News & Articles

Category Plans: What's In A Name

Retail World September 2008 – by Norrelle Goldring, Director, ShopAbility

What is a category plan? What isn’t it? What goes in one, how do you go about constructing it and most importantly, how do you get traction on it?

It’s that time of year again for many suppliers – annual planning time. Yet many suppliers have category plans that are in-store tactical expressions of the brand or individual customer plans, rather than category plans in their own right. Based on discussions with a number of you recently, we thought it topical to provide some thoughts on best practice category planning.

Why have a category plan?

Category plans provide a common platform and overarching framework for all marketing, channel and customer activity. A good category plan helps you:

• Grow the entire category and over-index in your share of that growth
• Take category leadership and expert position with retailers
• Provide an overarching vision and platform for all activities in the category
• Weld functional teams (sales, marketing, category/trade marketing)  and plans (marketing, category, customer) together
• Acquire, and demonstrate, in-depth category understanding
• Identify and go after the big plays for maximum growth.

Good category plans and strategies that have business-wide engagement are capable of re-engineering the business and the way it goes to market.

What is a category plan?

A future focussed strategy that covers the entire category, and all players, in it. The chart below illustrates the key characteristics of category plans.

But isn’t that what a category review is?

No. Category reviews historically have been about analysing yesterday’s data to provide tweaks for today for range and space, and introducing new product ideas to the retailer at a time that suits them. Whilst category reviews are an opportunity to showcase and update the latest consumer and shopper insights, review category trends and impacts for the category, ideally the reviews should be conducted in the context of what the broader category plan is.

Category plan scope

So what goes in a category plan? Many of the same in-store drivers you see in a category review, but at a much higher level and incorporating consumers, shoppers and channels at a macro level.

The structure of a category plan is pretty similar to that for a marketing or business plan e.g.:

Vision: a simply expressed future focussed goal for the category (not the supplier) e.g. ‘healthy breakfast everyday, anywhere’ or ‘a white wine for every occasion and palate’. Visions are mostly expressed in consumer and shopper terms and indicate what the growth drivers are likely to be. Range, space, price, display and promotion are all levers that can be pulled to achieve the Vision, but are rarely visions in themselves.

Mission/objective: quantification of what achieving the vision is worth in volume and value terms for the category, and then for the supplier

Definition: a clear definition of the category and its purpose, and the key segments in the category from the shopper’s perspective

Strategic pillars: strategic pillars cover a combination of consumer, shopper, occasion, channel, and in-store platforms to achieve the Vision.  The actual pillars will vary by category. Sales and Supply functions are generally (but not always) enablers of the category plan rather than pillars in themselves. Some pillars may be more in-home than retail focussed, e.g. ‘get into the pantry’ or ‘increase pantry stock’ is an in-home strategy, but the resulting tactics will be in-store focussed (and in this instance likely related to price and promotion).

Tactics: supporting the pillars, these are the top line activity implications of the pillars such as major adjustments to space and layout; range e.g. specific pack, product, or product line introductions; major changes to price and promotional strategy; working with related product suppliers; in-store marketing and retail marketing mix; focussing on specific store drivers or areas of stores; store staff incentives etc.

Enablers: one or two lines on people, capability, financial and supply resources required to achieve the strategic pillars. Examples include ‘25% field sales force increase’, ‘new plant ‘, ‘route to market reconfiguration’. Enablers are the things without which the tactics cannot happen.

Constructing the plan and getting engagement

Category plans should form an integral part of the overall annual business planning process.

However, typically most suppliers have brand and individual customer plans, developed in parallel but often not mutually, that are then turned into in-store tactics. The chart below demonstrates this.

In the integrated model, the category plan is developed at the same time as marketing and channel plans, and there are cross functional joint workshops and input to ensure relevance and consistency, per below:

In the integrated model, the initial analysis and insights and analysis is performed by each function but the outputs are jointly shared. In reality this middle stage will normally go through several iterations and workshops.

The inputs into the category analysis are also prepared by various cross functional teams, covering category, channel, consumer, shopper, product and pack innovation, point of purchase activation, price, profit, promotion, communications and media. The trick here is to stay topline and stick to macro trends and implications rather than analyse the nth degree out of something (which will simply yield a tactical change but not a strategic one).

The strategy workshops are used to share and agree the topline implications and big ticket opportunities, and likely strategic pillars, for each type of plan. Once the strategies are agreed the plans are taken down to tactical, operational level by the relevant functions and budgets set.

For the customer plans, this also involves building a category story for retailer engagement. This story then becomes the referral point for all future category reviews, with subsequent range and space recommendations put in the context of the overall category vision and strategic pillars.

The above assumes that your first go at a category plan is as part of the annual planning cycle.
However, if your next annual planning cycle is a way off you should still build the basic category plan using the format described above as an initial, cross functional exercise, and then revisit or slot it into the annual planning process.

The sooner you have a category plan in place the sooner the business can start kicking growth goals, rather than being mired in tactics.

For more information on how to construct category and channel plans, and implement new category strategy, contact us at enquiries@shop-ability.com.au

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