Practical CatMan Workshop Nestle Mar 2017

PRACTICAL
CATEGORY MANAGEMENT
WORKSHOP
16 MARCH 2017
CHRISTOPH MICHEL, GLOBAL CATEGORY MANAGEMENT CONSULTANT
OBJECTIVES
• Get an overview of the current market and shopper

environment
• Understand what is Category Management and how it can
add value to retailers, shoppers and Nestlé
• Experience every step of the Category Management
process with numerous examples
• Get insights into shopper behavior
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
• Understand what tools and data are needed

AGENDA
Day 1 Day 2
Introduction Review day 1
Market Overview
Shopper behavior
Definition
Roles & responsibilities Category tactics
Lunch Lunch
Category definition
Category tactics
Category role
Category assessment
Category scorecard Implementation & review
Category strategies Tools and data needed
3
HOUSERULES
4
PEOPLE
INTRODUCTION
THE 20 SECONDS CHALLENGE
Who is my neighbor and what are his / her objectives for this workshop?
2 minutes to prepare
6
MARKET OVERVIEW
VIETNAM RETAIL
LANDSCAPE 2016
CATMAN WORKSHOP MAR 2017
9
VIETNAM ECONOMY SHOWS RESILIENCE AMID SEA
REGION SLOWDOWN
2016 vs 2015 VIETNAM’S GDP GROWTH AMONG THE
HIGHEST IN SEA REGION
GDP% Growth
AGRICULTURE: +1.36%
+6.2% INDUSTRY: +7.57%
(Lower than
target 6.7%)
SERVICES: +6.98%
Inflation % Rate
2/3 of inflation rise in

9.2%
6.6%
4.1% 2016 was due to:
“
2.7%
0.6% • Healthcare Services Growth prospects for 2017/2018 are
brightest in the Philippines and Vietnam,
• Education boosted by inward investment.
- Oxford Economics
”
Source: General Statistics Office, Oxford Economics (Q4’16) 10
ALSO UNDER RADAR OF FOREIGN INVESTMENT, ESP. IN
RED RIVER DELTA
FOREIGN DIRECT INVESTMENT FDI % Contribution by Region
2.4
2 3.2
4
8.3 North Central Coast
15.2
$ 24.4 BILLION IN TOTAL IN 2016 22.1
13.6 South Central Coast
Mekong Delta
13.8 31.8
2,556 NEW PROJECTS North East - North West
Red River Delta
44.4 39.1 South East
9% VS. 2015
2015 2016
According to World Bank, in 2016, Vietnam jumped 9 places in EASE OF DOING BUSINESS, ranking 5th in SEA
23rd
2nd 46th 72nd 82nd 91st
SINGAPOR MALAYSIA THAILAND BRUNEI VIETNAM INDONESIA
E Source: General Statistics Office, Ministry of Planning and Investment, World Bank 11
DESPITE FUTURE DOUBTS, VIETNAMESE CONSUMERS
ARE CONFIDENT, WITH CCI SURGES TO 3-YEAR HIGH
They even go beyond basic commodities
FAST GROWTH IN NON -FMCG

CONSUMER CONFIDENCE INDEX (CCI)
104 105 108 109 107 107 112 Smartphones +11% YTD Jun’16
vs. YA
Car Registration +28% YTD Oct’16

vs. YA
MAT Jun’16
Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Major Appliances +19% vs. YA
Consumer Confidence Index Calculation

• Perceptions of local job prospects
• Perceptions of state of personal finances over Domestic Tourism +7% 2016 vs. 2015
the next 12 months
• Perceptions of good/bad time for people to buy
the things they want and need over the next 12
months
Source: Nielsen Global Survey – Consumer Confidence Section (Dec’16), GFK, Vietnam Tourism 15
16
FMCG WITNESSES SLOWDOWN IN 2016 WITH
VOLATILITY
Fast Moving Consumer Goods dynamics – Total Nationwide
9%
8%
7.8%
7.3% 6.9%
7% 6.1%
6.1% 5.9% 5.3%
6% 5.3%
5%
3.3% 6.4%
6.2% 4.2%
3.1% 5.3%
4%
5.1% 3.5% 3.7%
5.2%
3%
1.2%
2%
2.9%
1% 1.9% 2.0% 1.9%
1.4% 1.6% 1.6%
0.9% 0.7% 1.0%
0% 0.4%
Unit value change Volume change Nominal value growth

Source: Nielsen Retail Index – Versus year ago
Note: This slide only includes Feminine Protection, Hair Conditioner, Shampoo, Toothpaste, Toothbrush, Personal Wash, Dishwashing Liquids, Fabric Softener, Laundry Products,
Bouillon-MSG, RTDM, Soft Drink, Packaged Water, Energy Drink, RTDT, Cigarette, Sport Drink, Sweet Condensed Milk, Fruit Juice , Household Cleaners, Beer, Instant Noodles, Household
17
Insecticide, Tonic Food Drinks, Pie&Sponge Cake, and Biscuits
DRIVEN BY RURAL AS IT SOFTENS VS 2015
FMCG DYNAMICS
Vietnam Urban (49%) Rural (51%)
7.1%
6.1%
5.3% 5.5%
5.2%
4.9%
6.5%
5.1% 3.5% 3.9% 3.2%
3.5%
1.9% 1.7% 2.0%

0.9% 1.4%
0.7%
2015 2016 UR-2015 UR- 2016 RR-2015 RR-2016
Unit value change Volume change Nominal growth

Source: Nielsen Retail Index – Versus year ago
Note: This slide only includes Feminine Protection, Hair Conditioner, Shampoo, Toothpaste, Toothbrush, Personal Wash, Dishwashing Liquids, Fabric Softener, Laundry Products,
Bouillon-MSG, RTDM, Soft Drink, Packaged Water, Energy Drink, RTDT, Cigarette, Sport Drink, Sweet Condensed Milk, Fruit Juice , Household Cleaners, Beer, Instant Noodles, Household
18
Insecticide, Tonic Food Drinks, Pie&Sponge Cake, and Biscuits
VERY POSITIVE SIGN IN 6 KEY CITIES DESPITE VOLATILITY
Fast Moving Consumer Goods dynamics - Total 6 cities
8%
7%
6.3% 7.3%
6%
5.2% 5.4%
4.7%
5% 4.3% 4.3%
4.0%
6.0%
4% 2.9% 5.2%
3% 4.1% 4.6%
3.8%
3.1% 3.7% 3.5%
1.6%
2%
2.3%
0.7%
1%
0.9% 1.1% 0.9% 0.9% 1.1% 1.3%
0.6% 0.8% 0.6% 0.7%
0%
Unit value change Volume change Nominal growth
Source: Nielsen Retail Index – Versus year ago 21

IN Q4, FOOD KEEPS UP STRONG MOMENTUM WHEN
BEVERAGE REBOUNCE
Super Category Contribution and Growth - Total 6 Cities
40% 15% 15%

BEVERAGE FOOD MILK BASED
10.4% 11.6%
10.2%9.4%
8.9% 9.2% 7.8%
7.0% 7.3%
5.6%
4.7% 4.7% 4.0% 3.2%
3.0% 2.8%
1.6% 1.3%
0.7%
-0.9% -2.1%
-1.9% -3.5% -2.9%
Unit Value Change Volume Change Nominal Value Growth
Source: Nielsen Retail Index – Versus year ago; % is value contribution to Total FMCG MAT TY 22
HEALTHY GROWTH SEEN IN NON-FOOD, EXCEPT FOR BABY
CARE
Super Category Contribution and Growth - Total 6 Cities
6% 8% 13% 3%
HOME CARE PERSONAL CARE CIGARETTE BABY CARE
8.2%8.1% 9.6%
7.6% 8.1% 8.1%
6.1% 6.4%
4.6% 4.6% 5.1%
3.9% 3.3%
3.9% 2.4%
-0.1% 3.1% 2.7%
0.4% 2.2%
-0.5%
-1.5% -0.8% -4.2%
-2.8%
-3.5% -4.1%
-4.6%
-5.6%
-6.0%
-11.5
% -
12.1%
Unit Value Change Volume Change Nominal Value Growth
Source: Nielsen Retail Index – Versus year ago; % is value contribution to Total FMCG MAT TY 24
PART 3
CHANNEL DEVELOPMENT 2016
25
MODERN TRADE GROWTH ACCELERATE IN LAST 2
YEARS, WITH AVERAGE PRICE SLOWING DOWN IN 2016
FAST MOVING CONSUMER GOODS DYNAMICS – MT vs TT
Traditional Trade Off 6 cities MT 6 cities (*)

