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Category Management

The document lists organizations that have purchased licenses for the Sourcing Simulator software including various universities, apparel companies, retailers, and consulting firms. It then provides a high-level overview of key concepts in efficient consumer response, category management, and defining product categories. Examples are given to illustrate category management strategies and tactics for traffic building.

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658 views

Category Management

The document lists organizations that have purchased licenses for the Sourcing Simulator software including various universities, apparel companies, retailers, and consulting firms. It then provides a high-level overview of key concepts in efficient consumer response, category management, and defining product categories. Examples are given to illustrate category management strategies and tactics for traffic building.

Uploaded by

Pink
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Sourcing Simulator Licenses

Liz Claiborne Woolrich Glen Oaks Lebanon Apparel Val DOr Whisper Knits Brooks Brothers Tropical Sportswear Fruit of the Loom S&S Distribution Virginia Apparel Red Well Dayton Hudson QA Vertical Threads Kellwood Company Ackermans Ltd. Nike Nantucket Industries Private Label Concepts Federated Merchandise Levi Strauss Garan Edison Brothers Context Group Tanner Cuddle Time Se Chic by HIS Eagles Eye Claudel Lingerie Starter Corp Kikomo Goldman Sachs Kmart Aztec Trading Charles Gilbert Assoc GIDC UNITE WL Gore & Assoc Van Huesen Patagonia Danube Knitwear Capital- Mercury Shirt Lord Olords Inc Nat Inst Fashion Tech Limited Dist Services Wolverine Worldwide Cajah Mountain Hosiery HED 460 Bain & Co.

Sourcing Simulator Licenses


Texas A&M University University of Missouri. Colorado State University Western Kentucky University Texas Christian University Murray State University Michigan State University University of Kentucky Oregon State University University of Nebraska Southern Illinois University Indiana State University Iowa State University UNC Chapel Hill UNC Greensboro Kansas State University West Virginia University Cornell University Baylor University University of Hawaii Texas Tech University Kent State University Middle TN State University Stephens College California State University University of Rhode Island Se Sam Houston University Ohio State University Southwest Texas State University U of Massachusetts N Illinois University HED 460 U of California - Irvine

Sourcing Simulator Licenses


Auburn University Ball State University Clemson App. Res. Delta State University Oklahoma State U. East Carolina U Tampere University North Carolina State U Integrated Consulting Stonefield Josephson Prime Tanning Co Bayer Clothing Group May Merchandising Logistics Training Intl Exterior Wood, Inc. Firmin House Glen Oaks Industries American Identity Andersen Consulting Adexa Burlington Industries Cone Mills Dillards DuPont Nylon EDS Galey & Lord Glen Raven Mills Hologix Inc Se IBM Milliken & Co. Russell-Cross Creek Sara Lee Casualwear VF Corp Wellman Inc. Bios Group Burlington Chemical Co CFT Consulting PricewaterhouseCoopers T-MNA Inc. Timberland NHK International Twin Star Intl Nordstrom Bergdorf Goodman LL Bean Wal-Mart Lands End The Gap Wigwam Mills JBA International Bradley Perspectives

HED 460

Efficient Consumer Response

Efficient replenishment
Systems, EDI Fewer stockouts

Efficient promotion
Promotions based on consumer demand Lean inventory to support promotions

HED 460

Efficient Consumer Response

Efficient assortment
Turnover Profit Enhances brand and retailer perceptions

Efficient product introduction


Pull strategy for new products Based on unmet needs

HED 460

Category Management

Technique used by retailers

Product is sub-divided into categories that Reflect purchasing behavior of target customers Are managed as separate business units

Supermarkets and mass merchandisers


HED 460

Categories as SBUs

Department is too broad and less strategic

150-300 categories vs. 15-20 departments

Product/brand is too narrow to approach strategically

15-20,000 skus in a store and 16,000 new products/year


HED 460

Category Management

Integration of Buying and Merchandising responsibilities Management of price, shelf space, merchandising assortment strategy, promo efforts, replenishment Affects manuf. sales and marketing Team approach between channel members

HED 460

Category Plans
Jointly developed by retailers and suppliers Define strategies and financial objectives

GM Sales/cu ft.

HED 460

Buying/Merchandising Decisions

Responsibilities must be integrated


Inventory allocation Space allocation/analysis Customer demand

HED 460

Category Management

Goal - Retailer
Optimize each part of the store Allocate space that maximizes Gross Margin/unit of space

Goal Supplier

To become the lead supplier or channel captain for that category


HED 460

Benefits

Increased category sales (5-15%) Increased category margins Assists in creating optimal assortments

Reduction of SKUs in most cases

For Mfct., move from trade allowances (push) to trade promotions (pull)
HED 460

Manco example

Merchandising of tape products was difficult Different buyers bought tape Solution = tape center Later mailing center
Prevented other vendors access 19 SKUs to up to 32 feet in office superstores

HED 460

Direct Profit Profitability (DPP)


Profit associated with each category Per unit Gross Margin minus all variable costs
Procurement Distribution Sales

HED 460

Defining Categories

Consider end uses (frozen, chilled, deli fresh) Consider substitutablity (fresh/frozen) Consider complimentary purchase decisions (pasta + sauce) Base decision on how customer buys Same real estate

HED 460

HED 460

Dairy category

Displayed by brand name Customers shop by type (low fat, full fat, no fat, fruit) Then individual flavors

HED 460

Ready to eat meals category

Type Chinese, Italian, meat/two vegetables Cooking method oven, micro, stove Low calorie or regular

HED 460

Defining Categories

What products should be included? Beer Category- decisions


Shelf beer and cold beer part of total Shelf beer = 1 category and cooler = 2nd Sub category of beer/wine/alcohol Beer as a solution (picnic, party, meal)

HED 460

Roles/Implied Strategies

Destination

Traffic building Turf protecting Transaction building Excitement creation Cash generating Image creator
HED 460

Pasta Category
Strategy Traffic builder Examples
Std. Packs of dried spaghetti

Transaction builder
Cash generator

Parmesan, fresh herbs, pasta sauces


Lge. economy packs of dried pasta

Image creator
Excitement creator

Filled pastas: ravioli, tortellini.


Fresh, less well-known: stelline.
HED 460

Roles/Implied Strategies

Routine/ preferred

Transaction building Profit generating Turf protection

HED 460

Roles/Implied Strategies

Convenience

Transaction building Profit generating Image enhancing

HED 460

Roles/Implied Strategies

Occasional/ seasonal

Traffic building Excitement creation Profit generating

HED 460

Tactics Traffic building

Aggressive pricing on loyalty products/low margins Media on frequently purchased items Prominent space

HED 460

Case Study - Toothpaste


Results Sales Previous 12.3m Current 12.64m % Diff. 2.8%

Gross Profit
GP Margin Turns GMROI

1.66m
13.5% 12.2 1.9

1.52m
12% 14.5 25.2 1.98

(8.4%)
(11%) 19% (16%) 4.2%
HED 460

Days supply 30

Leading Manufacturers CM

P&G Kraft General Mills UnileverRalston PurinaPillsbury QuakerKelloggsCoke


HED 460

Leading Retailers CM

HEB Safeway Wal-mart Ahold Kroger Wegmans


HED 460

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