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Created with insights from the

Category Management Association
(www.cpgcatnet.org)

Thats likely how youd

quantify the amount of
data your company has about any given category. POS
data, shopper insights, line-item reviews enough Excel
sheets and PowerPoint charts to make your eyesight get
a little worse each year, right?
Its great that youre collecting all of this data, but
what are you doing with it? And what are you missing?
Most people dont know what they dont know,
because its inconvenient to think that way, says Gordon
Wade, managing partner and director of best practices for
the Category Management Association (CMA), Wimberley,
Texas. He summarizes this phenomenon and identifies

such weak spots with the acronym IWIK: I wish I knew.

Were here to eradicate the IWIKs.
The Convenience Store Products Category Management Playbook organizes category-management
tools into 10 key areas to standardize processes and
identify gaps in information. It stems from the CMAs ROI
Improvement Plan, which the association uses to evaluate a retailers or manufacturers category-management
functions and suggest changes.
Every retailer or manufacturer should go through
the CMAs ROI Improvement Plan. (Contact Wade
at gwade@cpgcatnet.org for more information.) In
the meantime, well provide you with the 10 steps of

the plan so you can begin formalizing your categorymanagement toolkit and put all that data to measurable use.
Many larger retailers may already have a semblance of this playbook in place, while indie operators
or brands in transition may be more focused on making
sure their night-shift employee shows up tonight.
Given that, you can go through this chronologically,
or pick one step at a time based on your needs today.
Well also share stories from retailers and suppliers on some of their big cat-man wins. Take
inspiration from their best practices for your own
category-management success.

Con ve n ie n c e St ore Pro du cts M A R C H/A PR IL 2 014

25

Consumer decision trees, such as this one for

bottled water shared by Nestle Waters, are
crucial for step two, the Category Shopper
Insight Platform. Work with suppliers for
consumer decision trees for all categories.

Still
Premium

Nonpremium

Unflavored
Flavored
Brand
Brand

The Voice of the Shopper

Historically, category management has focused on the products on your shelf, and
the shelves in your stores. Today, cat-man practitioners are increasingly expanding
their gaze to the shoppers themselves, integrating consumer insights in order to
understand how to get the shopper into the store in the first place and keep them
coming back.
This first step in the CMAs ROI Improvement Plan includes identifying the
behaviors and attitudes of each categorys core shopper. The foundation of this
Voice of the Shopper document involves a standard taxonomy for each category:
Who is the shopper?
What are they buying?
Why are they buying it?
When are they buying it?
How are you influencing their purchase decisions (such as with ads, marketing, social media, in-store signage)?
The goal of this document is to ensure everyone on the team understands
who the category shopper is and knows where to find that information quickly.
More often than not, though, it also serves to reveal gaps in data and areas where
the retailer needs further insights. It also helps retailers understand just what to
do with that data. Most retailers and manufacturers have a lot of data, but it is
pitifully organized, says Wade. This exercise will standardize the capturing and
sharing of that data across the board.
Voice of the Shopper data should come from a combination of supplier data,
POS data and household surveys from third-party firms such as Chicago-based
IRI, and the retailers own data from a loyalty program, intercept surveys and
shopper focus groups, among other places.
When building your Voice of the Shopper, consider the following types of data:
Category structure/consumer need states: how shoppers segment the category;
Path-to-purchase/ethnographic research: behavior in home and in store;
Demographic/psychographic segmentation: answering who the shopper is;
Market share trends: answering what they are buying;
Usage and attitude data: why they are buying it;
Channel trends; where they are buying it;
Seasonal, occasion and purchase-trigger data: when shoppers buy;
Assortment, price, placement and promotions from vendor success models
and internal POS analysis: how we are influencing shoppers.

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Co n ven i en c e Sto r e P r o du c ts M AR C H / AP RI L 201 4

Size

Pack
count
and size

Single vs.
multipack

Category Shopper
Insight Platform

The second tool in the CMAs ROI Improvement Plan takes the Voice of the Shopper and
applies those insights to come up with the strategies, policies and goals for the category.
It includes:
A definition of the category;
The structure of the category;
The role that the category plays within the total store;
The top 10 assessment trends going on in the category and their implications;
Tactics such as identifying traffic drivers and transaction drivers;
Pricing strategies for optimization, such as between premium, popular-price and
private-label brands.
Its the document that you use as a manufacturer to express and deploy your strategies based on your vision of the category. For the retailer its the flip-flop: Heres what I
think the category is; heres how I want to manage that category; here is the role that it
plays within the total portfolio of the store; here are the eight or 10 most important learnings; here are the strategies and tactics, says Wade.
An important element of this step is identifying how the consumer segments the
category and makes decisions accordingly. Shown above is a consumer decision tree
for water purchases, indicating that shoppers now consider brand more than ever, with
more practical considerations such as package size and pack count close behind. Create
similar decision trees for every major category and subcategory, and lean on suppliers
for such insights.