15% 15%
11.4%
10.5% 10.7%
9.6%
10% 9.1% 10%
7.5% 7.6%
6.0% 6.5% 6.6%
6.9% 4.9%
5% 4.2%
5% 3.6% 3.9% 3.8%
2.0% 2.8%
5.6%
0.9%
0%
0%
-5% -5%
Unite Value change Volume change Nominal growth
Source: Nielsen Retail Index – Versus year ago (*): MT excludes Saigon Coopmart 26
THE BOUNCE BACK OF WET MARKET & RISE OF
SMALL/SPECIALIZED FORMATS
Tradition Trade & Wet market bounce back to 2014 level while Supermarket loses its
importance
Where do consumers shop? How often do they shop ? Channel spend most in?
Ave. per month
2016 2015 % 2016 2015 2016 2015

Change
(+/-)
Wet Markets 83 79 4 21.9 21.2 46 37
Traditional Grocery /
Provision Stores / 67 51 16 7.6 8.4 10 7
Grocery Store
Supermarkets 46 52 -6 2.1 2.7 36 49
Convenience Stores
(not associated with 19 16 3 3.2 3.3 6 6
petrol/gas stations)
Personal Care / 19 12 7 1.1 1.0 - -

Drugstores / Western
Pharmacies
Base: All shoppers 2015 (n=1500), 2016 (n=1500)

Ref: Q7a Which of these types of stores have you visited in the past 7 days?
Ref: Q8 On average, how often would you shop at the following type of store?
Ref: Q7d Which of these types of stores would be the one where you normally buy most of your food and grocery items? 27
ONLINE CHANNEL ALTHOUGH SMALL BUT SHOWS

UPLIFT IN FREQUENCY
Also should notice the new channel Maternity & Baby Stores
Where do consumers shop? How often do they shop ? Channel spend most in?
Ave. per month
2016 2015 % 2016 2015 2016 2015

Change
(+/-)
Minimarts 3 2 1 1.1 1.7 1 -
Department Stores 2 3 -1 0.7 0.7 1 1
Cosmetics Shops 2 2 0 0.8 0.7 0 0
Online Shopping
(Internet shopping 1 1 0 0.8 0.6 - -
mall)
Maternity and Baby 1 - 1 0.8 - - -

Stores
Base: All shoppers 2015 (n=1500), 2016 (n=1500)

Ref: Q7a Which of these types of stores have you visited in the past 7 days?
Ref: Q8 On average, how often would you shop at the following type of store?
Ref: Q7d Which of these types of stores would be the one where you normally buy most of your food and grocery items? 28
SMALL FORMAT LIKE CVS HAVE RAPID STORE
EXPANSION
CONVENIENT STORE – No. of store
**Vinmart+ : 950 215 218

(+128 stores vs last month) 194
183
170
160 160 160 Circle K
153
147 142
139 136
128 129 130 132 129 129 128 128 B's Mart
127
117 117 119 132
110 115
105 106
104 106 102 126 126 122
Shop & Go
101 103 106 110
96
95 94 98 68 71 71
57 62 Family Mart
47
68 65 65 65
62 62 31 33 35
25 25 25 Mini Stop
17 17 17
Apr-15
Oct-15
Apr-16
Oct-16
Mar-15
Mar-16
Jun-15
Aug-15
Jan-16
Jun-16
Aug-16
Jan-17
May-15
Jul-15
Dec-15
May-16
Jul-16
Dec-16
Nov-15
Feb-15
Sep-15
Feb-16
Sep-16
Nov-16
Feb-17
Source: Retailers’ official website 29
MINI-MART
FOOD MINIMART – No. of store
126
120 120
105
101
Co.op Food
89 91 91 91 103 104
87 87 88 88 88 88 SatraFoods
94
85
Zakkamart
81
76 76 78 Bach Hoa Xanh
60 61 61
50 50 Co.op Smile
59 57 58
38 40 40 40
50 38
52 38 38 38 38 38 38 38
47 48
43
35
12 14
18 20
15 16
Apr-15
Oct-15
Apr-16
Mar-15
Oct-16
Mar-16
Jun-15
Aug-15
Jan-16
Aug-16
Jan-17
May-15
Jul-15
Dec-15
May-16
Jun-16
Jul-16
Dec-16
Feb-15
Sep-15
Nov-15
Feb-16
Sep-16
Nov-16
Feb-17
27
33
Feb-15
Mar-15
27
35
Apr-15
May-15
36
Jun-15
30 30
Jul-15
39
Aug-15
Sep-15
Source: Retailers’ official website

Oct-15
37 37
Nov-15
33 33 33 34
Dec-15
HEALTH & BEAUTY
39
42
Jan-16
34
Feb-16
41
41
Mar-16
38 38
Apr-16
39
43
May-16
HEALTH/BEAUTY & MODERN DURGSTORE– No. of store
42
Jun-16
46
Jul-16
43
Aug-16
39 39
47
Sep-16
45
Oct-16
39
Nov-16
48 48
Dec-16
38
Jan-17
40
46 46 46
50 50
Feb-17
Guardian
Medicare
Pharmacity
31
SUPERMARKET
SUPER MARKET – No. of store
Super market Feb’16 Feb’17 Super market Feb’16 Feb’17
Lan Chi
Co.op Mart 81 87 12 12
Mart
VinMart 40 67 Hapromart 16 14
Big C 32 33 Auchan 3 10
Fivimart 24 27 AEON 3 4
AEON
20 19 SatraMart - 3
Citimart
Co.opmart
Metro 19 19 2 2
Extra Plus
Lotte
11 14 Giant 1 1
Mart
Intimex 13 12 Emart 1 1

MOM & KID
MOM & KID CHAIN EXPANSION – No. of store
Stores Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
Concung.com 84 86 91 92 92
Bibomart 74 79 90 95 102
Kids Plaza 54 61 61 72 74
TutiCare 29 30 29 29 29
Shoptretho 23 26 27 27 31

NEW TREND,
VIETNAM SHOPPERS
NEW OPPORTUNITIES
34
VIETNAMESE SHOPPERS ARE VALUE SEEKER
How can Retailer & Supplier together help create more value in a shopping journey
88% 88% 74%

Willing to pay Customer service Promotion hardly affect

more for quality is very important store choice or brand
switch
Nielsen Shopper Trend 2017 35

SEEKING FOR CONVENIENCE
How can Retailer merchandising help shopper find quickly what they need?
How Supplier create package that brings convenience?
70% willing to pay more for CONVENIENCE #1 attribute

CONVENIENCE for store choice criteria in Supermarket
MODERN TRADE TRADITIONAL TRADE

+300 stores (+16%) +60 store s(+4%)

Store number growth of small format
Store growth 2015 vs 2014, MT includes (SM, CVS, H&B, Drug, Minimart, Independent store)
Source: Nielsen census 2016, Shopper trend 2017
36
VIETNAMESE IS VERY DIGITAL
VIETNAM SINGAPORE
91% 94%
Smart phone ownership Smart phone ownership
43% 64%
Tablet ownership Tablet ownership
78% 85%
Laptop ownership Laptop ownership
75% 63%
Desktop ownership Desktop ownership
24.7h/week 25.9h/week
Internet usage time Internet usage time
Source: World Bank (2015), Nielsen Cross Platform Study (2016) 37

USING BOTH ONLINE & OFF-LINE FOR PURCHASE
DECISION. THE BIRTH OF OMNI SHOPPER
- FRESH GROCERIES
VN
Visit to the physical store 56
Word of mouth from someone you know? 38
Blogs or special interest websites 21
Online user reviews 20
Recommendations/information from store staff 20
Social media 20
TV or radio 19
% Store website 17
Websites containing coupons or discounts? 17
Flyers or direct mails 16
Marketing e-mails 16
Online user reviews 16
Newspaper or magazines 15
Brand website 14
None of the above 8
Base: All respondents n=500
Nielsen Global Survey – Q3 – 2016 Field Dates: Aug 10 to Sep 2, 2016 38

OMNI SHOPPER BRINGS NEW OPPORTUNITIES
OMNI TRADITIONAL
52% 18%
Compare brands before purchase* Shopping without plan
44% 19%
Large pantry stock-up Large pantry stock-up
57% 6%
Shop to take advantage of Shop to take advantage
special promotion of special promotion
Source: Nielsen Omni shopper 2017

* Baby Care product 39
OMNI-
SHOPPERS
VALUE CONVENIENCE
SEEKER EMBRACER
WHO’S VIETNAMESE
SHOPPER
TO CAPTURE OPPORTUNITIES,
IT IS REQUIRED THE COLLABORATION OF BOTH RETAILER & SUPPLIERS
40
NEED TO DO TO BE SUCCESSFUL
Retailers Manufacturers
Split into groups. 10 minutes to brainstorm. Nominate a speaker to

feedback.
41
RETAILERS HAVE TO ENGAGE WITH SHOPPERS
• Optimize accessibility • Increase traffic,

