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.
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
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.
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
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
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.”
Discussion Questions: Why has category management faced slow adoption outside traditional CPG channels? What do you think of Phillips approach to getting a foothold in Kohl’s and Best Buy? Can you suggest other techniques when shopper insights data aren’t available?