Category Marketing For Growth

What is Category Marketing?

Category Marketing is a strategic capability developed for supplier companies to set a strategic commercial context. Brands are given clear direction to engage consumers, shoppers and customers to drive growth.

Introduction:

The challenge in any CPG business today is to define where business can find growth. There is no doubt that retailing, like many global businesses, is going through complex change, and that speed of change will only accelerate. Better performing businesses align their consumer strategies with their shopper and customer development strategies. Shopper Marketing is most effective when it persuades shoppers to decide to buy and enables them to complete the purchase. Understanding the customer, shopper, and consumer requires a deep dive into relevant insights and understanding the shopper’s journey.

Reference:

In this report, we look at the impact of new technology, and a downturn in the economy is having on CPG, specifically the grocery sector. Firstly, let’s look at the macro effects that have impacted our sector in the last 16 weeks.

Macro:

According to San Francisco based Grand View research, the AI market is set to explode, driven by the global lockdown. Industry verticals such as automotive, healthcare, retail, finance, and manufacturing have all enhanced productivity in that time with AI adoption.  Furthermore, it is widely predicted that the AI market will grow from $39.9 billion in 2019 to $733.7 billion by 2027. Even Google Mail tells me what I should be writing as I use Microsoft Word and a microphone. Are keyboards the next thing to hit the scrapheap?

When do you think things will settle into the new normal and are you ready for that? What other big things are on the horizon (Brexit) and are you ready for those?

Technology:

So why is this important? Technology moves on. Technology shapes how we live, and with that comes sacrifice in the short term. Retail has been at the forefront of change for many years, but there is no doubt that in the last 20 years, it has fallen behind other industries. Is this simply a case of an industry reset at the expense of a dedicated workforce?

Unemployment:

If the following statistics had been released in 2019, we could have potentially reviewed this as market hype.  But with the recent job losses totalling 24,000 job losses in the UK retail sector with a further 31,000 at risk, are many retailers using this downturn as an opportunity to reposition their offering by investing in new technology to increase efficiency?

Trends:

In the last 16 weeks, the core shopper has split into two distinct groups, according to Nielsen, in their report released in July 2020. According to Nielsen, during the lockdown, shoppers split into two groups, those who were not financially affected by Covid-19 and those dramatically affected by Covid-19. The first group focuses on products with a sustainable pedigree, whilst the second group is instinctively focused on discounted and own label. Why is this important? Is the grocery market about to segment in line with these new societal groups?

With this in mind which parts of your target market value chain are overperforming and do you know why? Secondly, which parts of your target market value chain are underperforming? 

Rebalancing Resources 2020 Report:

In March 2020, one week before lockdown, Big River Solutions released its long-overdue annual appraisal of CPG

supplier trends. One of the overriding conclusions from this report was that capability development within category and shopper was a top priority for many leading brands. Today understandably, the capability is not a priority as organisations regroup to address the new market conditions expected over the next two years. This must change.

Behaviours:

In 2019 companies were treating the category vision as simply a tick box exercise. Once completed, the tick box exercise consigned it to the bottom drawer whilst the business focused on short term activations to drive the numbers.

Are the main consumption behaviour changes are affecting your business? What are the main shopper behaviour changes affecting your business? What are the main customer behaviour changes affecting your business?

Numbers:

Numbers are always important. Retail is detail, after all. However, it’s hard to shift volume in an economy in recession and with unemployment on the rise. With some grocers seeking a 50% discount on cost price for all lines, the need for strong negotiation skills and RGM capability has never been more important.

Hindsight:

The last time we saw this was in 1991, and that was two retail generations ago. In the last 30 years, it’s true to say that Shopper Marketing has evolved at the expense of Category Development and Category Management. This has impacted long term planning.

Insight:

Why is this important? Suppliers need to understand different retailing model strategies and offer relevant and differentiated category-based solutions now that two shopper groups are emerging.

Here are some of the conclusions from our Rebalancing Resources 2020 report. The conclusions are as viable now as they were back in March 2020.

