppers have lost trust in many aspects of American life, and brands and retailers are no exception to this. 75% of shoppers say they no longer trust the information on food labels, according to the Food Revolution study we conducted in 2016.
The answer is to give shoppers the information they want, to develop transparency as a discipline and as a service, to engage shoppers with all they need to make more efficient and effective decisions. And in achieving this, Jones Grocery expects to reap the rewards. In fact, the FMI & Label Insight Transparency Imperative report 2018 found that “Three quarters of shoppers in 2018 would switch brands for transparency - a 90% increase from 2016”.
For all these reasons, Jones Grocery is embracing transparency as a corporate strategy, and therefore expect this to be realized in no small way through the Category Management planning process. This plan will achieve this by leveraging the Label Insight Category Management solution, which provides category managers with access to high-order attribute data relevant across each step of the CatMan2.0 process, with the aim of helping to better understand the "why behind the buy" in the category.
2. Re-enforcing the value of health and wellness
The second corporate strategic imperative is to double down and re-enforce the value of health and wellness. This is obviously related to transparency but is important enough to be called out separately as a specific corporate imperative. The The shopper’s concern over health and wellness is one of the strongest trends in today’s society. A recent article in Forbes described health & wellness as "not just a trend or a fad; it’s a way of life for more and more people".
As a result, Jones Grocery has made responding to health & wellness a central strategy across the entire store. Shoppers often make their H&W buying decisions based on what bad things are left out or what good things are included in a product. Fortunately, new transparency-related attributes can help Jones' shoppers make more informed decisions which would have previously been impossible without high-order attributes.
This is why Jones Grocery has decided to execute this attribute-driven category plan across the ice cream category, as for the first time the high-order attribute product data enables Jones Grocery to meet shopper needs in a more granular way, thereby re-enforcing the corporate strategy. It is therefore critical that this new capability is considered and reflected in the category management planing process going forward.
3. Targeting category-heavy buyers and Millennials
Jones Grocery recognizes that not all shopper groups are equal, and in fact, some groups are more valuable than others. And in their research they have identified two main groups to invest in. The first is the huge, growing, and demanding Millennial group, and the second are those in the trading area who are heavy category buyers.
The data shows that Millennials are demanding transparency and are strongly oriented towards health and wellness, so the previous two imperatives strongly align with this shopper group. Furthermore, the high-order attribute data will enable Jones Grocery to execute against Millennials' needs. Whereas the Jones' loyalty card data plus advanced analytics combined with the attribute-driven approach will enable Jones Grocery to better identify and target these strategically valuable cohorts.
4. Leveraging your shopper’s specific multi-category “need states”
Jones understands that shoppers buy products to meet particular needs. Furthermore, they realize that needs span categories, although some needs may be particular to certain categories or groups of categories (such as dairy vs. ice cream). Therefore, Jones Grocery wants to satisfy more of the multi-category needs within any given need state, such as planning a birthday party or a week’s worth of healthful meals.
At the same time, Jones Grocery believes that they are losing volume by not making it easy for shoppers to meet all their needs in any one need state. The new high-order attributes will help to identify items that meet a “need state,” such as those items qualifying for specific dietary need states, such as a Vegan diet or those without a specific allergen. As a result, Jones Grocery can have their vendors focus on a few need states related to health and wellness and specific dietary need states.
5. Utilizing the most advanced data and analytics solutions
Jones Grocery understands that new data sources, analytic tools and technology are transforming CPG marketing and in particular the Category Management Process. Therefore, Jones Grocery is mandating that all suppliers on-board their data via the Label Insight supplier on-boarding process, and that with that data and visibility into the Jones Grocery custom Health & Wellness view, bring the newest and best analytical techniques to the process.
In this plan, Jones Grocery will bring the following advancements to bear in this ice cream Category Management Plan:
- Drag and Drop Supplier On-boarding
- Label Insight data identifying new product attributes and packaging claims driving shopper decisions
- Data identifying heavy-using households in every category in your service area
- In-store shopper tracking data measuring the impact of end aisle displays
- New analyses of all things digital from circulars to iconography
- Pricing elasticity data by item type, price threshold, price gap, and price description
- We are using virtual testing techniques permitting rapid, accurate, and relatively inexpensive measures of category shelf array and pricing alternatives
- New assortment optimization techniques by store cluster using activity-based costing
- Custom Health and Wellness iconization to better support our unique market
Internal alignment with an attribute-driven approach
Now that we have clearly explored and defined alignment around the corporate strategy imperatives, we can more clearly communicate with our suppliers and partners how we aim to proceed through the ice cream category management process. This alignment ensures that all parties involved are working towards similar goals and best supporting each other. It provides a critical framework by which the plethora of decisions to be made can be evaluated to ensure that the end result is a coherent collaboration.
What's next? Category Definition and Segmentation
The next step in the process is Category Definition. It is in this step where we define the products that are in the category and sub categories, and most importantly, we begin to understand how shoppers buy in this category. We will be exploring Markov Chain Analysis, Clustering, and Category Decision Trees. It's starting to get exciting.