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Category Depth and Variety. Focus on Demographic Determinants. What makes a “good” category for the semester?. Competition among suppliers for shelf space (not just among brands). Retailer responsibility for brands, facings, depth, and pricing decisions. (No DSD)

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Category depth and variety

Category Depth and Variety

Focus on Demographic Determinants

What makes a good category for the semester
What makes a “good” category for the semester?

  • Competition among suppliers for shelf space (not just among brands).

  • Retailer responsibility for brands, facings, depth, and pricing decisions. (No DSD)

  • Competition among retailers and retail types (intertype competition, i.e., drug stores, grocery stores, discount stores,…)

  • It’s “doable” for one person to do one store.


  • Age, income, occupation, education, number of children, marital status, and all combinations thereof.

  • Census data and Internet web page make it available at no cost to retailers and wholesalers.

  • How is it used in category management?

  • How can provide a competitive advantage, to suppliers or retailers?

Suppliers have an initial advantage in product differentiation
Suppliers have an initial advantage in product differentiation

  • Manufacturers must introduce new products.

  • New brands and extensions are introduced to address the “unseen” motivations of buyers and can segment markets.

  • Retailers seldom have the scope of resources to introduce products for a particular segment.

  • Retailers’ locations, and patrons, are their point of differentiation.

The rising retailer corstjens and corstjens
The Rising Retailer (?) differentiationCorstjens and Corstjens

“Retailers must adopt broad, bland positionings: in contrast to manufacturers, retailers cannot deselect important consumer segments.

“Shopper segments exist, but they must be targeted within the store.

“Retailers must learn to handle in-store data to recognise which of their shoppers of the greatest potential…”

Store to store differences within chains
Store-to-store differences within chains differentiation

  • No two locations are identical

    • Size and orientation of parking lot

    • Adjacent retailers

    • Square feet of display area

    • Entrances

  • What are the economies of the chain?

  • Demographics (?)

Buying for the store
Buying for the store: differentiation

  • Differentiate from the competitor(s):

    • Minimize overlapping brands

    • Carry unique SKUs

  • Match trade area and/or patrons with the assortment

    • Understanding of the patrons, and trade area

    • Knowledge of typical store demographics

    • Know brand demographics

A c nielsen homescan consumer facts
A.C. Nielsen Homescan “Consumer Facts” differentiation

  • Buyer Behavior and “Purchase Components”

    • Provides the leading brands, penetration, sales, loyalty, dealing

    • Allows comparison of category to other categories, relative size, penetration.

  • Demographic Profile

    • Shows difference across brands in customer demographic profile

A c nielsen tips
A.C. Nielsen “Tips” differentiation

  • Create a Excel “Workbook” that will compile data for examination independent of access to the Homescan software.

  • Copy and paste “the Purchase Components” data into a single worksheet.

  • Copy and paste the Demographic data for “% $ Volume” and “$ Volume Index” into separate worksheets.

  • Sort on “% $ Volume” for category/brands

Top household demographics all categories
Top Household demographics (%) differentiation(All categories)

Light duty liquid detergents top household demographics volume
Light-duty liquid detergents differentiationTop household demographics: % $ Volume

Ivory light duty liquid top volume demographics
Ivory light-duty liquid differentiationTop % $ Volume Demographics

Interpreting index scores

Identifies “disproportionate” purchasing: differentiation

Dividing a % $ volume by % of households (multiplying by 100) creates index.

“Ivory Liquid, Female Head 55+” = 202

(% $ volume ÷ %household) x 100 =202

56.0% ÷ 27.7% (x100) = 202

Interpreting Index Scores

Ivory liquid top volume index demographics
Ivory Liquid: differentiationTop $ Volume Index Demographics

Assigning selling space
Assigning Selling Space differentiation

  • A category or line’s proportion of selling space can be examined with respect to:

    • Sales, to overall store sales

    • Gross margin, to overall gross margins

    • Physical size of the product and consumer preferences (paper goods)

    • Inventory needs, unit movement and replenishment costs (soft drinks, DSD product categories)

  • A line’s space will never be directly proportional to any single characteristic, but evolves to meet the needs of customers’ purchasing patterns and the retailer’s need for gross margins.

Consumer loyalty
Consumer Loyalty differentiation

  • Does the assortment need to carry a certain brand or brands?

  • What situation is best for the retailer, high flexibility or low flexibility?

  • Would customers be willing to switch to a higher gross margin, lower priced private label?

  • What information must be provided to create switching, how could I initiate switching behavior.

Shopping patterns
Shopping Patterns differentiation

  • Destination items

  • Purchase frequency

  • Price sensitivity

  • Household penetration

  • Sensitivity, “comfort of environment”

  • Sales responsiveness to promotions, impulse items

Differentiation or duplication
Differentiation or Duplication differentiation

  • Duplicating a competitor’s assortment:

    • Security in knowing you’re carrying a competitive assortment (“we’re competitive”).

    • Tap into competitor’s customer base.

    • Less time required in developing a pricing or assortment strategy

  • Differentiation

    • Improved margins

    • Distinctiveness in the store

    • Build positive associations with the retailer

Where does the customer shop
Where does the customer shop? differentiation

  • Intertype competition:

    • Disposable diapers

    • Pet foods

    • Batteries

    • Chewing gum

    • Bloody Mary mixes

  • Intratype competition

    • Distilled spirits (gin, whiskey, vodka)

    • Prescription drugs