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How CatMan + the Meat Case Can Save the Grocer!

The Category Management Association

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Category Management: A Global Standard in 20 Years

• Thanks to the collaboration driven by the FMI, the GMA and other trade groups like the American Meat Institute, CatMan has become a global standard for collaboration.

• Today every major retailer and manufacturer globally uses CatMan

Retailers Care about CatMan Industry Initiative Percent of Respondents Category Management 66.5% Sustainability 38.5% Diversity 31.1% Promoting Your Company as an Employer of Choice 31.1% On-pack nutrition labeling 26.1% Produce Traceability Initiative (PTI) 19.9% Geographic Expansion 13.0% GS1 DataBar 9.3%

Source: Progressive Grocer Market Research 2012

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Category Management Definition

A Retailer-Supplier process of managing categories as Strategic Business Units, producing enhanced business results by focusing on delivering consumer value

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What is the CMA? The association for Companies who want to improve the capabilities of their professionals in:

Category Management

Shopper Insights

& Shopper

Marketing

Planogram &

Space Management

In-Store Execution

& Merchandising

The only organization that: • Certifies CatMan professionals through industry-wide standards • Serves as an unbiased central resource for industry information and best practices

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Share Groups • Share Groups connect you to the global CatMan community • The CMA Holds Monthly Web Based Meetings

• Solution provider demos once a month • Website: CPGCATNET.ORG

Organizational Development

Insights & Analytics

Space Management

Shopper Marketing

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• The CMA created skills and capability standards • Standards posted on cpgcatnet.org • We certify training providers to these standards • Trainees take a final test from the CMA • Receive certification at one of three levels

– CPCA – CPCM – CPSA

The CMA and Certification

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But First, Where Have We Been?

• TV creates mass audience at low cost to advertisers

• This enables growth of brands and brand equity

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Weak Regional Retailers

• A&P #1 nationally 3% share

• No Walmart • No Costco • Kroger leads in

Cincinnati

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Then Came the Revolutions! • Communications

– Fragmentation • Retailing

– Consolidation • Data management

– The magnetic strip – Complementary data

bases

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Communications-Cable TV

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Fragmentation = Weakening of brands

TV Fragmentation Hurt Brands • Cost/m grew faster than profit per usage • CPM CAGR > 8% vs. brand profit/use > 3 to 5% • Worse still, ad clutter drives down recall by 50% • TV 1/3 as efficient today • P&G kills brands they can’t support • Goes all in on Tide

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Retail Consolidation

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Retail Consolidation

And Then Retail Loyalty Cards

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Balance of Power Shift

• Change in budget allocations • Account based Marketing • Shopper Marketing as recognition of

retailer power 17

Now the Internet and Smartphone

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Marketing Power Evolution

• TV • Cable/loyalty • Internet/cell

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Mr. Grocer: Your Diapers are Leaking! • Amazon has a 25% share of the disposable

diaper category. • Amazon focusing on “Need States” • Shoppers are leaking from grocers by ‘need

state’: pet care, beauty care, health care

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Grocers Must Build a Moat Around the Perimeter

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The Moat is pronounced “Meat”

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Winning the dinner need state is critical and winning the dinner need state means

winning here

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The first step towards Victory is

Mastering Category

Management

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Benchmarking and >CatMan ROI • The CMA compares the client company’s outputs from 10

documents to what is considered best current practice. Those documents are: – Voice of the Category Shopper – A Category Shopper Management platform – Category business analysis – Annual learning summary – Tactical success models – Account line review for the retailer – Key account analysis and recommendation – New Item introductory presentation – Retail loyalty card analysis – Category/brand retail profit efficiency

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The VOS Taxonomy • WHO are our shoppers? Who

• WHAT are they buying? What

• WHY are they buying? Why

• WHERE are they buying? Where

• WHEN are they buying? When

• HOW are we influencing them to buy? How

• Links to additional sources of information Other Resource 28

Who

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Who are Snack Shoppers?

Core Truths: – Bagged snacks are purchased by a broad range of shoppers in virtually every

demographic group. Few categories have such deep penetration, especially among C-Stores’ core shopper group

– Shoppers vary more psycho-graphically and behaviorally than demographically

– 5 different ‘need state’ shopper segments have emerged. They have widely different behaviors and consumption habits. Two segments, ‘All Day’ and ‘TV Time’, comprise over 2/3rds of total consumption

Source: Vendor research, NPD diary

Need State

Lunch Munch

All Day Party Time TV Time Dabblers Total

% shoppers 22 25 17 20 21 100

% volume 18 38 8 30 6 100

# Snacking Occasions Last Week

Average Lunch Munch All Day Party Time TV Time Dabblers

12 11 18 6 14 4

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Who are Snack Shoppers?