• New stores basket size, loyalty
– Optimized product range
• New store formats
– Product quality
– Availability
• Claim a unique positioning – Presentation
– Promotions
• Advertising / external – Services
communication – In-Store experience
• Also: internal communication
• Improve efficiency
Category – Distribution logistics
– Inventory costs
Management – Space productivity
42
SUPPLIERS HAVE TO ENGAGE WITH RETAILERS AND

SHOPPERS
Category
• Develop retailer relationship
Management
• Increase capabilities
• Joint business planning
• Talk the same language: category as opposed to brand
• Develop both consideration and conversion

• Ensure product presence, shelf space, impactful promotions
• Understand the role of brands within categories
• Increase focus on shoppers

• Increase shopper understanding
• Offer value through appropriate products and activities
• Develop solutions to satisfy shopper needs
• Collaborate with retailers to maximize shopper satisfaction
43
CATEGORY MANAGEMENT DEFINITION
Definition and relevance

4 key outputs
What it means to shoppers
CATEGORY MANAGEMENT DEFINITION
A joint retailer/supplier process

of managing categories as strategic business units,
producing enhanced business results
by focusing on delivering consumer value
45
Soufce: ECR (Efficient Consumer Response)
RETAILERS’ FOCUS EVOLVES
Demand focus
Developed
+ SALES
Marketing
Merchandising
Buying
- COST
Developing Operations
Supply focus
46
RETAILERS: TAKING A STEP BACK
Supplier 2 Supplier 3
Supplier 1
Supplier 4
CATEGORY
Supplier 5
47
MANUFACTURERS: TWO WAYS TO INCREASE

BUSINESS RESULTS
A. Increase the slice of the pie B. Increase the size of the pie
(Share increase) (Grow the category)
Category Management
48
A CONSTANT PROGRESSION
1990 2000 2010
Spread
Wal-Mart to Europe, Asia,
first retailer Middle East,
US to apply esp. in saturated
recession CatMan markets
49
TRANSLATING SHOPPER BEHAVIOR AND RETAILER

IMPERATIVES INTO IN-STORE ACTIVITIES
4P resentation
roduct range
romotional plan
ricing
50
SO WHAT DOES IT MEAN TO SHOPPERS?

ONCE UPON A TIME … CLOSE YOUR EYES AND IMAGINE…
• Retailers faced a huge competition.

• All they cared about, was to maximise front and back
margin
• Therefore whenever they met Manufacturers, all they
cared about was trade terms and promotional fees
• Even when they were comparing their results, they were
not talking the same language  manufacturers talked in
brands, retailer talked in categories
Retailers were too busy to care about shoppers, as they
were busy trying to maximise margins, listing fees and
space fees from manufacturers
• You go to a store, and this is what you see…
51
Workshop
52
CSD category, Vietnam
THEN THE INDUSTRY REALIZED THAT A CHANGE IS

NEEDED.
• Retailers understood that to be successful, they need to
improve their operational standards
• Thus, they are also able to make more money simply by
increasing the sales of their category by exploiting new
consumer needs and maximizing the shopper experience
• To do this, retailers need the help of Manufacturers, as these
have a deep knowledge about consumers and shoppers
• Manufacturers therefore begin to work as consultants to
retailers, sharing consumer and shopper insights to help
drive the sales of the category, therefore taking away the
focus from only price discussions
• Both Manufacturers and Retailers use a common working
process to satisfy consumer and shopper needs
• After they applied this common process, you go into a store
and this is what you see 53
Workshop
54
CSD, UK
Workshop
55
Toothbrush & paste, Carrefour China
THE SIX COMPONENTS OF CATEGORY MANAGEMENT
Collaborative Trading
Performance Measurement
Partner Relationships
Business Strategy
Business Process
Information Technology Organization Capabilities
57
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOPS
Need advice on how to start? Just contact us

Workshop
ROLES, RESPONSIBILITIES AND BENEFITS
Organizational Change
Category captaincy
Relationship
WHY DO CATEGORY MANAGEMENT?
63
RETAILERS ARE ADAPTING THEIR STRUCTURE FROM

FUNCTION ORIENTED…
General
Management
Buying Stores Distribution

Department Management Management
Merchandising
Buyers team Promotion team (Space Planning)
team
64
… TO CATEGORY AND SHOPPER ORIENTED.
General
Management
Customer Buying Stores Distribution

Management Department Management Management
Category Category Category

Manager Manager Manager
Promotional
Buyer Merchandiser Sales Analyst
Manager
65
CATEGORY MANAGERS HAVE A BROADER SCOPE OF

WORK
Buyer Category Manager
+
• Minimises product cost and • Plans and buys to improve
maximises supplier support category growth and profit
• Viewed as a cost centre • Category Profit&Loss
• Bonus based on overall responsibility
corporate results • Bonus based on category
• Typically a former Store
Manager or measurements
• Finance, operations, &
• Detailed, tactical marketing experience
• Short-term focus
 • Conceptual, strategic
• >1 year horizon
Optimize profit Manage a business 66

RETAILERS MAY SEEK THE SUPPORT FROM A

PREFERRED MANUFACTURER
As long as he can:
• Understand the retailer’s strategy
• Support the retailer’s strategy
• Share it own strategy
• Support the retailer’s tactics
That preferred supplier is called a category captain.
67
RETAILER
What criteria would you use to chose the captain?

Talk to the person next to you. 3 minutes to brainstorm.
68
RETAILER
How would you chose the captain?
Size and performance in the market

Number and quality of resources
Commitment from top management
Strategic fit
Experience in Category Management
Usage merchandising software

Consumer / Shopper knowledge
…
69
MANUFACTURER
BENEFITS OF DOING CATMAN FOR A
71
AWAY FROM A SILO-WORKING STRUCTURE…
General
Management
Sales Marketing Admin Supply
Account Brand
Managers Managers
Retail knowledge Consumer knowledge

Shopper knowledge Consumer
(limited)
Shopper knowledge
Trade Strategy Brand strategy

72
… TO A MORE CUSTOMER FOCUSED STRUCTURE.
General
Management
Trade Marketing / Supply

Sales Marketing Admin
Shopper Marketing
TM Managers
Account Managers Category Managers Brand Managers
Sales Analysts
Retail knowledge
Consumer knowledge
Shopper knowledge
Trade strategy Trade activities Brand strategy
Category
Management
73
ADDING A CONSULTANT FOR RETAILERS

Sales Manager (KAM) Category Manager
• Sales data • Sales, consumer, shopper data
• Expertise on own brands • Category expertise
• Brand/company reviews • Category reviews
•
•
Own brand/SKU promotions
Recommended brand
programs
Trade segment marketing
+
•
•
Full-line category programs
Recommendations on
retailer’s category strategies
Customer specific marketing
• Adversarial relationships • Partnering/alliances
Salesperson Business Consultant

74
CATEGORY PARTNER
What criteria would you use to prioritize retail partners you

want to do Category Management with?
Talk to the person next to you. 3 minutes to brainstorm.
75
CATEGORY PARTNER
How would you prioritize retailers?
Size and performance

Importance for the business
Strategic fit
Commitment from board of directors
Implementation compliance
76
HOW TO PRIORITIZE RETAILERS
High $ opportunity
2 1
Convince Do it!
the retailer
Low retailer High retailer
commitment commitment
3 2
Don’t waste Do it
your time efficiently
Low $ opportunity 77
ADVICE TO APPROACH A RETAILER FOR CAPTAINCY

Assign resources, skills and expertise needed to
Set up be a captain
Define and communicate internally & externally

Define the company’s way of CatMan, possibly in a charter
Do some homework: already do some analysis and

Prepare identify category opportunities for the retailer
Talk category & segments before brands. Do not
Communicate necessarily use the words “Category
Management”, not to scare away retailers
Start small: if relevant, ask the retailer for just one

Concede store
If needed, design and sign a data confidentiality

Reassure agreement with the retailer. Suggest compensation
if no success? 78
THE RELATIONSHIP
HOW DEEP WILL THE RELATIONSHIP BE?
Manuf. strategy sharing
Joint extended
Category Projects
Manufacturer
capability
to be TRUST Full Category
Management
category
“expert”
Space &
Assortment
Management
Fact-Based
Selling
Retailer data sharing

Retailer commitment to Category Management
80
HOW A PARTNERSHIP USUALLY TAKES PLACE
• Supplier(s) approach(es) retailer (or the opposite)
• Retailer nominates category captain
• Retailer & Supplier define scope of collaboration, define

key decision makers and agree process
• Both partners follow the process, but supplier does most of

the analysis and makes recommendations
• Retailer reviews the recommendations and makes final

decision
81
BOTH BRING SOMETHING TO THE PROCESS
Manufacturer Retailer
Skills/Information Skills /nformation
• Market data • Sales data
• Consumer & Shopper knowledge • Shopper knowledge
• In-market category knowledge • In-store category knowledge
• Marketing & Analytical skills • Selling and Operational skills
• Assortment & Merchandising skills • In-store execution skills
• Company & Brand strategies
Tasks
+ • Company & category strategy
Task
• Analysis • Review & decision
• Recommendations • Implementation
• Implementations resources • Compliance
Holistic business
understanding
82
BENEFITS FOR ALL PARTIES

