Thursday, April 18, 2013

Mastery Is Key to Future Success in Evolving CPG Ecosystem

Category Management is the primary platform from which CPG brand owners interact with retailers. Category Management provides the language, process framework, and metrics for communicating all strategic and tactical recommendations to the retailer.

Without the foundation of Category Management, shopper marketing is “a tale full of sound and fury signifying nothing.” That is why CPG leadership must understand what is happening in the CPG ecosystem and why they must allocate more resources to this critical function. Category Management is not just a department that builds pretty planogram pictures, any more than English is a language limited to writing legal contracts or rap lyrics. Category Management is a fundamental discipline, like consumer research or brand strategy development. Mastering Category Management is what will separate leaders from followers.

The central message is that brand owners need to give the Category Management function more and different resources, because several accelerating trends within the CPG marketing ecosystem are increasing the importance of category-based thinking. These trends threaten to overwhelm the existing capabilities of Category Management and choke growth unless management addresses them quickly, intelligently and holistically

These trends are:

  • Retailer control of the shopper’s moment of truth at the shelf. This simple and unassailable fact means the power of the retailer in the CPG ecosystem is increasing minute by minute, shopper by shopper. The retailer’s power is growing at the very moment when traditional brand building tools are losing their potency and when brand equity is in free fall. Does any brand enjoy the loyalty it had 20 years ago? If so, name it.

  • The growing importance of marketing to the shopper on the path to purchase and, more importantly, in store. All of those formerly brand loyal shoppers are aggressively searching the Internet for the better deal they sense is out there in cyberspace.

  • The growing importance of harnessing Big Data, especially the interaction of shopper loyalty card data with other data captured on social media and shopping-related apps. Everyone understands that shopper insights emerge from the interactions of all these data streams. Everyone appreciates how rapidly the new marketing ecosystem is accelerating through space. Everyone fears being left behind. The problem for CPG marketers is that we do not yet have the digital tools to facilitate the sorting of these interactions so that humans may discover an insight.

Category Management addresses all these emerging trends. How is it that this one function addresses all these emerging trends that have such portentous implications for CPG management?

Trend #1: Growing Retailer Power 
The retailer thinks and works at the category level. The retail buyers are called category managers for a reason. They are paid and incented to grow categories, not brands. When your presentation begins with a story about growing a brand, the category manager, your customer, tunes out. The Category Manager wants to hear how you grow the category or its margins. Unless you have an insight or a brand that grows the category, the only weapon you have is your wallet. Therefore, you must master the category with superior insights, superior people, and superior tools. Category management is the foundation for category mastery.

Trend #2: The Growing Importance of Marketing to the Shopper 
Just as the retail “buyer” thinks in terms of categories, the shopper thinks in terms of need satisfaction. She thinks in “need states.” That’s why shoppers often write “detergent,” “bleach” or “bread” on a shopping list instead of “Tide,” “Clorox,” or “Wonder.”  The category is the answer to the shopper’s need. Therefore, to win with the shopper you must think category need satisfaction first. You must organize your thinking around categories and the particular evolving needs they satisfy.  

Trend #3: Big Data and Insight Generation 
Marketers are drowning in an ever-rising tsunami of data. No one can yet contain this torrent into pools of relevant data so that researchers may plumb the pool for actionable insights. Our answer is to organize the data around that which one is trying to understand, namely the shopper need state we refer to as the “category.” Organizing big data around categories (need states) is basic to uncovering the following: 

  • Unmet needs, which are the basis for new product development
  • The emotional factors driving a need (insight)
  • The benefits that marketers need to offer
  • The location of key communication touchpoints.

Once you understand the factors driving attitudes, marketers can begin to influence behaviors through product or positioning breakthroughs or new communications approaches.


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