Advising Retailers When You Are Not a Category Captain

Bill Sever
EVP and General Manager

Client Service, Spectra

When a shopper scans the shelves, which product do they see first—yours or your competitors’? Product assortment and shelf placement heavily influence which products fly off the store shelf to the cupboard. However, when it comes to product assortment and shelf placement, control typically goes to an elite few—the category partners. Manufacturers who are not category partners have something retailers want—consumer insights. This insight, if used properly, can help manufacturers insert themselves into the category review process early on regardless of their category status.

A Traditional View of the Category Review Process
Retailers classify manufacturers in two different ways when partnering during category reviews—as category captains (in this article, we will refer to them generally as partners) and everyone else (referred to in this article as validators). The responsibilities and level of involvement of each manufacturer are assigned by the retailers, and quite often leave only one with a proactive position in the decision-making process.

The category partner is typically responsible for the majority, if not all, of the analysis and recommendations for the category. Their deliverables include category and segment definitions, the role the category should play within the account, an assessment of who is buying the category and the size of competitors, and an overview of industry trends, just to name a few. Assortment is optimized with recommendations on shelving, pricing and promotion. A scorecard is created to define and track success measures.

The role of the category validator is less defined and often creates confusion and frustration among manufacturers in this position. “Many manufacturers believe that if you are not a partner you will have less impact in the planning process,” said Kimberlee Marsh, VP of Category Management for Kellogg’s. “Because validators are brought in after the review to assess the recommendations made by the lead manufacturer, you may be assessing them versus your research to determine if the categories’ best interests were protected.”

Category validators can change this dynamic and strengthen their partnership with retailers by focusing on retailer’s issues and providing consumer insight that can be implemented at the account and store level.

What? So What? Now What?
Manufacturers and retailers share one common goal—sell more cases. To do this, retailers often rely on manufacturers’ expertise and execution recommendations in a variety of areas, including:

• Industry trends (e.g., obesity, low-carbohydrate products)
• Loyalty and market basket composition
• Aisle management
• Ethnic marketing
• Multi-planogram assortment
• Consumer-focused promotions

Scanner and shipment data, while being the foundation in the decision-making process for years, only provides half of the story. It is the “What?” that describes current and historical occurrences within a category. Good consumer data, along with scanner and shipment information, will help answer the “So what” (does this mean?) and “Now what” (are we going to do about it?). These two pieces of information provide rear-view and forward-looking perspectives for evaluating categories and brands.

This need for consumer insight is what places a category validator in the position to partner with retailers early on in the category review process. The case study on pages 16–17 illustrates how Kellogg’s, a category validator, achieved success by introducing their insights early on in the category review process and bringing actionable solutions to the retailer.

Insight and Action Are the Key
As the case study illustrates, category validators can become a vital part of the category review process as long as they can provide insights on relevant retailer and category issues and create a framework that can be implemented at the store level. By leveraging good consumer information, working with vendor partners, and most importantly, having a good understanding of the account’s objectives, category validators can create win-win situations and meet both retailer and manufacturer objective of selling the most cases.

Advising Retailers When You’re Not a Category Partner–A Case Study
Named category validator for one of their key retail accounts, Kellogg’s knew they had more to offer than the typical validator role allowed. Over the past year, Kellogg’s invested in several studies and knew they could leverage this information to bring new consumer insight to the review process.

Before the review process began, Kellogg’s met with the retailer to demonstrate their capabilities. Their objective was to be granted an “advanced” validator role whose proposals were reviewed simultaneously with those of the category partner. The retailer could then decide which recommendations were best for the category.

During the meeting, Kellogg’s highlighted three pieces of custom research addressing critical issues for the retailer—the “What?” that describes current and historical occurrences.

Kellogg’s consulted Spectra prior to the initial category meeting to review the retailer’s objectives—to efficiently target and retain consumers with the optimal mix of pricing and merchandising activity. In conjunction, they hoped to see how/if consumers were impacting under-performing stores.

To begin the analysis, Spectra integrated profiles of the retailer’s shoppers into its consumer-centric marketing software platform, Spectra InfiNet®. The consumer differences were brought to life by using Lifestyle and Lifestage information. Once the profiles were created, Spectra could then begin to understand why stores were under-performing by linking the profiles to other data sources and retailer information within Spectra InfiNet.

A study indicated that the retailer faced considerable competition from one key account, while four others competed with the account on some level. Spectra profiled the five accounts to see if there were similarities among the consumers within the trading area [See chart 1], and then performed a competitive interaction analysis to identify the stores that were in the trading area, as well as the store-level contested ACV [See charts 2 and 3].

Now that they understood the competition, Kellogg’s identified for the retailer under-performing stores by examining store-level sales movement to create a demand vs. development gap that compared actual sales against potential sales [See chart 4]. Going one step further, they then analyzed different variables to see what was influencing the category’s sales performance. This analysis showed that sales performance was most affected by the one key account outlined in the study and not by overall interaction by all key competitors.



Now that Kellogg’s had the “So what?” question answered, Spectra also helped them answer the “Now what?” by delivering a store-level action plan to help retain customers and begin to close the store-level opportunity gap.

“Heavy competitive interaction occurred in two of the five clusters of the account. Within these clusters, a significant opportunity gap was identified, and Spectra recommended modifying the clusters and assortment to help prevent consumers from switching accounts [See chart 5],” said Steve Kapinus, Spectra Account Manager. “Recommendations for separate merchandising and pricing strategies among cluster groups were given to help retain shoppers and potentially convert them to loyal shoppers.”

Kellogg’s clustering and assortment methodology was well received at the account and is currently being tested within a division.

“This was a great opportunity,” said Marsh. “In-depth understanding of the retailer’s issues, coupled with Spectra’s consumer analysis, positioned the retailer to grow organically—a win-win position for the retailer and manufacturers.”

If you would like to learn more about how to advise retailers when you are not a category partner, please contact Steve Kapinus at steve_kapinus@spectramarketing.com.