CATEGORY CLASSIFICATIONS

Carol Angrisani

During category-management meetings with retailers, Nestle USA often finds that its own category definitions don't match the retailers'. Such discrepancies can often slow the momentum of the meeting, forcing the Nestle sales force to take time to explain the data differences that may occur.

That's why Nestle has begun using Category Business Planner, a new system from ACNielsen that lets it use the same category definitions and structure for the data as its customers. Now, if a retailer includes, say, cough drops in the candy section, the category data available in CBP will include cough drops. Nestle will then have access to the cough drop data, even though it does not purchase the data from ACNielsen, a Schaumburg, Ill.-based marketing information company.

"This reduces the amount of time and energy our sales personnel spend with customers to explain the methodology of the data," Brad Anderson, category management director, Nestle USA, Glendale, Calif., told Brand Marketing.

Nestle's efforts exemplify the efforts marketers are making to strengthen their category-management initiatives. The company's use of CBP comes at a time when category management has evolved into the effective execution of consumer insights and total store management.

Manufacturers like Nestle are working to streamline the process and improve collaboration with retailers on the development of category plans. Because of this, many marketers are broadening the focus from individual categories to entire aisles, said Don Stuart, partner, Cannondale Associates, Wilton, Conn. This means, for instance, that they don't just look at the cereal category, but the entire breakfast food section.

The reason for this change stems from the higher degree of consumer interaction with various product choices. A consumer in search of a snack may head for cookie/cracker categories, or opt for a salty snack or even a confection. This means all three categories are snacking opportunities and should be analyzed as such.

"Category management has become a more consumer-driven focus, rather than a retailer's category-driven focus," said Stuart.

According to a Cannondale survey called PoweRanking 2001, the Top 10 manufacturers that best practice category management are, as rated by retailers, P&G, Kraft, General Mills, Nabisco, PepsiCo, Quaker Oats, Pillsbury, Frito-Lay, ConAgra and Unilever, respectively. (Mergers and acquisitions have since combined Kraft with Nabisco, General Mills with Pillsbury, Pepsi with Quaker and Unilever with Bestfoods.)

Of the companies in the Top 10, Quaker Oats, General Mills and Nabisco improved their standing the most compared to prior years. Quaker Oats' ranking increased 4.7%; General Mills', 3.8%; and Nabisco, 2.6%.

When asked why retailers are placing more confidence in all three companies, Stuart points to their support of the aisle-management concept.

"All three are focusing on consumer-defined occasions, which often manifest themselves in aisle-management solutions," said Stuart.

While representatives from all three firms were unavailable for comment, their companies' category-management efforts can best be summed up by retailers themselves.

"Quaker Oats brought us some learnings this year that we found incredibly helpful," an unidentified retailer said in the Cannondale study. "It was very well-explained and gave us direction on next steps."

Another retailer said Nabisco's category-management program has made a significant change for the better.

"Nabisco came to us with a well put-together message this year," a retailer said. "It was much different than a few years ago, when it was clear that their category-management program wasn't up to snuff. Now, they are one of the best."

As for General Mills: "General Mills' category management practice across the company is one of the best in the industry," said another retailer. "They have consistently good programs no matter which division you go to."

While Nestle didn't make it into the Top 10 in the PoweRanking survey, it's working hard to build on its category-management program. CBP is an integral part of that effort.

"(CBP) provides the avenue for both parties to use the same data to make good business decisions with analytical support," said Anderson "Our people can concentrate on the results of the analysis instead of the data differences."

Jim Dippold, vice president, global marketing, ACNielsen, said the system enables both parties to conduct analysis rather than spending the bulk of time trying to produce templates. (Research from ACNielsen shows that 80% of the time during category management meetings is spent haggling over category definitions and other tasks, as opposed to making decisions that impact the category.)

"The pre-execution part of planning process is critical in terms of getting results you want, like how you are performing and where opportunities or threats are," he said.

Currently, 10 retailers, representing 19 banners, are using CPB. They include Supervalu, Hannaford Bros., Meijer, Bruno's Supermarkets and Walgreens. Seven manufacturers have signed contracts, although only Nestle has been formally announced.

Nestle has just begun testing CBP with one retail account, which it declined to name. It hopes it can eventually target its top 30 customers.

Nestle has access to the system at its headquarters, and also at the local office for the account's customer team. It's currently using the system for its top categories, though it may expand into other categories when "opportunity or cost allows," said Anderson.