Manufacturers looking to embark on a structured management plan for the categories that they proffer rarely have trouble developing a strategic vision. However, when it comes down to the implementation of the plan, many fall short of achieving their goals.
It's no surprise, then, that to facilitate the laborious process of category management, manufacturers are turning more and more to technology to help streamline the process. Components of category management that require frequent tracking -- like changing consumer demographics, marketplace fluctuations and in-store shelf stocks -- are much easier to keep a handle on when technology is on one's side. But the frequency with which these data points need to be consulted and updated is currently being addressed with the introduction of new automated and interactive applications software.
Continuous category management, as it is being hailed, would enable manufacturers to review and manipulate data on a daily basis. It was designed through a joint venture among consumer packaged goods software solutions provider Interactive Edge, New York; category management firm The Partnering Group, Playa Del Rey, Calif., and supply chain solutions provider Armature, United Kingdom.
Some of the most crucial aspects of the automation include the capability to continuously update consumer insights gained through research, as well as alerts that can be sent to vendors and retailers to announce impending out-of-stocks, for example.
"Continuous category management means giving the manufacturers and retailers the tools to get to insight faster," said Zel Bianco, president and chief executive officer, Interactive Edge. "Instead of it being a project, it becomes part of their daily business."
The Miller Brewing Co., Milwaukee, recently updated its procedure to allow for "more in-depth consumer insight," according to Jeff Schouten, the brewer's director of category development.
The new Miller Advantage Point program includes analysis of trends and opportunities in the beer category, helping retailers determine what they want the category to do for their stores, and a more intricate tracking and measurement system, to name a few aspects.
"We're putting in place a lot of continuous scorecarding; we get data every week," Schouten told Brand Marketing. "With some retailers we have a monthly plan that we check and update," he said.
"We are going much more toward technology to keep tabs," he added.
Miller internally already uses "alerts" much like the ones offered by the new continuous category management software, Schouten said, to gain knowledge about certain issues that figure into the company's category management process, like indications that sales have dropped 5% in a certain market, or that the company is losing distribution in another. However, he said he thinks the daily aspect of the new CCM applications may be a little too aggressive. "I don't think it's needed daily; that would be information overload. A monthly view of a plan's progress is much more than what's being done now and would be a good first step," Schouten said.
Randy Scott, former manager of sales and technology at Johnson & Johnson, said many things can influence the frequency needed for category management, not the least of which is a manufacturer's status in the particular category.
J&J is recognized as the category captain in some areas, as a category validator in others. Depending on J&J's status, the category management process is addressed monthly, quarterly, semi-annually or annually, he told Brand Marketing less than a week after he left his position at J&J, New Brunswick, N.J., to become director of client services at Interactive Edge.
"CCM says I'm going to keep my finger on the pulse of the business all the time rather than once a year, when I may have found something that could have been addressed previously," Scott said.
Meanwhile, at Mott's, Stamford, Conn., "most of the systematic category management initiatives are carried out on an annual basis in response to specific customer requests," said Ray Passant, senior category manager at Mott's.
The main approach to category management at Mott's is to "generate demand growth by developing and applying key insights into the factors that drive consumer purchase behavior in a particular category," Passant said.
Although he was not sure of his company's commitment to the new software, he told Brand Marketing that, as a concept, he thought CCM would improve upon current practices.
"If the process can be successfully implemented, one of the key benefits will be the ability to quickly adjust tactics to capitalize on strong business performance, or, conversely, react to reverse volume decline," Passant said.
While the need for daily category management remains up for debate, industry sources seem to agree that collaboration between retailers and vendors is paramount to any successful program.
Kraft Foods, Northfield, Ill., has created a network of information teams that tackle category management issues on a daily basis, according to Chris Hogan, senior director, sales information and technology. More than 200 sales information members on these category business teams work hand-in-hand with clients to analyze and develop their businesses and drive growth.
"Overall, our focus is delivering business insights that help to drive growth, both for the retailer and for Kraft Foods," Hogan said.
Kraft utilizes internally developed analytical tools to bring forth these insights, he said, including "our Three-Step Category Builder, Efficient Promotion Analysis Tool and our Pricing Insights Tool. We also explore and uncover consumer insights on shopping behavior through our ConsumerCast, Consumer View of Shopping and Consumer View of Retailing Brand Equity studies," he added.
