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Introduction to Category Management

Introduction to Category Management. or How to get people to buy stuff they don’t really need. Introduction to Category Management. or How are you going to stay ahead of your competitors?. Introduction to Category Management. Category Management Process How To Get Started Challenges.

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Introduction to Category Management

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  1. Introduction to Category Management orHow to get people to buy stuff they don’t really need CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  2. Introduction to Category Management orHow are you going to stay ahead of your competitors? CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  3. Introduction to Category Management • Category Management Process • How To Get Started • Challenges CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  4. Introduction to Category Management What Category Management Should NOT Be Not business as usual Not doing whatever the Supplier/Distributor wants Not beneficial to an organization without careful planning, analysis and a willingness to change Not a “sales/merchandising” thing – requires new skills and processes throughout the organization Not just filling out templates Not a once a year line review CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  5. Introduction to Category Management • A structured business approach to understanding: • Who buys your product • What they buy • Where they buy it • When they buy it • How they buy it • Why they buy it What Category Management Should Be • A structured business approach to determining what you what the consumer to do differently… and then getting them to do it CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  6. Introduction to Category Management 8 Steps to Category Management Business Process • Category Definition • How does the consumer view the category? • Category Role • Destination, Core, Seasonal, Convenience • Category Assessment • Market, Distributor, Consumer, Supplier • Category Scorecard • Financial Measures • Market Measures • Productivity Measures • Consumer Measures CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  7. Category Strategy Traffic Building Transaction Building Profit Generating Cash Generating Turf Protecting Excitement Creating Image/Loyal Enhancing Continuity/Loyalty Building Trial Penetration End User (i.e. DYI’er) Own Label Consumption Building Introduction to Category Management 8 Steps to Category Management Business Process CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  8. Introduction to Category Management 8 Steps to Category Management Business Process • Category Review • Category Tactics • Assortment • Promotion • Pricing • Merchandising • In-Store Service • Supply Chain • Plan Implementation • Executive Approval • Review CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  9. Category Management Process Overview CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  10. Category Management Process Overview Assessment Outputs Inputs Data Aggregation & Analysis Store Inventory Stocking Plans Optimized Retail Pricing Plans Merchandising Plans Promotional Plans POS Data Price Shops Consumer Research IMR Data NPD Data POLK VIO Data Demographics Retail Research Trend Analysis Forecast Prediction Statistical Significance Sampling Frequency Segments Feedback & Updating CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  11. Introduction to Category Management How To Get Started CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  12. Category Management – How to Get Started • Get Committed • Senior management buy-in • Change in your company’s culture • You will need to spend money • Get the Personnel • Category Managers, Data Analysts, Programmers • Get Trained • The Partnering Group, Bill Morgan, 513-469-6840 http://www.thepartneringgroup.com/ CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  13. Category Management – How to Get Started • Get Some Data • Polk, NPD, Market Studies, Sales History, POS History, Industry Analysis • Catalog data must be mapped to Polk, to get VIO by P/N • Market Assessment, Consumer Assessment, Distributor Assessment, Supplier Assessment • Get Some Software Tools • Build in-house or use outside vendors • Pricing Analysis, Line Review, POS Data • Get Involved • AAIA Category Management Committee Meetings CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  14. Category Management – How to Get Started How Much Do You Really Know About Your Industry & Your Category? CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  15. Category Management – How to Get Started Things You Should Know About Your Category • How is each customer performing in the category? • Who is over-performing and who’s under-performing? • What is each customer’s performance gap? • How many units and $ per store does each customer sell? • What is the balance of sales between Good, Better, Best? • What is the trend over the past several years? • How often do they up-sell or down-sell? • What % of the time do they sell the premium unit? • What % of the time do they sell the economy unit? CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  16. Category Management – How to Get Started Things You Should Know About Your Category • What is the industry average unit sales & $ sales? • What is the balance of sales between Good, Better, Best? • What is the trend over the past several years? • What is the industry average retail price? • What is the breakdown between Good, Better, Best? • How does each customer’s market share compare to their average retail price position? • What are the over-performers doing different? • Assortment, service, selection, pricing, warranty? CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  17. Category Management – How to Get Started Things You Should Know About Your Category • What is your market share? • What is the trend over the past several years? • Is your business growing in one area faster than another? • New vs. Reman, Good vs. Better, Best vs. Better? • What are your competitors doing? • Are they growing their business? • Are new competitors entering the market? • Who is privately labeling and who has established brands? • How does their offering compare to yours? • Are they proactive with Category Management? • What are customers saying about your competitors? CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  18. Category Management – How to Get Started Things You Should Know About Your Category • What is the consumer decision process? • What is the most important thing to the consumer? • What is the size of the market for each item? • What is the VIO’s? • Are the VIO’s evenly distributed through all geographies? • How fast is the market for each item growing or declining? • What is the demand for each item? • Is the failure rate the same for every item in the category? • What is the age of the vehicle when demand peaks? • Is there anything on the vehicle that accelerates the failure? CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  19. Category Management – How to Get Started Things You Should Know About Your Category • How long is each item’s life-cycle? • Does the item fit disposable vehicles (i.e. GM X-Bodies)? • Does your item have a longer or shorter life cycle than the OE item? • Where is each item in it’s life-cycle? • How many more years will there be good demand for the item? • How does your customer’s assortment compare? • What is the SKU count for each type of store (small, regular, large, Hub, etc.) • What is the difference between Good, Better, Best? CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  20. Category Management – How to Get Started Things You Should Know About Your Category • What is the VIO coverage of the assortment? • What is the breakdown between Good, Better, Best? • What is the breakdown between type of store (small, regular, large, Hub, etc.)