Shoppers
• Evaluate category offer according to their needs
• Enhance shopping experience
• Get high levels of satisfaction and value
Retailers
• Improve product sourcing, sales forecasting
• Optimize in-store activities
• Improve shopper satisfaction
• Further build store image
• Increase financial results
• Get free additional resources
Manufacturers
• Become category captains / advisors
• Build stronger relationship with retailers
• Increase financial results
83
CATEGORY MANAGEMENT PROCESS
Retailers vision, missions, target shoppers, strategy

ECR 8 steps process outline
UNDERSTANDING THE RETAILER, HIS STORES AND
SHOPPERS
Vision, Mission Universe

Strategy Segments
Store clusters Targets
85
RETAILERS’ MISSION ADDRESS FUNDAMENTAL
SHOPPER NEEDS Discounters
Price
Hypermarkets
Convenience
stores Convenience Choice
Department stores
Quality
Mission
“Saving people’s money so they can live their
life better”
Specialty stores
Provide value for sustainability and health 86
What does it mean???

87
88
ECR’S 8 STEPS PROCESS
Category Category Category Category Category Category Category

Definition Role Assessment Scorecard Strategy Tactics Implementation
What is the How important Where are we? Where do we How will we What actions How will we
category? is it? want to go? get there? will we take? bring it to life?
Category Review
ECR=Efficient Consumer Response What are the results?
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOPS
Need an objective CatMan third party? Just contact us

CATEGORY DEFINITION
Category definition
Category decision tree
KEY OBJECTIVE
Define a distinct, measurable and manageable grouping of

products
that the retailer and his captain will optimize by better

understanding and meeting the needs of shoppers
Define the Understand

category its structure
93
DEPENDENT ON THE RETAILER AND CATEGORY –
THE SHOPPER PROFILE WILL DIFFER
Pet CONSUMERS
food SHOPPERS
CONSUMERS
Food SHOPPERS
CONSUMERS
Personal
Hygiene SHOPPERS
Supermarket ≠
Convenience Store ≠
Cash & Carry / Wholesaler
94
Define the category
DEFINING
THE CATEGORY
KEY BUSINESS QUESTION
WHAT IS THE CATEGORY WE WILL
BE WORKING ON AND WHICH
PRODUCTS BELONG TO IT?
CATEGORY DEFINITION PROCESS
Define the consumer need
List interrelated & substitutable products
Cluster them in groups

Define measurable & manageable categories
96
EXAMPLE: LOW INCOME SHOPPERS
Need To have clean dishes at home
Interrelated
products
Clustered 550 SKUs

into groups 48 suppliers
4 locations
Manageable 67 SKUs
category 18 suppliers
1 location
Substitutable products
(segments) 46 SKUs / 21SKUs
Regular Added-value 97
A PROPER DEFINITION.
Category definition
Dishwashing Liquids
• All detergent-based products designed to clean dishes

by hand.
• It includes any products that may be
observed/described as a detergent-based household
preparation specifically designed to clean dishes by
hand.
• It excludes products such as tablets and powder, laundry

detergents, household and general-purpose soaps,
household cleansers, and all cleaning products not
specifically intended for use in dish care.
POINTS OF ATTENTION
It is important that the grouping is not…
• …Too large, for strategic focus
• …Too small, and therefore insular, possibly ignoring
the bigger picture
Every product should be evaluated from

• Retailer’s perspective
(Store Management)
• Manufacturer’s perspective
(Category Expert)
• Shopper perspective
(Consumer Need - current or potential future )
The extent and structure of the category varies by format and is
determined by the retailer with input from his captain
99
Define the category
SEGMENTING
THE CATEGORY
KEY OBJECTIVE
UNDERSTAND THE GROUPINGS OF
HIGHLY SIMILAR PRODUCTS THAT
SHOPPERS MAKE
CATEGORY DECISION TREE

DO LAYOUTS REFLECT HOW SHOPPERS SEGMENT

THE CATEGORY?
CATEGORY X
Brand A Brand B Brand C Brand D
Small pack size Small pack size Small pack size Small pack size
Medium Medium Medium Medium

pack size pack size pack size pack size
Big pack size Big pack size Big pack size Big pack size
101
THERE ARE MANY DIFFERENT WAYS IN WHICH

CONSUMERS COULD SEGMENT A CATEGORY
Examples of a category segmentation parameters
Example
Meal occasion Morning/evening; snack/main meal
End use Bathroom/kitchen; indoor/outdoor
Formula Diet/regular; decaff/caffeine; smooth/strong
Brands Coca-Cola/others
Size Single use/multipack
Price position Economy/regular/premium

Recipe/flavour Indian/Chinese; beef/chicken; orange/lemon
End user Male/female; children/adults; cat/dogs
Format Liquid/powder; spray/roll-on
Which ones appear, and in which order?

102
LAUNDRY DETERGENT
SHOPPER DECISION TREE EXAMPLE:
104
UNDERSTAND THE STRUCTURE OF THE CATEGORY
Prioritize the parameters

using the following key
question:
if some product segments Store switching Pre-store decision

with that specific attribute
were not available, would Product switching In-store decision
shoppers
Orange Juice
• switch to another store Tropicana
 important factor Minute Maid
• switch to another product Fruit
 less important factor
Apple Juice Juice Vinamilk
Mango Juice 106

WHERE DOES BRAND FIT?
• The shopper purchase decision hierarchy is shaped by

consumer usage, needs, occasion, of which Brand only plays a
part
• Brand can appear directly in the hierarchy if:

- Brand has a dominating share
- Brand loyalty is extremely high
- Consumer marketing dominated category
107
HOW TO FIND OUT THE CATEGORY DECISION TREE?
• Market research data

• Qualitative in-depth exit interviews
• Virtual Shopper quantitative study
• Quantitative substitution exit interview questionnaires
• Consumer panel or loyalty card data using market structure
methodology
• Purchase frequency of product
• Purchase quantity rates
• Brand loyalty
• Brand switching / substitution rates
108
CASE STUDY: GS RETAIL & DONGSUH FOODS,

KOREA
• Building planogram principle by category decision tree
• Sectioning by sub-category sales ratio
GS Retail Dongsuh Foods • Customized roll-out in 15 stores
Source: ECR Asia
Category value sales + 14%
Workshop
109
OUR RETAILER
Local chain of supermarkets

Famous for imported products
Share in the market: 6.2%
110
CATEGORY DEFINITION / DECISION TREE EXERCISE
• Write the definition of your category (one sentence)

• Specify min. one product type that would be excluded from the definition
• Work out the category decision tree (max. three levels)
Milk Powder
Coffee
Liquid Milk
Sauces
Split into groups. 15 minutes to prepare. Nominate someone to

feedback. 5 minutes to present.
111
Source: ECR EUROPE, Barcelona. Coca-Cola & Morrisons, UK

112
Source: ECR EUROPE, Barcelona. Coca-Cola & Morrisons, UK

113
REMINDING CONSUMPTION OCCASIONS
Every day use
Special moment
See Through storage
114
PLAN ON A PAGE
FILL IN THE RELEVANT PART IN YOUR CATEGORY
115
CATEGORY ROLE
4 category roles
EACH CATEGORY CONTRIBUTES TOWARDS THE
RETAILER STRATEGY
Category Category Category Category Category Category Category Category Category Category Category
A B C D E F G H I J J
Attract target Drive value, Generate impulse Enable one-

shoppers, achieve profit, build purchase, increase stop shopping

differentiation, retailer overall as basket size
provide maximum a store of choice
shopper
satisfaction
117
FOUR DIFFERENT CATEGORY ROLES
Destination Occasional / Seasonal

(5%-7% of categories) (15%-20% of categories)
Total: 150-400 categories
Routine Convenience
(55%-60% of categories) (15%-20% of categories)
The role will drive the efforts 118

CATEGORY ROLE DEFINITIONS

Destination - To be the primary category
provider and help define the retailer as the
store of choice by delivering consistent,
superior target consumer value
- Signature items
- High consumer penetration
- Highly image building
- Will ensure differentiation 5%-7% of categories
Routine - To be one of the preferred category

providers and help develop the retailer as the
store of choice by delivering consistent,
competitive target consumer value
- Core items
- High consumer penetration
- Important turnover 55%-60% of categories
119
CATEGORY ROLE DEFINITIONS
Occasional / Seasonal - To be a major

category provider, to help reinforce
the retailer as the store of choice by
delivering frequent, competitive
target consumer value
Only shopped at certain times
15%-20% of categories
Convenience - To be a category
provider and help reinforce the
retailer as the store of choice by
delivering good target consumer
value
- Ease the shopping experience
15%-20% of categories - Impulse categories
Workshop
120
HOW TO ASSIGN THE ROLE TO A CATEGORY?
Is the category Is the category important Is the category

important for the target for the retailer vs. delivering a good
shopper? competitors? performance?
Penetration Vision Share

Frequency Mission Growth
Spend Differentiation Margin
Roles are based on goals and are not necessarily

reflective of current realities
Workshop
121
CATEGORY ROLE BREAKOUT
Objective: using the description of V-Mart and the performance

of various categories, determine the role of your category for V-
Mart.
V-Mart
“We make our customers
look and feel good with the
best from around the world”
Split into same groups. 20 minutes to prepare.

