FD Buyer: Let’s Try Coordinating the Time of Category Reviews

Discussion
Mar 08, 2010
Warren Thayer

Commentary by Warren Thayer, Editor

Through a special arrangement, presented here for discussion
is a summary of a current article from Frozen & Dairy Buyer magazine.

Let’s say you’re a manufacturer with a new product breakthrough, and you’re
ready to present it to the trade this month. Your research says shoppers will
love it, your promo plan and consumer advertising are perfect and you’re understandably
excited. But let’s also say that several of your key retailers won’t be reviewing
your category until the following January. So how do you get your precious
baby onto the shelf and give it enough traction to get started with consumers?
There’s only one answer: With horrendous difficulty and inefficiency.

It’s a real dilemma. Do you go ahead with promotion and ad plans in the market
if you’re on the shelf in only half the stores? Do you sacrifice efficiencies
in ad spending, and risk alienating the retailers who don’t yet carry the product?
Will the lack of critical mass doom your launch?

This is a bigger problem in categories with SKUs coming and going all the time
— like dinners and pizza — than it is in more stable categories, such as
potatoes. In seasonal categories like ice cream and novelties, the seasonality
is readily understood industry-wide, so planning and promotion run more smoothly.
But there’s no reason why many frozen and dairy categories must be reviewed
in April, November, or whenever. Standardization seems like a good idea that
would benefit everyone.

Manufacturers could get to market more efficiently, helping improve the chances
of new item success. Shoppers, seeing an ad or coupon, would find product in
more stores. And there would be fewer emergency re-sets during the year. Quite
a few retailers, manufacturers and brokers I’ve spoken with think this is a
good idea, so now we just have to herd the cats. What do you think?

Discussion Questions: Would an effort at standardizing
which categories are reviewed when (i.e., category X in January and category
Y in April) be beneficial for the industry? If so, what is the best way to
bring this about?

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17 Comments on "FD Buyer: Let’s Try Coordinating the Time of Category Reviews"


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Ben Ball
Guest
11 years 2 months ago

Pluses and minuses on this one.

Pluses are well summarized by Warren.

Biggest minus that comes to mind is for small manufacturers with a large regional or even national footprint. Most of these folks have a relatively small sales and category development staff. So the workload of trying to hit every customer’s category review in the same month might be a real killer.

On balance though, seems like a good idea.

Doron Levy
Guest
Doron Levy
11 years 2 months ago

What about smaller regional vendors? They don’t have the time (or the bankroll) national vendors have. If you have a hot product that will sell, it’s up the vendor to get the retailers to review the category whenever necessary.

I was never for standardized review times for categories. If you have a great ice cream coming to market in January, I want to hear about it. Retailers are always starving for new and innovative products. Any buyer who refuses a presentation based on timing is selling themselves short. Category reviews should be ongoing especially in high velocity sections such as frozen dairy.

Dave Wendland
Guest
11 years 2 months ago

Although not directly involved in the dairy/frozen categories (our firm specializes in category management within the health, beauty and wellness arena), this topic has surfaced several times.

I think Warren has done a very nice job outlining the advantages of a single calendar. But, like Ben, I feel there are some downside risks–especially for the small and mid-sized firms. In addition, getting large retailers on the same calendar may resemble the turning of the Titanic.

Carol Spieckerman
Guest
11 years 2 months ago

To me, it is up to the supplier (and individual marketing and account teams) to know each retailer’s review schedule and to plan their business accordingly; not the other way around. Working with multi-national, multi-channel brands, I see this problem quite often–retail is a component of their business but not all of it, so they plan their promotional calendars outside of retail then try to cram it down into retail. When a retailer says “We’re not ready” or “You’re too late,” some become indignant. These days, standardization and retail are strange bedfellows!

Max Goldberg
Guest
11 years 2 months ago

I agree with Ben…there are pluses and minuses to this, depending on the manufacturer’s distribution strategy. Standardization might work well for planning the launch of a new national brand, but it could hurt small businesses trying to launch regionally and retailers that buy locally or regionally.

Steve Montgomery
Guest
11 years 2 months ago

I agree with Mr. Ball that there are pluses and minuses to this type of standardization. One of the minuses is that if everyone launched their new products at the same time within a category, the customer might be bombarded with several new items at the same time, meaning none of them got a chance to shine.

One way to potentially overcome this is if you are in a category where you have a lot of items you could delete (did I say that out loud?) a slow selling item from your line so that the new items could be slotted.

J. Peter Deeb
Guest
11 years 2 months ago

This subject has been on the table since the beginning of the formalized Category Management process. National manufacturers would love the “Big Guys” to to have a standardized category review schedule UNTIL they have an introduction that has to happen right now based on competitive factors, manufacturing efficiencies, etc. For the most part, seasonal items go relatively smoothly but it is the “right now” lines or the 1-3 SKU opportunity that will always be an issue. I don’t think there is a right answer to this situation other than both vendors and retailers using common sense on timing and items.