c-store Shoppers (% Total)

<21 22-35 36-55 56+ Total

Male 17 21 13 8 59

Female 12 15 10 4 41

Total 29 36 23 12 100

Grocery (IRI)

<21 22-35 36-55 56+ Total

Male 5 6 12 8 31

Female 8 21 26 14 69

Total 13 33 32 22 100

Observations: • c-store snack shoppers are much younger than grocery snack shoppers • In the overwhelming majority of cases, these c-store shoppers are buying for

immediate personal consumption while grocery shoppers are primarily buying for family consumption at a later time

Source: Vendor research, c-store internal research 31

Who are Snack Shoppers? • This segment limits snack consumption to lunch often as a

complement to a sandwich or soup • Prefer potato chips

Lunch Munchers

• This group is addicted to snacks • They have one favorite but also enjoy a repertoire of 3 to 4

snacks daily All Day Snackers

• Snack at multi-person events such as a Super Bowl party, Cinco de Mayo, or family celebrations Party Time

• Consume snacks while watching TV at night or on weekends while watching sports. Major consumers of beer, CSD and dips TV Time

• Try snacks only occasionally often with dip as meal replacement at lunch Dabblers

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IWIK’s = I Wish I Knew • What other items are the ‘All Day’ and ‘TV Time’

segments buying at c-stores? • How do snack preferences vary by age/gender? • What flavors and sizes does the All Day segment

prefer? • What flavors and sizes does the TV Time segment

prefer? • How to attract the two heaviest consuming

segments, the All Day and TV Time snackers?

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The Most Challenging IWIK… Moving from Category

Management to Need State Management

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Not the Diaper Category… the Baby Development Need State

My Baby Is developing normally! 35

Formats Compete At Need State level

• How to understand need state

• How to organize around need states

• How to optimize share of need

Categories Annual $ Groc $ Leak $ % GrocFeed 691.6 378.0 313.6 54.7%

Formula 130.0 91.0 39.0 70.0%Juice 41.6 27.0 14.6 65.0%Baby food 520.0 260.0 260.0 50.0%

Clean 1,221.0 752.2 468.8 61.6%Diapers 780.0 546.0 234.0 70.0%Wipes 208.0 135.2 72.8 65.0%Shampoo 130.0 19.5 110.5 15.0%Oil 103.0 51.5 51.5 50.0%

Fun & Learn 553.8 243.2 310.6 43.9%Toys 442.0 221.0 221.0 50.0%Books 18.2 8.2 10.0 45.0%Photo 93.6 14.0 79.6 15.0%

Wear 884.0 439.4 444.6 49.7%Clothes 624.0 249.6 374.4 40.0%Shoes 260.0 189.8 70.2 73.0%

Care 327.6 117.8 209.8 36.0%OTC 197.6 59.3 138.3 30.0%First Aid 130.0 58.5 71.5 45.0%

Safe 628.2 208.3 419.8 33.2%Crib 130.0 65.0 65.0 50.0%Car seat 270.4 67.6 202.8 25.0%Stroller 150.8 60.3 90.5 40.0%Security 77.0 15.4 61.6 20.0%

Total 4,306 2139 1698 50%

Baby Need State ($HH)

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What is a ‘Need State’? • A multi-dimensional, multi-category shopper requirement and a

unifying emotional attitude creating a compelling desire for a superior comprehensive solution.

• Meeting the needs of a baby is one of the most complex and powerful of all need states because it’s multi-dimensional, continuous and highly emotional.

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The need states where the grocer can win are tied to the perimeter

and often to protein

HEALTH & WELLNESS

FAMILY DINING

CULTURAL CUISINE

WEIGHT CONTROL

HOLIDAY CELEBRATION

PICNIC/COOKOUT

NATURAL/ORGANIC

TIME SAVING

GLUTEN FREE FRESHNESS

VALUE

CARRIED LUNCH

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Organizational Challenges

Process Challenges

Data Challenges

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Bad News: No one prepared

Organizational Challenges

Car Seat

Baby HBA

Baby Food

Same need state but different categories

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Process Challenges

• What is the need state marketing process? • Who owns it? The retailer? One manufacturer? • Who develops need state insights? • How develop need state insights? • How develop the Voice of the Need State?

Category Definition Category Role Category

Assessment Category

Scorecard Category Strategy

Category Tactics

Plan Implementation

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Data Challenges

• Who creates need state standards? • What is analytical protocol? • How prioritize? • Which category drives the retail choice?

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How To Win in the Future • By moving

– Beyond Category Management – Beyond Shopper Marketing – To….Need State Management

Shopper

Shopper Marketing

Category Management

Need State Management

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