Nominate someone to feedback. 2 minutes to present.
122
HOW TO ASSIGN THE ROLE TO A CATEGORY?

Is the category Is the category important Is the category
important for the target for the retailer vs. delivering a good
shopper? competitors? performance?
Penetration Vision Share

Frequency Mission Growth
Spend Differentiation Margin
Workshop
123
PLAN ON A PAGE
124
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need a category decision tree? Just contact us

CATEGORY ASSESSMENT
Four assessment areas

Category issues &
opportunities
FOUR AREAS TO UNDERSTAND OPPORTUNITIES
Category
CONSUMER / MARKET
SHOPPER Segment
Brand
SKU
RETAILER SUPPLIER
Panel, Scanning, Interviews,

Observations, Neuroscience…
Opportunities and objectives 128

CONSUMER ASSESSMENT
• What do we know about the consumers of this category?

- demographics
- lifestyle
- attitude
• What is the category penetration rate?

• Why and when do they use the category?
• What do they like/dislike?
• What are some of the barriers for consumption?
Workshop
129
SHOPPER ASSESSMENT
Who  Why  Where  What  How

Segments Missions Channel/Store Category / Shopper
choice product choice behavior
Workshop
130
MARKET VS RETAILER ASSESSMENT
Category & segments trends

Number of SKUs
Seasonality
Pricing per segment/SKU
Share & performance of Margins, ROI

each channel / retailer Space allocation
Days of stock
Promotion effectiveness
Workshop
131
SUPPLIER DATA
• Share
• Growth
• Margin
• Innovation level
• Replenishment capability (Electronic Data Exchange, direct
store delivery, etc.)
• Delivery reliability
132
ASSESSMENT EXERCISE
Look at the analysis information for your category.

There is one key issue in each category. Write down the key issue and the implied
action you might have to take for the category.
Split into same groups. 20 minutes to prepare. Nominate

someone to feedback. 5 minutes to present key facts and
actions.
133
134
135
136
137
PLAN ON A PAGE
138
CATEGORY SCORECARD
Key scorecard values

QUANTIFY AND CAPTURE PERFORMANCE
OBJECTIVES
Possible metrics Current Target
PERFORMANCE
Sales
Key Measurable
Category value sales Opportunities Objectives
Sales/sq ft/ wk
Profit
Gross Profit
1
Gross margin %
Gross Profit/sq ft/ wk
2
Share
Category to total business
3
Retailer category market share
4
SHOPPERS
Penetration 5
Frequency
6
Transaction Size
Retention Rate
Satisfaction Rating 7
SUPPLY 8
Days of supply
Inventory value
Turns
GMROI
Service level
140
KEY FINANCIAL VALUES
GROSS & NET PROFIT
• COGS = Cost of Goods Sold
• Gross Profit (Profit before expenses)

– Gross Profit $ = Sales - COGS
– Gross Margin % = Gross Profit x 100
Sales 1
• Net Profit (Profit after expenses)

– Net Profit $ = Sales - COGS - Expenses
– Net Profit % = Net Profit x 100
Sales 1
142
CONTRIBUTION TO MARGIN
• CTM is a method for analysing the profit contribution of

different components.
• CTM can be used at retail level for Department, Category,
Segment and Promotional analyses.
% of Sales x Gross Margin = CTM

Dairy 11% 25% 2.75
Fruit & Veg 12% 28% 3.36
Meat 11% 19% 2.09
143
GMROII: GROSS MARGIN RETURN ON

INVENTORY INVESTMENT
Yearly Gross Profit 35mil

GMROII = = 3.5
Average Inventory
10mil
Value (at cost)
Indicates the number to times gross margin is earned from

the invested inventory (= how valuable is the inventory).
Avg. grocery GMROI in the US is 5,0*. Minimum should
be around 3.2.
*Source: Risk Management Institute, Seattle
145
SCORECARD
Fill-in the scorecard section in your Category Management

plan according to the below instructions
Milk Powder: how much additional sales revenue would you
achieve if Follow-On would get the same growth rate as the
market?
Liquid Milk: how many additional volume sales would you
achieve if promoting Brand D?
Sauce: how much additional profit could we achieve by
bringing out of stock for Brand D to an average of 2%
Coffee: how many additional households buying coffee at V-

Mart could we achieve if regaining historical penetration
levels?
Split into same groups. 5 minutes to prepare.
146
CATEGORY STRATEGY
Seven possible strategies

HOW TO ACHIEVE THE TARGET
Attract & retain Shoppers Increase Shopper spend Increase profit / cash flow
Traffic builder Transaction builder Profit generator
Image builder Cash generator
Excitement Creator
Turf protection
Strategy
Profit Transact.
Image Cash
148
A TRAFFIC BUILDING STRATEGY FOCUSES ON

ATTRACTING SHOPPERS
• Strategic Assignment
• Persuade shoppers to visit the category
• To direct shoppers moving in the store
• Segment Property
• Segment with high buying rate
• High penetration among target group
• Segment with high price sensitivity
149
A TRANSACTION BUILDING STRATEGY FOCUSES

ON CREATING VALUE
• Increase value of shopper’s shopping basket
• To increase average purchase
• High impulse purchase
• Complementary goods
• Segments attractive to target group
150
A PROFIT GENERATING STRATEGY FOCUSES ON

CREATING PROFIT
• Increase the profitability of category
• Segments with high margin
• Low price sensitivity and low price awareness among shopper
151
A CASH GENERATING STRATEGY FOCUSES ON

CREATING CASH FLOW
• Increase cash flow
• Segments with high penetration, buying frequency and turnover
152
A IMAGE BUILDING STRATEGY FOCUSES ON

INCREASING THE SHOPPER’S PERCEPTIONS
• To strengthen desired image in mind of shopper i.e. “high quality”,
“wide assortment”
• Certain segments may be used as image creators with unique features
• Special products in assortment
153
AN IMAGE BUILDING STRATEGY FOCUSES ON

INCREASING THE SHOPPER’S PERCEPTIONS
154
A TURF PROTECTING STRATEGY FOCUSES ON

KEEPING THE SHOPPER’S LOYALTY
• Protect currently high market share
• Maintain loyalty of current shoppers
• Segments with high importance for target group
155
A EXCITEMENT CREATING STRATEGY FOCUSES

ON INCREASING THE SHOPPER’S AWARENESS
• Increase impulse purchases by creating needs and image enhancement
• New Segments, products with high impulse rate
156
STRATEGIES MOST OFTEN IMPLIED BY ROLE

• Destination • Occasional / Seasonal
• Traffic Building • Traffic Building
• Turf Defending • Excitement Creation
• Transaction Building • Profit Generating
• Image Enhancing • Transaction Building
• Excitement Creation
• Routine
• Transaction Building • Convenience
• Profit Generating • Transaction Building
• Cash Generating • Profit Generating
• Image Enhancing (mainly just One-
Stop-Shop image)
157
STRATEGIES BREAKOUT
Take into account the category role you have chosen earlier
Listen to what the retailer’s CatMan team says about your

category and determine 1 or max. 2 strategy/ies to apply.
10 minutes to prepare, 3 minutes to present.

158
PLAN ON A PAGE
159
STOP AND THINK
RECAP DAY 1
• A changing marketplace
• Why Category Management
• Roles, responsibilities, benefits
• 8 steps introduction
• 5 first steps
161
RECAP DAY 1
Any questions?
Tomorrow start at 9am
162
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need a category assessment? Just contact us

PRACTICAL CATEGORY
MANAGEMENT WORKSHOP
DAY TWO
REVIEW DAY 1
165
SHOPPER KNOWLEDGE
The human eye

The human body
The human brain
Workshop
167
EYE LEVEL IS NOT BUY LEVEL
15°
30°
168
Source: Nielsen shopper observation
STANDING
5-7 meters
1.5 meters
THE EYE ACTS DIFFERENTLY WHETHER WALKING OR
169
THE HUMAN EYE REACTS FASTER TO THREE COLORS
170
Workshop
THE HUMAN EYE GETS ATTRACTED BY….
172
LIGHT ATTRACTS THE HUMAN EYE
173
USE BASKETS/TROLLEYS ENCOURAGES PURCHASING
= min.+20%
= +20%-30%
 Spread baskets around, optimize

size of the trolley
174
SHOPPERS USE FAMILIAR COLORS AND SHAPE TO

NAVIGATE IN THE STORE
Brand
As our brain simplifies tasks and puts us into auto-pilot,

as we are attracted by the familiar
175
SHOPPERS ARE EITHER IN SHOPPING MODE AND

LOCATING MODE
Locating
Transition
Shopping
176
BROWSING (IN HIGH INTERACTION CATEGORIES) NATURALLY

TENDS TO HAPPENS IN THE MIDDLE OF AN AISLE.