Brand
Size

Pack
count

Category Business Analysis

This step is meant to create a standardized approach to understanding a given

categorys performance. It is actually a document the manufacturer should provide
to the retailer that identifies whats going well and not so well within the category.
It should include at a minimum a review of:
Category and sub-category trends in dollars and unitswhats growing and
declining by sub-category;
Retailer share trends by sub-categorywhere is the retailer strong or weak;
Comparisons to key competitors on assortment, pricing, merchandising and
promotion patterns in areas where the retailer is underperforming;
Conclusions about causes of weak/strong performance.

Insights Summary

Once you have developed a robust, standardized Voice of the Shopper document, youll want to
provide your team with updates throughout the year. This is your Insights Summaryit should
be written in a consistent way and distributed companywide.
Having an Insights Summary ensures that the team member who owns this step is collecting
fresh data on a regular basis. As with the Voice of the Shopper, resources should include supplier
data, third-party firms and the retailers own proprietary insights. Summaries should be prepared
for each major category.

Supplier Evaluation

Most retailers are quick to evaluate a supplier when something goes wrong, says Wade, but
less frequently do they enact a regular evaluation program to ensure vendors are delivering on
their needs.
Supplier Evaluations should include metrics for:
Innovationhow the supplier is feeding the new-product pipeline;
Consumer knowledge;
Strength of offers;
Brand and individual sales trends;
The type and quality of information and tools the supplier is providing the retailer.
The Supplier Evaluation standardizes this practice and should certainly be shared with the
respective vendor so the company can better serve the retailer. Wade recommends undergoing
this step annually.

Retailer Win:
Category Captains
A key element of Anne Flints management of the tobacco category
at Cumberland Farms is the service
of its category captain, Swedish
Match. The manufacturer assists
with category organization for the
Framingham, Mass.-based chain
and provides the analysis we
need and its bipartisan input, says
Flint, senior category manager for
tobacco/OTP, adding that a prudent
category captain realizes that you
cant plug in a certain brand from
that supplier if its an ill-advised fit
for that store.
We constantly review Nielsen
data in collaboration with Swedish
Match to determine what we are not
carrying, and adapt to those findings, Flint says. They will suggest
items for us to carry, knowing our
background as a retailer.
Flint says that geographic considerations are always in play with
her chains own cat-man playbook:
Massachusetts smokeless-tobacco
tax rate had recently risen, which
affected category-management
decisions at stores in that state.
This tax increase is a major factor
as we make decisions going forward
in expanding e-cigs, she says.
I used to go with my gut instinct
[many years ago] from information
gleaned from the Web and Nielsen
rankings, says Flint. Now, we have
a solid picture of what our e-cig sets
should consist of.

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27

Vendor Line Review

While the Supplier Evaluation (No. 5) is meant for the retailer to present to the
supplier, the Vendor Line Review is a document that the vendor must provide the
retailer to summarize category performance.
Often, says Wade, if a retailer isnt proactive in what he or she requires from the
Vendor Line Review, it becomes a tool for the supplier to pitch new items.
The line review tends to be a selling doc instead of an analytical doc, he
says. The retailer should have a standardized document that they send to the
vendor to say, This is what I expect you to bring to me when you bring a line
review.
Vendor Line Reviews should include the following metrics:
Which segments are growing and declining?
Which vendors are growing and declining?
Why those segments/vendors are growing and declining?
What new items are seeing big gains?
Whats going on in the rest of the country thats applicable to the retailer?
What other retailers are doing things that are really unique and different?

Vendor New Item Presentation

A great amount of energy and resources are put toward new-product rollouts. Unfortunately,
says Wade, not nearly enough is put toward following through to ensure the product doesnt
end up collecting dust in a retailers back roomor simply cannibalizing sales from other items.
The CMA recommends retailers create a standard list of questions to ask suppliers when
presented with a new product. Likewise, suppliers should be prepared to provide the following
information in detail:
What segment of the category is it in?
How big is the segment? Is it growing? What was the share of the last item introduced into
this segment? What kind of market share does the item need to attain to reach the claimed
volume levels?
What is this items point of difference?
What makes this product stand out from similar items?
To which shopper segment does this item appeal?
Who will buy this item? When, and why?
How much incremental volume will it generate?
Will it simply replace volume from another item, or does it appeal to a different shopper need?
Whats the effect on total category profit?
Does this item increase gross margin dollars? Does it source volume from lower gross-margindollar items? What is the profit model for the category with this new item?
What is the introductory marketing effort?
What happened the last time you introduced an item into the category? What was the marketing support, and what results did it generate?