  • Speed to market will become a competitive imperative as companies will need to implement faster innovation and development processes to lead with innovation. As ranges are reduced shopper-centric products will be required to increase the footfall in-store.
  • We have already seen that smart knowledge is changing how we interact. With routine delegated to AI-enabled machines, leaders must focus on unlearning and learning how to drive change and growth.
  • Channel and format competition will intensify; definition, assessment and prioritisation of distribution channels will be key to maintaining profitable access to target shoppers.
  • As Nielsen has confirmed, the rise of the eco-friendly consumer now has a part to play in this market. Retailers must ensure their categories and brands are established and equally relevant with strong credentials to capture the eco-friendly consumer.
  • Shoppers look for the most experiential value, and this is not to be overlooked. The shopping experience in all channels needs reinvention to remain relevant to older (more affluent) shoppers.
  • Shoppers look for the most convenient access to goods. Distribution strategies need to be regularly re-evaluated to ensure availability meet shopper expectations. During the lockdown, we have seen the rise online at the expense of in-store visits whilst the High Street was locked down. Next quarter the industry will have data to confirm whether online shopping is now a shopping habit.
  • Consequently, omnichannel will become a key tactic for any supplier. A good example of this is D2C. Whilst still in its infancy, D2C is a positive example of the benefits found when omnichannel becomes core to the business.

Foresight:

There is no doubt (as cited in the Times recently) that we are now going ‘back to the future”. To find growth requires a focus on category marketing which aligns any organisation to the core principles of putting category at the heart of your business. To do that, the organisation should empower an experienced commercial team to deliver these principles. Experts should be sourced both internally and externally to drive a 360 appraisal of the portfolio and offer.

The outcome has to be embedded at an operational level and is owned by the Commercial Director.

Recommendations

  1. Better performing businesses align their consumer strategies with their shopper strategies and customer development strategies. The alignment tends to ensure greater cooperation in investment and effort, leading to more efficiencies and commercial strategies’ effectiveness.
  2. Strategic planning is still conducted in functional silos. Consumer marketing is still to embrace ownership fully; this leads to failure to set up a regular category vision for the business to work towards.
  3. Companies tend to excel in operational planning and execution; however, there is often a disconnect between the strategic intent driven by the immediacy and urgency of day to day operations.
  4. Business processes are well defined for major activities such as strategic planning, annual planning, budgeting and forecasting. However, functional roles and responsibilities tend to be loosely defined by underdeveloped functional integration. Most commercial teams have functional organisation structures and working practices that promote functional segregation rather than integration.
  5. Functional competency requirements have not kept up with the evolution of the distinct roles within the commercial team.

How to develop Commercial Excellence

  • Look at the market and category through one lens.
  • Measure what you can. Use informed and logical reasoning to close gaps.
  • Do not jump to conclusions.
  • Use a matrix that connects internal perspectives to market indicators.
  • Distinguish between caps and real opportunities.
  • Develop market insights about category performance that make strategy obvious.
  • Develop and share a realistic and ambitious vision of the category, your business in the category and your customers potential.
  • Develop and implement integrated consumer, shopper, and customer growth strategies. Deliver the promise.
  • Align capability standards to strategy do what is necessary to do it at a higher level than your competitors.
  • Invest in people today for a better return tomorrow.
  • Find and track significant forces changing the market/category and adjust strategy and capability programmes to accommodate.

What consumer attitudes are driving these changes? What shopper attitudes are driving these changes? What customer attitudes are driving these changes?

Good luck, and if you need any help, our contact details are below.


Who are Big River Solutions?

  1. We are Big River Solutions, a global Category Marketing consultancy based in the UK specialising in driving commercial excellence.
  2. Our focus is on helping our clients grow through connecting their categories and brands to their target consumers, shoppers and customers. Creating Category’s for Growth is our expertise.
  3. We help develop rigorous and commercially integrated strategic and tactical growth plans for categories and brands based on knowledge, insight, vision and a deep understanding of market drivers.
  4. We help convert plans into action through innovation and engagement that drives positive behaviour changes in target consumers, shoppers and customers and delivers expected results.
  5. We help develop and embed commercial capabilities required to gain and sustain competitive advantage through organisation and people.

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