CPGmatters: Philips Takes Category Management to New Trade Channels
Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
Both Kohl's and Best Buy have set formulas for merchandising in their stores -- and neither includes CPG-type category management. So in looking to establish its Sonicare and electric-shaving product lines in the process, Philips used a reverse approach than manufacturers typically take with retailers in establishing influence over how they merchandise and manage categories in the store.
"We went from the top down -- from the shopper-insights piece down to the data piece," said Peter Naumann, Philips' director of category-development management. "At a Kroger or a Safeway, you build up your category-management engagment with data pieces and by analyzing shares and then you get to the resulting shopper insights and get asked to do higher-level strategic management.
"But with these retailers, we did shopper observations that led to merchandising-strategy suggestions first. We flipped the model on its ear."
In the absence of pre-existing data that would help Philips explain how it could help either retailer, Philips talked with Kohl's and Best Buy shoppers both in-store (with the retailers' cooperation) and in other settings to understand their views on such issues. Armed with insights based on that information, Philips obtained and got buy-in from chain management to present ideas for tinkering with how merchandise in the relevant categories -- both Philips' and competitors -- might be rearranged and enhanced to appeal more to what shoppers were saying.
With Kohl's, Philips came up with some ideas for promotional strategies for the relevant categories with advice on how to exploit the fact that sales in the power-shaving segment, for instance, is heavily driven by the Christmas season.
When it came to Best Buy, power oral care and power shaving devices were placed in the back, and both types of products displayed statically in their boxes. Philips suggested that Best Buy move the merchandise set forward and allow shoppers to "play" with the merchandise a bit, with shavers out of their boxes and connected via their power cords to electricity.
"We could show them the lift that this approach historically gives retailers and how shoppers are looking for that extra level of engagement, and how it improves the shopping experience and conversion," Mr. Naumann said.
The upside-down category management was a daring but, considering the history of category management outside of CPG brands and perishables, maybe the only option available to Philips.
"The perception is that you can't do category management unless you're in the CPG category -- very fast-moving goods -- or you've got a lot of syndicated data about your product sales," Mr. Naumann said.
"Category management has grown up typically in places where data is more available, where analytics are more possible and more enabled, and where retailers have tended to want to drill into it and have the conversations you need to have," said Joe Beier, executive vice president of GfK Interscope, which advised Philips in the effort. "Retailers dealing in categories outside of that bull's-eye have been slow to adapt."