Calls to Action

Category management has a new acronym.

Cannondale Associates calls it Consumer Marketing at Retail (CMAR), a hybrid of solution selling and category management that focuses trade activity on consumers.

The term makes its debut in the Wilton, CT-based consultancy’s 2002 Category Management Benchmarking Study. Cannondale says category management has matured beyond its original blueprint. While the old, eight-stage template born in the 1990s is still de rigueur for many marketers, Cannondale sees CMAR on the rise.

While category management originally focused on boosting sales in a product segment, CMAR incorporates a wider view of consumer solutions, usage occasions (such as breakfast or snacking), and whole aisles or sections of the store.

“Those benefiting from the sales-building potential of category management’s underlying collaborative planning process have recognized that the opportunity is bigger than ‘category’ and more dynamic than ‘management,’” the study concludes.

This new incarnation is a simpler structure focused more on execution than analysis. “Gone are the days of the three-inch data binders,” says Cannondale partner Bob Hilarides.

“The benefit of all the time-consuming analysis that category management was built on was never really worth it,” agrees Joe Landfair, vp-trade planning with Stamford, CT-based Mott’s, Inc. “It’s more about action these days.”

The CMAR model streamlines the eight-step process into a more integrated five-pronged cycle linking Issue Identification (defining objectives for both sides), Research and Analysis (building a knowledge base of best-practices), Action Translation (preparing a plan for achieving the objectives), Execution, and Performance Monitoring (reviewing the program and adding to the best-practices base). The consumer is at the heart of the process, with all five components hooked into shopping behavior and attitudes (see chart).

“I absolutely agree with that model,” says Dan McHugh, director of retail sales promotion with St. Louis-based Anheuser-Busch. “We’re focusing on more places of the store and trying to make programs simpler. If you can’t explain your promotion in two sentences, you’ve lost the retailer.”

Marketers use CMAR to build total store sales, not just one segment. “The categories only look at themselves as distinct businesses,” said one of the survey’s wholesaler respondents. “We need to start determining adjacencies and optimal traffic.”

“The idea of category management from a manufacturers’ standpoint was flawed, as it only increased volume at specific accounts. It needs to grow overall volume,” says Chip Hoyt, director of consulting with Danbury, CT-based Kenosia Solutions.

Cannondale details five steps for marketers looking to switch over to a CMAR model (see pg. 29).

Other Study Pointers

Cannondale’s annual survey of 250 marketers and retailers found that sales directly attributable to category management activity rose an average of 14 percent for retailers and eight percent for manufacturers last year.

Seventy-five percent of manufacturers and 83 percent of retailers called category management “important” in 2001, up from 70 percent and 80 percent, respectively, in 2000.

Retailers still rank Procter & Gamble as the best category management practitioner among manufacturers, although its marks fell 15.9 percent in 2001. Kraft Foods ranked second, followed by General Mills, Nabisco, Pepsi-Cola Co., Quaker Oats, Pillsbury, Frito-Lay, ConAgra, and Unilever.

The addition of Nabisco gives Kraft a larger hand to deal this year. “Kraft is on fire,” says Ken Harris, Cannondale founding partner. “They want to be the company that retailers work with not because they’re big, but because they’re better.”

Among retailers, Safeway gained top marks from manufacturers, followed closely by HEB Stores and Wal-Mart, then Kroger, Wegmans, Ahold, Publix, Target, Albertson’s, and Meijer.

Nearly all respondents (95% of manufacturers, 96% of retailers) said execution at retail is the biggest hindrance to successful category management. Last year, trade promotion inefficiency was respondents’ top concern.

New products are critical to the differentiation of categories and stores, with 91 percent of manufacturers and 88 percent of retailers listing them as important. A record 90 percent of retailers say private label products are very important.

Nearly three-fourths of retailers say they need help from manufacturers to measure cannibalization within categories to provide for more efficient assortment.

It could be the study’s most significant insight that 54 percent of retailers and 34 percent of manufacturers say trust between partners has improved over the last two years.

The Five Step Program

How to shift from CM to CMAR

• Broaden your scope. Think outside the traditional category or product bounds. Apply a marketer’s “frame of reference” to the retail environment and organize efforts around the appropriate categories, aisles, occasions, or departments.

• Mine existing research. With a broadened scope, review your consumer understanding to identify ways to encourage shoppers to trade up or spend more. Be vigilant to ensure insights pass the “executability” test.

• Generate new retail insights. Considering retail as a fresh marketing environment, apply traditional research (such as channel-specific attitude and usage studies) and cutting-edge activity (frequent-shopper card analysis) to fill in gaps and identify new growth strategies.

• Execute, execute, and execute some more. Brilliant insight with poorly executed strategy is worthless. The practitioners who deliver on their plans will not only realize results, they will find themselves positioned as the “go-to” player by trade partners.

• Commit to enhancing relationships. Management commitment and partner relationships continue to be important differentiation points between leading practitioners and the rest of the pack.

Source: Cannondale Associates