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Retailer Win: King Is King

Randy Adams, center store category
manager for Martin & Bayley, parent company of the 113-store Hucks
chain, based in Carmi, Ill., saw a new
sheriff in town: the king. King-size
confection, that is.
People talk about king-size
candy bars growing recently, but
in Hucks stores, its been prevalent
for about two to three years, says
Adams. It started when the Hersheys team approached us about
the upside of king-size bars, so a
decision was made to remove one
12-foot section of gum and mint and
allocate it to king-size varieties.
Even with the downsizing of
gum and mints, our gum and mint
sales remained the same. I actually lost 30 gum/mint SKUs in that
swap-out but didnt lose sales,
Adams continues. When it came to
gum/mint people, the main thing we
found is that they were flavor-loyal
more than brand- or segment-loyal.
Meanwhile, king-size sales at
Hucks stores enjoyed a healthy
percentage increase.
Adams says that Hucks does
aggressive suggestive selling on
candy, and the chain historically
feared that putting a hot price on
a brand would pull away from the
sales of a customers regular brand.
But what occurred was that the guy
who buys a Kit Kat will buy that and
buy a brand we have on special. This
proved my loyalty theory that its not
an either/or, but both, says Adams.

Tactical Success Models

This tool in the retailers arsenal is meant to identify and map out strategies around assortment,
pricing, merchandising and promotion that have proven success.
There are only five things you can do with a product, says Wade. You can put it in or take
it out, price it higher or lower, place it here or there in the plan-o-gram, promote it this way or the
other way, and you can vary the service level. So the question is: What works?
This is where one of the most common category-management mistakes can happen: the lack of
proper follow-through and analysis. Wade urges manufacturers to develop the metrics to measure
the effects of promotionsand retailers to demand such analytics from their vendor partners.
One of the great sins of modern marketing is that management will spend hundreds of
thousands of dollars on an initiative and nothing on measuring its appeal to the shopper, he says.
Agree in advance what will be measured and how. If you dont have the data, ask yourself whats
more expensive, the data you need or the continuing ignorance about what is working and not.

Category Profit Report

While the Vendor Line Review is intended for the supplier to present to the retailer, and
the Supplier Review is meant for the retailer to analyze the supplier, the Category Profit
Report is an internal tool to help the retailer identify what items are generating profits
and, based on such performances, the role of that category within the total store.
The Category Profit Report should:
Compare categories on a series of metrics based on corporate strategy and
category-management objectives;
Inform and align management around performance metrics, revealing how the
company is delivering against its strategic objectives;
Be assigned to an owner who will develop such cross-category reports regularly.
This step reveals the more holistic, total-store view of category management.
While we manage on the basis of a category being a strategic business unit, it is managed as a part of a portfolio, says Wade. That is the purpose of the role development
step in category management. That is where one looks at a category and says: This is
a really important category to me; therefore, I should give it more assets, more space,
more inventory and more of my time, because its really important.

Competitive Review

Most retailers track their competitors, but how many are doing it in a standardized way? This final
step in the CMAs ROI Improvement Plan has you create a formatted review of principal competitors.
It should include:
The companys strategies and tactics around assortment, pricing, merchandising and promotion;
Overarching company initiatives;
Recent changes to the company as a whole and the category specifically.
Assign one person per category to own this task on an ongoing schedule, sending updates to the entire
team on a monthly or bi-monthly basis, says Wade. Lean on suppliers and third-party firms for some real
data-driven insights for the reports, and look not just at the c-store channel, but also competitors across
the segment.
A shopper doesnt think of just c-stores when hes going to lunch, Wade says. He thinks about everything from a Frischs here in Cincinnati to a McDonalds to an Applebees, as well as a Hess and a Wawa.

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Co n ven i en c e Sto r e P r o du c ts M AR C H / AP RI L 201 4

Supplier Win: Their

Store, Their Brand
The power of CPG brands is undeniable: A consumer often enters a
c-store looking not for a candy bar,
but a Snickers. They want Doritos,
not a salty snack. Yet the retailer
cant let the store brand fall into the
shadows of those on the shelves.
What the retail brand stands for
is something manufacturers need
to understand, says Joe Vonder
Haar, industry veteran and managing partner of St. Louis-based iSee
Store Innovations.
Vonder Haar says a visionary
supplier is one who works to fit
its own products into the retailer
brandnot the retailer trying to
shoehorn the product into its own
mix in what could be an ill-advised
fit. He points to upscale tea brand
Argo Tea and adventure-themed
retailer Maverik as an example.
This tea brand might not necessarily be adventurous, as its
an upscale boutique offering, he
says. Lets say Argo Tea is eager
to garner shelf space in Maverik
stores. The brand team could work
to infuse some adventure into
their upscale tea offering, he says,
referencing the North Salt Lake,
Utah, chain whose core shopper is
the outdoor enthusiast. Maybe just
a subtle nuance helps garner that
positioning in Maverik stores. The
brand worked to fit [itself] into the
retailers own brandnot the other
way around.