Category Management Ppt by emj68678


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									                      Sourcing Simulator Licenses
                      Nike                     Kmart
Liz Claiborne         Nantucket Industries     Aztec Trading
Woolrich              Private Label Concepts   Charles Gilbert Assoc
Glen Oaks             Federated Merchandise    GIDC
Lebanon Apparel       Levi Strauss             UNITE
Val D’Or              Garan                    WL Gore & Assoc
Whisper Knits
                      Edison Brothers          Van Huesen
Brooks Brothers
                      Context Group            Patagonia
Tropical Sportswear
Fruit of the Loom     Tanner                   Danube Knitwear
S&S Distribution      Cuddle Time              Capital- Mercury Shirt
                      Chic by HIS              Lord Olord’s Inc
Virginia Apparel
Red Well              Eagles Eye               Nat Inst Fashion Tech
Dayton Hudson QA      Claudel Lingerie         Limited Dist Services
Vertical Threads      Starter Corp             Wolverine Worldwide
Kellwood Company      Kikomo                   Cajah Mountain Hosiery
Ackermans Ltd.        Goldman Sachs            Bain & Co.      HED 460
                        Sourcing Simulator Licenses
                                  West Virginia University
Texas A&M University              Cornell University
University of Missouri.           Baylor University
Colorado State University         University of Hawaii
Western Kentucky University       Texas Tech University
Texas Christian University        Kent State University
Murray State University
                                  Middle TN State University
Michigan State University
                                  Stephens College
University of Kentucky
Oregon State University           California State University
University of Nebraska            University of Rhode Island
                               Se Sam Houston University
Southern Illinois University
Indiana State University          Ohio State University
Iowa State University             Southwest Texas State University
UNC Chapel Hill                   U of Massachusetts
UNC Greensboro                    N Illinois University
Kansas State University           U of California - Irvine    HED 460
                           Sourcing Simulator Licenses
                           American Identity       Bios Group
Auburn University          Andersen Consulting     Burlington Chemical Co
Ball State University      Adexa                   CFT Consulting
Clemson App. Res.          Burlington Industries   PricewaterhouseCoopers
Delta State University     Cone Mills              T-MNA Inc.
Oklahoma State U.          Dillards                Timberland
East Carolina U            DuPont Nylon            NHK International
Tampere University                                 Twin Star Int’l
North Carolina State U                             Nordstrom
                           Galey & Lord
Integrated Consulting
                           Glen Raven Mills        Bergdorf Goodman
Stonefield Josephson
                           Hologix Inc             LL Bean
Prime Tanning Co
Bayer Clothing Group       IBM       Se            Wal-Mart
May Merchandising          Milliken & Co.          Lands End
Logistics Training Int’l   Russell-Cross Creek     The Gap
Exterior Wood, Inc.        Sara Lee Casualwear     Wigwam Mills
Firmin House               VF Corp                 JBA International
Glen Oaks Industries       Wellman Inc.            Bradley Perspectives
                                                                 HED 460
        Efficient Consumer Response
   Efficient replenishment
     Systems, EDI
     Fewer stockouts

   Efficient promotion
     Promotions based on consumer demand
     Lean inventory to support promotions

                                       HED 460
        Efficient Consumer Response
   Efficient assortment
     Turnover
     Profit

     Enhances brand and retailer perceptions

   Efficient product introduction
     Pull strategy for new products
     Based on unmet needs
                                          HED 460
          Category Management
   Technique used by retailers
       Product is sub-divided into categories that
          Reflect purchasing behavior of target

          Are managed as separate business units

       Supermarkets and mass
                                              HED 460
          Categories as SBU’s
   Department is too broad and less
       150-300 categories vs. 15-20 departments
   Product/brand is too narrow to approach
       15-20,000 skus in a store and 16,000 new
                                            HED 460
       Category Management
   Integration of Buying and Merchandising
      Management of price, shelf space,
       merchandising assortment strategy,
       promo efforts, replenishment
   Affects manuf. sales and marketing
   Team approach between channel
                                      HED 460
    Category Plans

 Jointly developed by retailers and
 Define strategies and financial

     GM
     Sales/cu ft.

