Category Management

Category Managers fall into one of the following three groups;

1.They set multiple category targets without understanding the connections between each target.
2.They have no targets, except a vague direction to improve performance.
3.They have set few some, but they are not S.M.A.R.T.

I am not talking about the ‘hard’ targets of sales and profit. I am talking about the category targets for what they want to achieve through shopper/consumer measurement. For example, penetration, market share, frequency, and so on.

An effective Category Manager should fall into a fourth group. Having a ‘guiding star’ target. A target that the Category Manager and the supporting category teams, have as a horizon to aim towards. Yes, other targets can be identified. The ‘North Star’ is the key target.

What is an Example of a North Star Target?

Without a North Star target category management teams will be forever watching many measures and targets. And chasing them all. There has to be one. A bit like in the ‘Lord of the Rings’ - One ring to rule them all. One target to rule them all.

There are 3 choices when it comes to choosing the Category’s North Star Target. Those are:

•‘I want more shoppers to buy my category’. This is a penetration measure. The number of people that buy my group of products. This sounds obvious, but it is only when you understand the 3 choices, that you understand how hard the decision is to make.
•‘I want my current shoppers to buy more frequently’. This is a frequency measure. It is about how often your category shoppers buy your product. Maybe once a week, like milk, or once a year, like shoe polish.
•‘I want my current shoppers to buy more on each trip’. This is a trip spend measure. This is about encouraging your shoppers to buy more when thy buy. At present they might buy only one pack of cooked ham, but a ‘3 for 2’ promotion, could persuade them to buy 3 packs, instead of 1.

Making the choice is hard. It should be. It’s a big decision. This is a target that should stay with the category for 2-3 years. Once chosen, the target needs to be S.M.A.R.T. In my experience 99% of people roll their eyes at SMART, and then never have any targets that are.

Chosen, Now What?

Once you have chosen either a penetration, frequency, or trip spend target, it’s now about making it real. Buying the team into the target. Making it practical. Making it live.

Let’s say that you have chosen a SMART frequency target. Your current rate of frequency is 4 times per year. Once every 12 weeks. Your target is 5 times per year. Then you’ll add a date and some other pieces to make it SMART.

Break the target down into 3 groups; heavy, medium, and light shoppers. Let’s say that their current frequency is heavy 7, medium 4, and light 1. Each group needs a target. All 3 targets added together equal the overall frequency target.

Give each shopper a name, e.g. ‘Mr Heavy’ (Maybe a netter name!) and bring it life. Maybe with a 6-foot cardboard cut-out of your shopper with a reminder if the target written across him. Now analyse each shopper completely until you know them as you know your best friend;

•When do they buy most frequently?
•What’s the ceiling when you run frequency promotions?
•How does the competition compare on frequency?
•What was frequency like 3 years ago?
•And so on.

Next, brainstorm what can the category teams do to get Mr Heavy to increase his frequency from 7 to 9. Then share the data insights with the category team, and brainstorm again.

You now have a list of things that you can do to increase Mr Heavy’s frequency. Create a plan, agree actions, and publish a dashboard showing the target, the measure, the actions’ progress, and the gap, on a 2—weekly basis.