Browsing
LOCATING SHOPPING MODE LOCATING

MODE MODE
177
WOMEN ONLY HAVE A LIMITED REACH
• Majority of shoppers are women
• Average height of woman :
1.50-1.60m
• Average reach is about:
1.70-1.80m
 Avoid “virtual out-of-stock”
178
SHOPPERS TEND TO SEEK PRODUCT INFORMATION

FROM BIG PACK SIZES
1 litre pack sizes play a role Small pack sizes (110 or 180 ml)
in conveying information are purchased
81% bought 4x small

packs
179
Source : Exit Interviews/Focus Group Discussions
MIRROR, MIRROR ON THE WALL…
Mirrors slow shoppers down and

increase sales of whatever is next
to them
180
IN-STORE TV MEDIA NEEDS TO FIT WITHIN THE

SHOPPER EXPERIENCE
• nobody watched the ads

• better location near cash
desk or at eye level on
the aisle
• short messages in display
more effective
182
Source: shopper observations
SAMPLE BEST PRACTICES FOR RETAIL
NEUROLOGICAL BEST PRACTICES FOR RETAIL

MARKETING
AVOID “REPETITION
BLINDNESS.”
Too much of the same

thing in the aisle will
decrease the
effectiveness of all
displays and signs. If
everything looks the
same, everything will
suffer.
185

MARKETING
BEST
PRACTICES
USE THE
ENVIRONMENT TO
PRIME THE PRODUCT.
Appropriate materials enhance the
characteristics of the products or
displays. Natural-looking materials
are especially important for food
product displays.
186

MARKETING
KEEP IT SIMPLE.
The Brain loves order

and simplicity. Clutter
overwhelms and
frustrates the
shopping brain.
187
IT’S ALL ABOUT CHOICE
188
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need shopper insights? Just contact us

CATEGORY TACTICS
Range
Macro & Micro Space Planning
Price
Promotion
Assortment management
List Maintain De-list
to maximise shopper satisfaction
Key content & output

Less is more? Final product range
Listings
Delistings
Workshop
192
KEY QUESTIONS TO ADDRESS
How many How to build Are we

What is the
products to assortment considering all
expected impact
satisfy shopper breadth and addition/deletion
on sales?
needs? depth? criteria?
Product range
193
BUILDING BREADTH VS DEPTH

When adding, consider Breadth first
When removing, consider Depth first
Breadth (Segments, sub-segments)
4 1 3 9 - 8
2 5 6 Depth (brands,
10 7 price points,
pack sizes)
194
MARKET COVERAGE: HOW MANY PRODUCTS DO

WE NEED
How much consumer demand does the retailer satisfy with its current
product range? Does he need more? Can he afford less?
Market data Retailer data

Market
Market coverage benchmarks:
share% Destination: >80%
SKU 1 xx.x SKU 1 Routine: > 60%
SKU 2 xx.x SKU 2 Convenience: 35%-40%
SKU 3 xx.x SKU 4 Seasonal: according to season & strategy
SKU 4 xx.x SKU 5
SKU 5 xx.x SKU 7
SKU 6 xx.x …
SKU 7 xx.x
… xx.x
XX.X = market coverage
195
THE 20/80 PARETO PRINCIPLE

IN
Must have Strategic Questionable Candidates for listing based
on sales in the market
Cumulated value sales in the category
(retailer data) Value sales
SKU 1
SKU 2
80%
SKU 3
… Ranking
Cum. value share
… excluding
… promotions
…
…
…
20%-30%
…
OUT
20% No. of Candidates for
products de-listing
196
ELEMENTS TO BE CONSIDERED BEFORE DELETING
Lifecycle
Cat1 Cat2
Regional differences, off-take, cross-category purchases, brand loyalty, profit margin, supplier strategy/promotional support, lifecycle 197
ELEMENTS TO BE CONSIDERED BEFORE ADDING
Product duplication, shopper value, logistics issues, exclusivity/first mover advantage, innovative, in
198
line with target shoppers profile, needs and expectations
ASSORTMENT BREAKOUT
• Soy sauce: based on the information you have, and given a

one in-one out rule, what assortment recommendations will
you make?
• Liquid Milk: which 3 SKUs would you recommend to delete?
• You are Milk Powder manufacturer A: recommend 3 new
SKUs to V-Mart and explain why.
• Coffee: based on the provided information, if you could list 5
more SKUs, how many SKUs of which brands would you

recommend?
20 minutes to prepare, 5 minutes to present. Don’t forget your category role and
strategies!
Workshop
200
Workshop
201
Workshop
202
Workshop
203
Workshop
204
PLAN ON A PAGE
205
Category location (macro-space)
Key content
and output
Store layouts
Category adjacencies
Multiple sitings
Category location in store

Workshop
208
THE LOCATION IN STORE WILL REINFORCE THE

RETAILER’S IMAGE AND MAXIMIZE SALES
Objectives when choosing the location of categories:
• Attract shoppers into the store
• Encourage stay and browsing
• Guide shoppers through the store
• Expose shopper to high profit areas
• Turn traffic into purchase
• Build store image
Workshop
209
KEY PRINCIPLES
• Place destination categories in high visible, high traffic areas

• Spread destination categories across the store
• Place a high image building category at the entrance
• Place routine categories in “regular” locations
• Place convenience categories in available locations
Coop, Switzerland 210

CATEGORY ADJACENCIES HAVE TO BE THOUGHT

THROUGH
Cross Merchandising
Carbonated Soft Mineral
Drink Water
Beer Wine
Salty Snack Candy
Workshop
211
THOUGHT THROUGH
CATEGORY DUAL PLACEMENT HAVE TO BE
212
THE SPACE ALLOCATED TO EACH CATEGORY
• The more a category sells, the more space it deserves…

but…
• Is there enough space to support the existing assortment
without risking out of stocks of fast movers?
• Do we need to increase the visibility based on the desired
strategy?
• Does the category have very large pack sizes which need a
disproportionate size?
• Has the space allocation kept in line with the increase in
sales of the category or segments in the category?
Workshop
213
LOCATION BREAKOUT
Looking at the store map, where would you place your

category?
Split into same groups. 10 minutes to prepare. 2 minutes to present.
Workshop
214
FOOD
NON-FOOD
FOOD
FROZEN
DAIRY, MEAT
DRINKS
FRUIT,
SNACKS
VEGETABLE
215
Traffic & Dwell time
DAIRY, MEAT
FROZEN FRUIT,
FOOD FOOD VEGETABLE
SNACKS
NON-FOOD DRINKS
216
Codification
N
W E
S
3 B West
A
B 10
C
D 1 2 3 4 5 6 7 8 9 11
E
F 12
23 North
G 22
13
H 23
15 16 17 18 19 20 21
I
24
J 14
K 25
L 217
PLAN ON A PAGE
218
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOPS
Need a product range review? Just contact us

Product space allocation
x x
y y z
Key content & outputs

Facings calculation Facings per SKU
Selling vs. allocating facings

Workshop
221
THE ALLOCATION OF FACINGS WILL BE DONE BY

CONSIDERING VARIOUS FACTORS
• Unit sales
• Value sales
• Profit
• Brand image
• Strategy
• Etc…
Workshop
222
BUT THE BASE IS ALWAYS UNIT SALES

Unit sales Facings
1,000
• Brand A 1,000
4 4,500 * 18
2,000
• Brand B 2,000
8 4,500 * 18
• Brand C 1,500 6 1,500
4,500 * 18
4,500
Facings available: 18
Workshop
223
BUT THERE WILL BE LOSERS
• Poor performing products will lose space, and ultimately be

deleted from the assortment
• 40% of share of sales does not always mean 40% of shelf

space
Workshop
224
FACINGS BREAKOUT
Which of the following will you take into account when allocating facings in your
category? More than one answer possible.
Unit sales
Price per SKU
Margin
Origin
Team work. 5 minutes to discuss. Same teams as before

