speaking the language - category management...

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SPEAKING THE LANGUAGE© 2015 The Partnering Group, Inc.

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SPEAKING THE LANGUAGECOURSE HANDOUT


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TABLE OF CONTENTS

Module 1: Introduction

Module 2: Consumer Packaged Goods

Module 3: The 4Ps of CPG

Module 4: Category Leadership Planning Process

Module 5: Supply Chain & Operations

Contacts

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MODULE 1: INTRODUCTION

WHAT YOU WILL DO:

When you have completed the four modules in this course, you should be able to recognize, understand and correctly use terminology and foundational principles and practices commonly used in the Consumer Products Industry. Additionally, you should be able to explain the purpose, rationale and evolution of the industry’s best practices in category management.

WHAT YOU WILL ACHIEVE:

• Distinguish between consumer packaged goods and commodity items

• Give examples of the roles of consumer and shopper

• Explain what ACV is and how it can be used • Recognize the difference between base and

incremental volume• Explain the relationship between pricing and

profitability• Calculate margin and markup• Show how categories, segments and sub-

segments make up assortment• List the purpose, duration and types of

product promotion • Explain the two main aspects of

merchandising• List the steps in the best practice Category

Leadership Planning process• Summarize the role of supply chain • Distinguish between the responsibilities of

merchandising and operations


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MODULE 2: CONSUMER PACKAGED GOODS

OVERVIEW:

This module introduces Consumer Package Goods, Consumers and Shoppers, and CPG Measures (Both ACV and Base vs. Incremental).

OBJECTIVES:

• Distinguish between consumer packaged goods and commodity items

• Give examples of the roles of consumer and shopper

• Explain what ACV is and how it can be used

• Recognize the difference between base and incremental volume


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Consumer Packaged Goods

• Manufactured and sold in food, drug, mass, specialty, dollar, and convenience stores

• Defined package size

• Defined package graphics

• Brand identity

• UPC code

Commodity Items

• No stated package size

• Often no stated UPC Code

• No brand graphics

• Lack of a brand identity

• Examples include: Bulk potatoes, peanuts, cereal, flour, bulk apples, and mozzarella cheese sold in blocks

CONSUMER PACKAGED GOODS VS. COMMODITY ITEMS


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Consumer The end user of the product.

Shopper The individual who purchases the product. The shopper and consumer can be the same individual, but are not necessarily so.

CONSUMER & SHOPPER


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MODULE 3: THE 4PS OF CPG

OVERVIEW:

This module introduces and discusses the 4Ps: Product (Assortment), Pricing (Retail Pricing & Profitability), Placement (Merchandising) and Promotion.

OBJECTIVES:

• Indicate how assortment impacts the product mix in a particular category

• Explain the relationship between pricing and profitability

• Recognize the difference between margin and markup

• Identify how categories, segments and sub-segments make up assortment

• List the purpose, duration and types of product promotion


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7© 2015 The Partnering Group, Inc.SPEAKING THE LANGUAGE


PRODUCTAlso called assortment or distribution. It’s the product line up that a retailer carries in a category.

PRICINGPricing includes the pricing strategy, how customer pricing compares to key competitors, and other special requirements regarding retail pricing and price changes.

PLACEMENTSome call this merchandising. Placement is usually considered into two sections: Shelving and displays. • Shelving involves the day-to-day positioning of the product. • Displays are an area where product is displayed off-shelf, for

promotional purposes.

PROMOTIONPromotion is used to attract new shoppers to the category; to sell multiple units to an existing shopper; or to react to the competition.

There are 4 sales levers at the customer and they are often referred to as the 4Ps:

8© 2015 The Partnering Group, Inc.SPEAKING THE LANGUAGE


PRICING & PROFITABILITY

Retailer A: $10

It depends...

Retailer A $10/unit - $5/unit cost = $5/unit profit

Retailer B $12/unit - $8/unit cost = $4/unit profit

What retailer would you say is most profitable?

Retailer B: $12

At first glance it might look like Retailer B was more profitable. But we don’t have enough

information to know that for sure because we don’t know what Retailer A or Retailer B

paid for product X.

X X


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MODULE 4: CATEGORY LEADERSHIP PLANNING PROCESS

OVERVIEW:

Category Management is a distributor-supplier process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer/shopper value. The goal of Category Management is to achieve business results we wouldn’t be able to achieve otherwise. This module introduces the business process.

OBJECTIVES:

• Explain the history of Category Management

• List the steps in the Category Leadership Planning process

9SPEAKING THE LANGUAGE© 2015 The Partnering Group, Inc.


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MODULE 4: CATEGORY LEADERSHIP PLANNING PROCESS

CATEGORY LEADERSHIP PLANNING PROCESS

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Review & Refine Objective Setting & Alignment

Category Definition

Insights Identification

Category Vision & RoleCategory Growth Strategies

Tactical Planning

Plan Activation & Target Setting


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MODULE 5: SUPPLY CHAIN & OPERATIONS

OVERVIEW:

The Supply Chain consists of the steps required to move finished product from the manufacturer to the retailer’s shelf. This module describes the role of the supply chain and its integration with the retailer.

OBJECTIVES:

• Summarize the role of supply chain

• Distinguish between the responsibilities of merchandising and operations

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MODULE 5: SUPPLY CHAIN & OPERATIONS

ROLE OF THE SUPPLY CHAIN

• Supply chain is often referred to as Logistics, which is an important aspect of this broader topic

• Steps required to move finished product from the manufacturer to the retailer’s shelf

• Steps vary: Category, sales volume and/or size of the retailer

• Drop ship: Product ships directly from the plant to the store

Available for

Purchase In Store

Retailer’s Warehouse

Distribution Center

Manufacturer’s Warehouse

Distribution Center

Produce the Item


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CONTACT

TPG’s Category Management College is an unparalleled capability development program based upon rigorous assessment, Best Practice curriculum and innova-tive e-based & classroom delivery.

For all technical questions and issues please contact our support desk:Phone number: 1-513-429-2841 Email address: [email protected]

For more information about TPG University please visit www.thepartneringgroup.com or contact TPG at 513-469-6840.

© 2014 The Partnering Group, Inc. All rights reserved.

No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and/or retrieval system, without permission in writing from the copyright holder.

© 2015 The Partnering Group, Inc. 13

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