1. Category Depth and Variety Focus on Demographic Determinants

2. 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.

3. Demographics 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. www.census.govwww.census.gov How is it used in category management? How can provide a competitive advantage, to suppliers or retailers?

4. 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.

5. The Rising Retailer (?) Corstjens 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…”

6. Store-to-store differences within chains 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 (?)

7. Buying for the store: 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

8. A.C. Nielsen Homescan “Consumer Facts” 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

9. A.C. Nielsen “Tips” 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

10. Top Household demographics (%) (All categories) RACE/ORIGIN - WHITE78.9 AGE/PRESENCE OF KIDS NO KIDS - UNDER 1866.8 FEMALE HEAD EMPLOYMENT - EMPLOYED46.9 ACN COUNTY - A39.3 HH AFFLUENCY - LIVING COMFORTABLY37.2 HH HEAD OCCUPATION - NOT IN WORK FORCE35.9 FEMALE HEAD EMPLOYMENT - NOT EMPLOYED34.3 FEMALE HEAD EMPLOYMENT - FULL TIME33.4 AGE/PRESENCE OF KIDS - KIDS UNDER 1833.2 HOUSEHOLD SIZE - 2 MEMBER32.4 ACN COUNTY - B30.7 HOUSEHOLD SIZE - 3-4 MEMBER30.6

11. Light-duty liquid detergents Top household demographics: % $ Volume RACE/ORIGIN - WHITE70.2 AGE/PRESENCE OF KIDS NO KIDS - UNDER 1862.8 FEMALE HEAD EMPLOYMENT - EMPLOYED47.4 FEMALE HEAD EMPLOYMENT - NOT EMPLOYED40.2 ACN COUNTY - A40.1 HH HEAD OCCUPATION - NOT IN WORK FORCE38.1 HH AFFLUENCY - LIVING COMFORTABLY37.2 AGE/PRESENCE OF KIDS - KIDS UNDER 1836.8

12. Ivory light-duty liquid Top % $ Volume Demographics AGE/PRESENCE OF KIDS NO KIDS - UNDER 1882.2 RACE/ORIGIN - WHITE78.1 FEMALE HEAD AGE - 55+56.0 HH HEAD OCCUPATION - NOT IN WORK FORCE51.7 FEMALE HEAD EMPLOYMENT - NOT EMPLOYED49.4 HOUSEHOLD SIZE - 2 MEMBER45.0 HH LIFESTAGE - EMPTY NESTERS44.3

13. Interpreting Index Scores Identifies “disproportionate” purchasing: 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

14. Ivory Liquid: Top $ Volume Index Demographics FEMALE HEAD AGE - 65+ 230 FEMALE HEAD AGE - 55+ 202 HH LIFESTAGE - EMPTY NESTERS POOR 202 HH LIFESTAGE - EMPTY NESTERS 197 HH LIFESTAGE - EMPTY NESTERS LVNG 195 FEMALE HEAD AGE - 55-64 169 FEMALE HEAD EMPLOYMENT - NOT EMPLOYED 144 HH HEAD OCCUPATION - NOT IN WORK FORCE 144

15. Top $ Volume Indices for the Category RACE/ORIGIN - AFRICAN AMERICAN11.5 160 FEMALE HEAD EDUC - NOT HS GRAD4.4 151 HH LIFESTAGE - EMPTY NESTERS POOR6.5 144 RACE/ORIGIN - NON-WHITE21.2 141 HOUSEHOLD SIZE - 5+ MEMBER10.7 132 HH LIFESTAGE - MATR/FAM POOR-GETT8.9 132

16. Assigning Selling Space 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.

17. Consumer Loyalty 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.

18. Shopping Patterns Destination items Purchase frequency Price sensitivity Household penetration Sensitivity, “comfort of environment” Sales responsiveness to promotions, impulse items

19. Differentiation or Duplication 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

20. Where does the customer shop? Intertype competition: –Disposable diapers –Pet foods –Batteries –Chewing gum –Bloody Mary mixes Intratype competition –Distilled spirits (gin, whiskey, vodka) –Prescription drugs