                               HED 460
    Buying/Merchandising Decisions

   Responsibilities must be
     Inventory allocation
     Space allocation/analysis

     Customer demand

                                  HED 460
    Category Management
   Goal - Retailer
     Optimize each part of the store
     Allocate space that maximizes Gross

      Margin/unit of space
   Goal – Supplier
       To become the lead supplier or channel
        captain for that category
                                        HED 460
   Increased category sales (5-15%)
   Increased category margins
   Assists in creating optimal assortments
       Reduction of SKU’s in most cases
   For Mfct., move from trade allowances
    (push) to trade promotions (pull)
                                           HED 460
        Manco example
   Merchandising of tape products was
   Different buyers bought tape
   Solution = tape center
   Later mailing center
     Prevented other vendors’ access
     19 SKUs to up to 32 feet in office
                                           HED 460
        Direct Profit Profitability (DPP)
   Profit associated with each category
   Per unit Gross Margin minus all variable
     Procurement
     Distribution

     Sales

                                       HED 460
       Defining Categories
   Consider end uses (frozen, chilled, deli
   Consider substitutablity (fresh/frozen)
   Consider complimentary purchase
    decisions (pasta + sauce)
   Base decision on how customer buys
   Same “real estate”
                                        HED 460
HED 460
    Dairy category
   Displayed by brand name
   Customers shop by type (low fat, full
    fat, no fat, fruit)
   Then individual flavors

                                    HED 460
    Ready to eat meals category
   Type – Chinese, Italian, meat/two
   Cooking method – oven, micro, stove
   Low calorie or regular

                                  HED 460
        Defining Categories
   What products should be included?
   Beer Category- decisions
     Shelf beer and cold beer part of total
     Shelf beer = 1 category and cooler = 2nd

     Sub category of beer/wine/alcohol

     Beer as a solution (picnic, party, meal)

                                         HED 460
      Roles/Implied Strategies

   Destination      Traffic building
                     Turf protecting
                     Transaction building
                     Excitement creation
                     Cash generating
                     Image creator
                                       HED 460
      Pasta Category
Strategy              Examples
Traffic builder       Std. Packs of dried spaghetti

Transaction builder   Parmesan, fresh herbs, pasta sauces

Cash generator        Lge. economy packs of dried pasta

Image creator         Filled pastas: ravioli, tortellini….

Excitement creator    Fresh, less well-known: stelline….

                                                      HED 460
      Roles/Implied Strategies

   Routine/        Transaction building
    preferred       Profit generating
                    Turf protection

                                     HED 460
       Roles/Implied Strategies

   Convenience      Transaction building
                     Profit generating
                     Image enhancing

                                       HED 460
       Roles/Implied Strategies

   Occasional/      Traffic building
    seasonal         Excitement creation
                     Profit generating

                                      HED 460
      Tactics – Traffic building
   Aggressive pricing on loyalty
    products/low margins
   Media on frequently purchased items
   Prominent space

                                     HED 460
        Case Study - Toothpaste
Results        Previous   Current   % Diff.
Sales          12.3m      12.64m    2.8%
Gross Profit   1.66m      1.52m     (8.4%)
GP Margin      13.5%      12%       (11%)
Turns          12.2       14.5      19%
Days supply 30            25.2      (16%)
GMROI          1.9        1.98      4.2%
                                           HED 460
      Leading Manufacturers – CM
   P&G
   Kraft
   General Mills
   Unilever…Ralston Purina…Pillsbury
   Quaker…Kellogg’s…Coke

                                        HED 460
      Leading Retailers – CM
   HEB
   Safeway
   Wal-mart
   Ahold
   Kroger
   Wegman’s
                               HED 460

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