? • Does the consumer expect the item to fail? • If so, when (xx months, xx miles)? CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  21. Category Management – How to Get Started Market Assessment Sample Data CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  22. Category Management – How to Get Started Marketplace Snapshot CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  23. In 1955, there were 24 platforms used in the manufacturing of automobiles and the top six held 80 percent of the market. Today there are more than 250 platforms and the top six account for only 30 percent of the market. Category Management – How to Get Started Parts Proliferation CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  24. Category Management – How to Get Started North American Rotating Electrical Aftermarket • Unit Sales are projected to decline – 1% CAGR 2002-2006 • 2006-2009 unit sales to begin increasing due to the quantity of new vehicle sales from 1999-2001 and these vehicles coming into the “5-7 year” window of failures. • Unit Sales are projected to return to 2002 levels by 2009 • Dollar sales are projected to continue increasing (3.6% CAGR) from 2002 to 2009 Source: Frost & Sullivan 2004 CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  25. Category Management – How to Get Started Unit Shipment and Revenue Forecasts CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  26. Category Management – How to Get Started Incidence of Repair-Starters and Alternators-1999to 2004 Starters Alts 1999 3.63 5.26 2000 3.47 4.83 2001 3.29 4.74 2002 2.95 4.01 2003 3.21 3.92 2004 2.91 3.53 Source: IMR CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  27. Category Management – How to Get Started Consumer Assessment Sample Data CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  28. Category Management – How to Get Started Changing Consumer Demographics • Future customers not likely to be young, Caucasian or male • Ethnic Trends • White births comprised 61% in 2000 • will drop to 56% in 2010, will drop to 42% in 2050 • African-Americans will double by 2050 • Latinos will double by 2050 to 88 million • Baby Boom Impacts • The first of 78 million boomers (1946-1964) will start retiring in ‘08. • The next 45 million Generation Xers can’t fill their shoes. • By 2025: • 62% increase in 65+ year olds • 74% increase in 55-64 year olds • 9% increase in 45-54 year olds CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  29. Category Management – How to Get Started Consumer Decision Process Source: Remy, Inc. CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  30. Category Management – How to Get Started DIY vs. DIFM by Household Income Source:: IMR CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  31. Category Management – How to Get Started % of Alternators Replaced DIFM Source: IMR CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  32. Category Management – How to Get Started % of Starters Replaced DIFM Source: IMR CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  33. Category Management – How to Get Started Distributor Assessment Sample Data CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  34. Category Management – How to Get Started The Traditional and Retailer channels are the largest channels for starters and alternators in 2003. CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  35. Category Management – How to Get Started Traditional Consolidation The Shrinking # of WD Locations The Shrinking # of Jobbers CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  36. Category Management – How to Get Started Retail Stores Growth Rate: ‘02 to ‘05 Total of 1017 New Stores Since 2002 Source: Compiled from Annual Reports by Remy CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  37. Category Management – How to Get Started Auto Repair/Service Outlets Outlet TypeQty Independent Repair Shops 125,000 New Car Dealerships 22,000 Independent Collision Shops 46,000 Tire Dealers 28,000 Fast Lube Centers 6,600 Service Stations /w service 7,500 Retail/Dept Stores 12,000 Total Repair Locations 247,100 CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  38. Category Management – How to Get Started Supplier Assessment Sample Data CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  39. Category Management – How to Get Started New & Remanufactured Revenue Market Shares by Manufacturer Reman Light Duty Alternators and Starters New Light Duty Alternators and Starters Source: Frost and Sullivan 2004 CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  40. Introduction to Category Management Challenges CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  41. Category Management – Challenges • It takes a long term commitment from your entire organization • Anything less than a 100% sends a negative message to your customer • Continuous improvement attitude • Your customer’s dependency on you will only grow in the future • It takes resources • Data costs money • Expertise costs money • Software tools costs money CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  42. Category Management – Challenges • It takes time, so start now • Rome wasn’t built in a day and neither will your category management department and skills • The sooner you start, the sooner you can move ahead of the competition • It takes resourcefulness • How are you going to stay ahead of your competitors? • In your customer’s eyes, all manufacturers have: • good quality, good service, good cataloging, good pricing • If every company does the same thing, how is your company going to differentiate itself from the competition? • Few off-the-shelf category management tools available • Lowering your price is the easy way out CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  43. Gross Profit Margin % = - 1 Unit Volume % Change Gross Profit Margin % +/- Price Change % .45 .50 .45 .50 - 1 = 28.6 % - 1 = 11.1 % - 1 = -18.2 % - 1 = -9.1 % .50 + .05 .50 - .05 .45 + .10 .45 - .10 Category Management – Challenges Price Reduction Impacts CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  44. Category Management – Challenges How will your company improve its bottom line this year? Price changes have the biggest, fastest impact on profits Source: McKinsey & Co. CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  45. Introduction to Category Management Summary CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  46. Category Management – Summary Compete With Our Brains Out Think The Competition CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  47. Category Management – Information Where to get help • AAIA – http://www.aftermarket.org • Frost & Sullivan - http://www.frost.com • Green Book - http://www.greenbook.org/ • Industrial Market Research - www.industrialmr.com • Lang - http://www.langmarketing.com/ • NPD - http://www.npd.com/ • The Partnering Group - http://www.thepartneringgroup.com/ • MEMA - http://mema.org/ • SEMA - http://www.sema.org/ • Wards Automotive - http://www.wardsauto.com/ CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  48. Introduction to Category Management Questions? CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

  49. Introduction to Category Management Thank You! CONFIDENTIAL-Information in this document is confidential and shall not be viewed or transmitted by any person unless expressly authorized in writing by Remy International. Inc.

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