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2017 Category Management Handbook

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8 | Progressive Grocer | 2017 Category Management Handbook | December 2016 ROI: e most frequently asked question by CMA members is, "What's the ROI of CatMan?" CatMan 2.0 provides the first comprehensive pro- cess to address ROI, as well as a spreadsheet that practitioners may use to calculate ROI. What's New in Data? CatMan 2.0 identifies the data sources that have been dramatically enhanced or discovered since CatMan 1.0. roughout the document, in myriad areas, CatMan 2.0 identifies how these new data inform and improve practitioners' ability to build better category plans. Among these new or improved data sources are: An enlarged household panel facilitating exceptionally granular analyses of leakage from retailer to retailer by category, brand and even product attribute. ese data provide extraordi- narily valuable insights into brand and item loyalty, substitutability, and shopper worth. ey continue to rank among the unexploited treasures available to the CPG community. Loyalty card data were completely ignored in CatMan 1.0. No one had adequately integrated loyalty data into CatMan category plans. CatMan 2.0 shows how this can be done and is a real step forward in sophistication. Over the past few years, data providers have begun aggregating shopper interaction with vari- ous path-to-purchase influences. Many of these influences (retail websites, text messages, retail apps, etc.) didn't even exist when CatMan 1.0 was created. Now CatMan 2.0 identifies them and demonstrates how practitioners can use these data, down to the level of individual markets and retailer. We expect the data to open new frontiers of understanding for retailers and manufacturers if they have the foresight and stamina to attack the opportunity. What's New in Analytics? All of these new data are useless, even distracting and confusing, if they can't be properly analyzed. Solution providers have revolutionized analytics since CatMan 1.0. In CatMan 2.0, we point the way toward multiple new ways that the data can be analyzed. For example, practitioners can now know what percent of category volume at an EDLP retailer such as Walmart is sold at a lower price by competitive hi-lo retailers. Moreover, they can use sophisticated price elasticity models to understand how the lower price is affecting Walmart by com- petitive retailer and market. Needless to say, this was impossible 20 years ago. e major breakthrough is in the application of an analytical technique (multivariate modeling) to the new data, using vastly more sophisticated soft- ware and hardware. is powerful weapon allows practitioners to isolate the effect, and therefore the ROI, of various marketing decisions (price, offer type, communication method, by shopper cohort, etc.), and to do so by retailer, by market and by competitor. No practitioner is making optimal use of the tools and data, even though most would correctly claim "awareness" of the data and analytical tools. "Awareness" isn't the same as "application," and few who are aware are applying them. e reason is easy to understand: e speed of change is greater than the ability of the practitio- ners to keep pace. To be candid, the data, tools and analytical personnel cost money that many companies, large and small, either don't have or choose not to acquire in a zero-based budgeting world. What Does CatMan 2.0 Portend for the Future? CatMan 2.0 creates a new vantage point from which we can see the path to the future. In several process steps, the industry committee offered opinions on where the path would lead. e clear- est vision is of a more individualized marketing plan tailored by analytics, and then deployed by the individual shopper addressability afforded by digital tools of various kinds. Practitioners, especially retailers, will be able to tailor appeals to specific shopper cohorts by trip type and need state. is will be facilitated by learnings from e-commerce, especially click- and-collect, which represents a new frontier about which the industry as a whole, and especially manufacturers, know virtually nothing. Winning in this new environment will require mastery of new and emerging analytical weap- onry. is, in turn, will require new organiza- tional capabilities, many of which will need to be outsourced. roughout it all, the category will remain the primary organizational framework at retail for numerous reasons, not the least of which is that categories represent needs, and needs are what drive shoppers to purchase. Category managers of tomorrow will need to understand how their category and brands drive what shopper missions of which shopper cohorts. Sometimes it seems that the more we know, the more we need to know. e achievement of CatMan 2.0 is that now we know what we can know if we're diligent and persistent seekers of knowledge. PG Gordon Wade is managing partner and director of best practices for the Minneapolis-based Category Management Association. The combined effects of changes in retailers, shoppers, data and analytics mean that everything has changed, and CatMan 2.0 reflects all of these changes. CatMan 2.0

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