225
FACINGS BREAKOUT
Looking at the following information, determine the number of facings for various
SKUs and be ready to defend your point of view.
Unit sales Supplier Price Origin Margin%
Product A 320 Alpha Medium Local Low
Product B 350 Beta Low Local Medium
Product C 160 Delta Medium Imported High
Product D 170 Omega High Local Medium

1,000
Available facings: 10
Team work. 10 minutes to prepare. Same teams as before.
Team Coffee: you work for Manufacturer Alpha
Team Liquid Milk: you work for Manufacturer Omega
Other teams: you work in V-Mart’s own Merchandising Team 226
Placement

Key merchandising rules Planogram
Category signage Category in-store theatre elements
Workshop
227
PLACEMENT ON THE SHELF (=MERCHANDISING)
Based on
• common shopper behavior
• shopper decision tree
Define the
• retailer strategy merchandising
• product range principles to be
used
• space available
• etc…
Workshop
228
GENERAL MERCHANDISING RULES
Create clear segment blocks

following the Decision Tree
Workshop
229

Large store Small store
Segment 1
Segment 1 Segment 2 Segment 3 1st level of
Segment 2 decision
tree
Segment 3
1.5m
2nd level
or of
decision
tree
Min. 40-50cm
Create clear segment blocks 230

BRAND BLOCKING EXAMPLE
Products made by
same manufacturer
grouped together.
Using the packaging
design to create
attractive fixture
231
BRAND PRESENTATION
232
COLOR PRESENTATION
Workshop
233
FUNCTION PRESENTATION
234
DISPLAY BY FUNCTION AND PRICING
Regular phone Smartphone

<<<<< 1mio <<<<< 2mio <<<<< 3mio <<<<< 4mio <<<<< 6mio <<<<< 8mio <<< 14mio
235
Allocate facings according to sales, objectives

and strategy
Workshop
236
PLACE PRODUCT TO PUSH FOR HIGH INTERACTION

CATEGORIES IN THE MIDDLE OF THE AISLE

Products you want to push
Browsing
LOCATING SHOPPING MODE

MODE
Assumed consumer flow
237
LEADING PRODUCTS ACT AS SIGNPOSTS FOR LOW

INTERACTION CATEGORIES

Products shoppers
expect to find
quickly
Other
products you
want to push
(leaders)
Grab & Go
LOCATION SHOPPING MODE

MODE
Assumed consumer flow
238
Large pack sizes or high rotation items
239
THE BOTTOM SHELF
240
GENERAL MERCHANDISING RULES: TO INCREASE

PROFIT
Medium profit items
High profit items
Medium profit items
Low profit items
241
GENERAL MERCHANDISING RULES: TO BUILD

IMAGE
Excellent image
Good image
Low image
242
GENERAL MERCHANDISING RULES: FOR PRICE

SENSITIVE CATEGORIES
Expensive
Medium price
Cheap
243
BUILDING A PLANOGRAM AND SHELF STRATEGY
Planogram
SDT
Segment A Segment B Segment C
+ Merchandising
Segments on shelf principles
Allocate products to segments
244
RELEASING STANDARD PLANOGRAMS
245
246
SIGNAGE WILL HELP TO LOCATE THE CATEGORY

AND TO MAKE CHOICES
247
Source: ECR, IGD
HELPING SHOPPER TO MAKE A SELECTION
249
SIGNAGE MAKES IT MORE ENGAGING
250
SIGNAGE, LIGHT AND EDUCATION MATERIAL

CONTRIBUTES TO A GREAT SHOPPING EXPERIENCE
LUMINARIA
VERTICAL CON
INFORMACIÓN
MECHEROS
GIRATORIO
ESPEJO
HOT SPOT (ESPACIO NOVEDAD) 253

PRIVATE LABELS
THERE ARE USUALLY THREE DIFFERENT TYPES OF
PRIVATE LABELS
Generic Private Label + organic, fresh,
• Strategy – Cheapest, entry price point, basic product special diet needs,
• Objectives – Provide customer with low price option, expand customer base
ethical, …
• Branding – No brand name, or identified as first price label
• Pricing – Large discount, 20-50% below brand leader
• Category coverage – Basic functional product categories
Copy Brand
• Strategy – Similar product at a lower price
• Objectives – Increase negotiation power, increase retailers share of category profit
• Branding – Store brand or category-specific own labels
• Pricing – Moderate discount, 5-25% below brand leader
• Category coverage – Originated in large categories with strong brand leader
Premium Store Brand

• Strategy – Value added
• Objectives – Provide added value product, differentiate store, increase sales & margin
• Branding – Store brand with sub-brand or own label
• Pricing – Close to or higher than brand leader
• Category coverage – Image-forming categories, often fresh products
255
IN THE CONTEXT OF CATEGORY MANAGEMENT
• Private labels must be accepted and considered when

available or planned
• Sales and ROI must be assessed just like any other

manufacturer brand to justify them in the assortment
• Depending on the category strategy and the nature of the

Private Labels, they will usually be placed at the beginning
of a category section as a price entry point, or next to the
leading brand to attract shoppers
256
MERCHANDISING RULES
What are some of the key merchandising rules you will use? Add them to your
category plan.
Coffee: 2 bays
Milk Powder: 8 bays
Liquid Milk: 4 bays
Sauces: 2 bays
1) First blocks by which elements of the tree?

2) Horizontal or vertical?
3) Push visibility of which products?
Same groups. 5 minutes to prepare

257
STOP AND THINK
CATEGORY
MANAGEMENT
WORKSHOP SERIES
Need a planogram? Just contact us

Pricing Promotions

EDLP / Hi-Lo Pricing &
Promotional plan
Key promotional rules
Tactics by role / strategy 260

THE RIGHT PRICING NEEDS TO BE DETERMINED
• Key inputs to determine pricing per SKU:

• Role and Strategy
• Competitors price positioning
• Gross Margins
• Value provided to shoppers
• Pricing approach:
• High-Low (high reaction to promotional price decrease)
• Every Day Low Price (EDLP) (high reaction to long term price
increases) 261
KEY RULES
Increase?
Maintain?
Decrease?
$=?
262
PROMOTIONS MUST OFFER CONSUMPTION

SOLUTIONS TO OCCASIONS
1) Choose the 2) Choose the

right occasions right solutions
International day of… SKU

Flavor
Anniversaries… Size
Events…
263
PROMOTIONS MUST BE VISIBLE
264
“POWER AISLE”, GONDOLA END EXAMPLES
265
ENSURE EFFICIENCY OF PROMOTIONS TO

MAXIMIZE TOTAL CATEGORY VALUE
• Don’t promote leading SKUs at similar price positioning at

the same time: the whole competitive set gets cheaper,
cross-trial will not happen, hence not maximizing category
sales
• Maximize calendar events leverage
• Achieve Above The Line / Below The Line synergies
266
TACTICS BREAKOUT GROUPS 1 & 2
Fill in the following board with the appropriate text boxes provided.
Provide one example per category role.
CATEGORY TACTICS
CATEGORY
Assortment Merchandising Price Promotion
ROLES
Destination
Preferred
Occasional
(seasonal)
Convenience
Split into different groups. 20 minutes to prepare. 5 minutes to present.

267
Fill in the following board with the appropriate text boxes provided.
Provide one category example per strategy.
Strategy Product characteristics Key tactics

Traffic
building
Transaction
building
Cash
generating
Profit
generating
Turf defending
Excitement
creating
Image
enhancing
Split into different groups. 20 minutes to prepare. 5 minutes to present. 268

Product characteristics Key tactics

Strategy
Traffic building Products with high share, high price awareness, Frequently promote high loyalty items with
high household penetration & loyalty and frequent important discount, maximize visibility. Create
purchase loyalty with EDLP items.
Transaction Products with large transaction size, attractive to Promote big spending segments, encourage
building large families, move well off display and subject trade up and cross-category purchase. Slightly
to impulse purchase bias visibility towards high priced items.
Cash Fast turning products with excellent payment Ensure good payment terms, draw consumer
generating terms and low inventory. attention with high visibility for new/high profile
SKUs
Profit Products with higher margin, higher loyalty, with Limit promotions to items with above average
generating highly profitable cross-category purchases and margin, minimize price discounts, slightly bias
little price sensitivity visibility towards high profit SKUs
Turf defending Products frequently purchased by target customer High promotional frequency on selected SKUs to
with big consumer preference, highly price- highlight competitiveness. Keep price at parity
sensitive, frequently promoted by competition with competitors, focus on media events.
Maximize visibility of own labels.
Excitement New or seasonal products, rapidly growing Discount new, noteworthy items to communicate
creating segments excitement and urgency, chose high profile
location in store.
Image Products that reinforce the store theme or Frequently promote image building products, only
enhancing advertised positioning (freshness, healthy, quality, discount if pricing image desired, also use media
price, etc.) advertising
269
CATEGORY TACTICS
CATEGORY
Assortment Merchandising Price Promotion
ROLES
Destination Complete variety Prime store Leadership (best High level of
at segment and location with high value for the activity, high
SKU level traffic, high category, loss frequency, long
exposure leader) duration, many
vehicles
Routine Broad variety, Average store Equal to Average level of

down to SKU level location, high competition, activities, various
space allocation across all SKUs vehicles
Occasional Timely variety Good store Equal to Seasonal, timely

