SAN FRANCISCO -- Category management could go a long way toward keeping things in the frozen food department from cooling off, according to two executives at Information Resources Inc., Chicago.
"We need to better understand the process, the dynamics of category management," said Walt Donovan, IRI's director of sales force development. "If I was to suggest a key to successful category management, it would be in clearly identifying the corporate mission, the roles for each category and strategies," he said.
The corporate mission statement, he said, should include an explanation of the company's commitment to category management and a mention of "how we want the customers to see us."
The next step is to define categories in terms of specific segments, Donovan said, using coffee as an example. "Each segment has its own unique appeal. While understanding the category, each segment's role must be defined. Is it a destination, routine, convenience or occasional segment?
"The manager must define the strategy of each segment in the category," Donovan explained. "In the coffee example, traffic building and profit-generating were suggested as the winning strategies. Traffic-building applied to the ground and instant segments. But the other segments were clearly identified as having profit-generating attributes. With this determined, the process can continue.
"Finally, with strategies chosen, tactics consistent with the plan must be determined. This includes such marketing elements as assortment, pricing and promotion. But maximizing the impact of all of these combined will be the result of successful category management. Category management requires a user-friendly, yet robust, step-by-step approach to complete the category plan."
Donovan and Ted File, IRI's senior vice president, spoke about category management here during the National Frozen Food Convention, co-sponsored by the American Frozen Food Institute, McLean, Va., and the National Frozen Food Association, Harrisburg, Pa. Both urged attendees not to let frozens be sold short.
"There's real value in frozen food, not only in sales of products, but in terms of merchandising opportunity," File said.
"Frozens is the third-largest department in the supermarket, accounting for about 6.1% of sales nationwide," Donovan said. "At a 20% gross margin, this department would contribute about 1.2 gross points to the total. This 1.2 could be the bottom line before taxes in most supermarkets. Things are so tight today with grocery grosses ranging 14% to 18%; frozens is a department that could really help make up for that shortfall."
File said in addition to expanding their ice cream and pizza sections, grocers need to promote frozen foods more effectively.
"Even though the promoted dollar sales are up, it's apparent frozens may not have either the advertising frequency or impact on the weekly food day ads we would expect," File said.