(seasonal) location, average competition during activities using
space allocation season several vehicles
Convenience Selected SKUs Available store Within reach of Low level,

(biggest sellers) location competition, selected vehicles
around 15%
higher
270
Fill in the category plan with the key rules for pricing and
promotions
Which pricing level vs. the

average market?
High
Medium
Low
Which level of
promotions?
High
Medium
Low
Same groups. 5 minutes to prepare

271
the
Plan
You just
Category
completed
CONGRATULATIONS!
274
CATEGORY IMPLEMENTATION
Implementation plan
A CAREFUL IMPLEMENTATION IS AS IMPORTANT AS

ALL THE PREVIOUS STEPS
• Final approval
• Tasks and timing
• Roles and responsibilities
• Monitor compliance
276
THE FINAL APPROVAL HAS TO INVOLVE ALL

DECISION MAKING PARTIES OF THE RETAILER
• Commercial Department
• Marketing Department
• Head of stores
• Buying Department
• Security
• Logistics
• Etc…..
But have them involved earlier!

277
ENSURE TASKS AND TIMINGS ARE COMMUNICATED

AND UNDERSTOOD
• De-listed products
• New products
• New planogram in store
• Promotion plan
• Price changes
• New signage / POS material
 prepare an implementation plan
278
MONITOR COMPLIANCE AS IMPLEMENTED PLANS

CAN CHANGE VERY QUICKLY
Visit stores at least once a week

• Check planogram: range and facings
• Check if promotional material is in place
• Check signage / POS material
• Check product availability
279
MONITORING STORE EXECUTIONS
Approved Lay-out Store check Photo
Fell down products
Over stocked product
Nonexistent product at
shelf
Lack of product
& facings
Mirror image
Reversed lay-out
Lack of product
& facings
Send WRITTEN feedback to stores and management

280
CATEGORY REVIEW
Results & corrective actions

A REGULAR REVIEW IS NECESSARY TO ENSURE

LONG TERM SUCCESS
Destination Routine Convenience
Monitoring Monthly Quarterly Every 6
results months
Going through 2x/year 1x year Every 2
the 8 steps years
• Influenced by category dynamics

• Measure progress using the scorecard
• Review strategies, tactics and implementation
• Identify and implement corrective actions
282
MEASURE THE SUCCESS
Q1 Year N-1 Q4 Year N-1 Q1 Year N

Financials
Shopper behavior
a b c
Shopper satisfaction
Other categories same store

Same category different stores = Index
Q1 Year N-1 Q4 Year N-1 Q1 Year N
d e f = Index
283
SUMMARY
CATEGORY MANAGEMENT IS A SHOPPER-CENTRIC

WAY OF WORKING TO IMPROVE PERFORMANCE
285
HOW PEOPLE SHOULD HAVE CHANGED
Enemies Partners
Seeing pieces of puzzles Seeing the FULL picture
Short term Tactical focus Long term Strategic focus

No common platform A standardized process
286
WILL CATMAN LEAD TO HAVING EXACTLY THE

SAME LAYOUTS ACROSS ALL RETAILERS?
No!
Different target shoppers
Different category roles
Different store formats
Different store missions
Different strategies
288
TYPICAL RESULTS IN ALL AREAS
• Increased sales and gross profits by 5% to 10%

• Increased ROI by 5% to 10%
• Reduced inventory investment by 10% - 20%
Results published by ECR in the US Workshop

290
Workshop
EXAMPLE: P&G AND VANGUARD, CHINA
291
IMMEDIATE RESULTS
Workshop
292
P&G & TESCO, CHINA
Workshop
293
TOOLS & DATA NEEDED
RETAILERS AND MANUFACTURERS NEED TO

UNDERSTAND THE MARKET
• Retail audit measures

• Category, brands, SKU performance by city or region
• Shares
• Distribution
• Pricing
• Promotions
• New products introductions
Workshop
295

UNDERSTAND THE RETAILER
• Key account (Retailer) data

• Retailer specific performance
• All items in the category
• By store
• By shopper group (if available)
• Performance by segment, brand, SKU
• Pricing
• Promotions
• Volume
• Value
• Profit?
Workshop
296

UNDERSTAND THE CONSUMER/SHOPPER
• Who is consuming or shopping the category?

• Consumer and shopper profile through consumer panels, U&A tracking
• Why are they shopping?

• Shopper Missions through quantitative research
• Where are they shopping

• Channel choice understanding through quantitative & qualitative research
• How are consumers shopping the category?

• Shopper modality through exit interviews
• Category decision tree through virtual shopper, exit interviews
• Shopper behavior through in-store observation
• Shopper behavior through consumer card data, consumer panel data
• Shopper satisfaction through exit interviews Workshop
297
SPACE AWARE ASSORTMENT OPTIMIZATION TOOLS
298
RETAILERS AND MANUFACTURERS NEED TOOLS TO

HELP CATEGORY PLACEMENT DECISION MAKING
Workshop
299
RETAILERS AND MANUFACTURERS NEED TOOLS TO

HELP DESIGN PLANOGRAMS
Workshop
300
STOP AND THINK
SOME MORE READING
305
FEEDBACK FORMS
The most dangerous phrase
in the language is 'We've
always done it this way.'
Grace Hopper, computer scientist

Practical CatMan Workshop Nestle Mar 2017

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PRACTICAL

• Get an overview of the current market and shopper

• Understand what tools and data are needed

Roles & responsibilities Category tactics

2/3 of inflation rise in

FAST GROWTH IN NON -FMCG

Car Registration +28% YTD Oct’16

Consumer Confidence Index Calculation

Unit value change Volume change Nominal value growth

Vietnam Urban (49%) Rural (51%)

1.9% 1.7% 2.0%

2015 2016 UR-2015 UR- 2016 RR-2015 RR-2016

Unit value change Volume change Nominal growth

Unit value change Volume change Nominal growth

Source: Nielsen Retail Index – Versus year ago 21

40% 15% 15%

-1.9% -3.5% -2.9%

Unit Value Change Volume Change Nominal Value Growth

Unit Value Change Volume Change Nominal Value Growth

CHANNEL DEVELOPMENT 2016

FAST MOVING CONSUMER GOODS DYNAMICS – MT vs TT

Traditional Trade Off 6 cities MT 6 cities (*)

Unite Value change Volume change Nominal growth

2016 2015 % 2016 2015 2016 2015

Supermarkets 46 52 -6 2.1 2.7 36 49

Personal Care / 19 12 7 1.1 1.0 - -

Base: All shoppers 2015 (n=1500), 2016 (n=1500)

ONLINE CHANNEL ALTHOUGH SMALL BUT SHOWS

2016 2015 % 2016 2015 2016 2015

Department Stores 2 3 -1 0.7 0.7 1 1

Cosmetics Shops 2 2 0 0.8 0.7 0 0

Maternity and Baby 1 - 1 0.8 - - -

Base: All shoppers 2015 (n=1500), 2016 (n=1500)

**Vinmart+ : 950 215 218

Source: Retailers’ official website

SUPER MARKET – No. of store

Super market Feb’16 Feb’17 Super market Feb’16 Feb’17

Source: Retailers’ official website 32

MOM & KID CHAIN EXPANSION – No. of store

Stores Oct-16 Nov-16 Dec-16 Jan-17 Feb-17

Source: Retailers’ official website 33

88% 88% 74%

Willing to pay Customer service Promotion hardly affect

Nielsen Shopper Trend 2017 35

70% willing to pay more for CONVENIENCE #1 attribute

MODERN TRADE TRADITIONAL TRADE

+300 stores (+16%) +60 store s(+4%)

Source: World Bank (2015), Nielsen Cross Platform Study (2016) 37

Base: All respondents n=500

Nielsen Global Survey – Q3 – 2016 Field Dates: Aug 10 to Sep 2, 2016 38

Source: Nielsen Omni shopper 2017

Split into groups. 10 minutes to brainstorm. Nominate a speaker to

RETAILERS HAVE TO ENGAGE WITH SHOPPERS

• Optimize accessibility • Increase traffic,

SUPPLIERS HAVE TO ENGAGE WITH RETAILERS AND

• Develop both consideration and conversion

• Increase focus on shoppers

Definition and relevance

CATEGORY MANAGEMENT DEFINITION

A joint retailer/supplier process

RETAILERS’ FOCUS EVOLVES

RETAILERS: TAKING A STEP BACK

MANUFACTURERS: TWO WAYS TO INCREASE

1990 2000 2010