Christopher P. Ramey
Guest
11 years 2 months ago

This reminds me of the days when every major car manufacturer (okay, there were only three back then) introduced their new products at the same time. It created excitement and sales for the new models, as well as opportunities for deals on the old models.

Those days are gone. There is so much noise in the marketplace that attempts to relive the days of excitement for a category are likely futile.

A products’ success will be the result of a multi-tiered approach more effectively executed by one company. Including the industry dilutes your message.

Positive press is the best way for manufacturers to convince retailers to introduce earlier (who can control the press?). A staggered approach creates differentiation.

The bigger question is your ability to rise above the din on a product by product basis.

Bill Bittner
Guest
Bill Bittner
11 years 2 months ago
There are a lot of things to consider here, everything from the different seasonal and demographic issues to in-store execution, and of course there is the consumer. With all manufacturers trying to hit the same time window, you are only going to increase the paranoia the other manufacturers have of the “Category Captain.” I am not sure the warehouse, category manager, or stores have enough resources to risk on a variety of unknown new items all at once. The consumer may also feel overwhelmed as discontinued products force them to make new brand choices across many items. Who knows, you may end up with a lot of unproductive space in six months when new items are no longer supported by advertising and introductory discounts. The advantage of the current method is that there is constant evolution of the category occurring. This allows for adjustments between resets that avoid long periods of unproductive space or under allocated space. Perhaps the important thing is to administer categories more flexibly, allowing for changes between major resets. This means… Read more »
James Tenser
Guest
11 years 2 months ago
Wasn’t one of the four planks of ECR “Efficient New Product Introduction”? Warren has neatly outlined one of the areas of confound. It’s self-evident that the priorities of store operations and product marketing are not naturally well aligned. It could be operationally efficient to change category assortments only at two or three set times per year. This would eliminate the ritual of the “new product cut-in” and probably help control one dimension of labor costs. But who decides when and for which categories? Even within a large chain, optimal timings will vary by banner, segment or geography. Extending the standard across multiple competitors seems far out of reach to me. And what of the product marketer who misses a launch deadline by 10 days due to say, a factory tooling or raw materials supply issue? Is that firm fated to wait until the next launch window, even if it’s six months away? From an In-Store Implementation perspective, fewer cut-ins and more predictable resets are certainly a desirable goal. But I believe this may be best… Read more »
Gene Detroyer
Guest
11 years 2 months ago

There is no issue here. Most new products introduced into retail are not especially new and innovative and most do not have a great consumer oriented effort behind them. There is no urgency for a retailer to react. On the other side of the argument, I do not know of a retailer that will not make exceptions for new and innovative products or those with substantial support behind them. I do recognize that the folks who are introducing Double-Stuffed, Golden Oreos might disagree, but let’s all be realistic about how many needs are filled by a new product. And, the smart product manager always makes sure that the coupon for New! Super Extra Strength Excedrin is also good on Extra Strength Excedrin.

Planned category reviews make sense if only for the retailer to adjust to a more profitable and appealing shelf mix. The retailers have some rationale for their scheduling and even with categories that are not seasonal, the reviews are surprisingly similar in time frame across channels.

Roger Saunders
Guest
11 years 2 months ago

The “Open to Buy” time has been always provoked a gap for manufacturers and retailers, and it is likely to continue to be a factor. The fact of the matter is, now more than ever, the retailer is at the center of the point of decision of the consumer.

Nevertheless, manufacturers don’t have to sit on the sidelines for an extended period. Dating, test shipments, new channels, working with retailers that have greater flexibility/innovation and less bureaucracy, test markets, alternative areas of the country, along with other avenues, are always open to the manufacturer who “knows that they have the right product for the market.”

Victor Hugo pointed out over a century and half ago that “There is nothing more powerful than an idea whose time has come.”

If the manufacturer believes in their product, they’ll find a way to get that idea across to the retail community.

Ralph Jacobson
Guest
11 years 2 months ago

We all know how this has worked in the past … especially in the food biz. In this changing economy, with customer attention spans at an all-time low, all stakeholders need to be flexible. It’s Darwinism at its best. If a hot product comes along, be responsive. Make it happen, because your competition will. Regardless of the size of the supplier.

The apparel industry has only typically acknowledged a few seasons each year. That is all over with Zara. They have taken the business model and started a better way to do business today. All of us need to be more open to this. “Business as usual” is lethal today.

Robert Dyer
Guest
Robert Dyer
11 years 2 months ago

I believe the bigger issue here is one of rigidity. The core concept of category management is the focus on the consumer, which should drive product decisions. Category Managers are busy people and too often they get wrapped up in the business process of category management and lose the focus on the consumer. Category managers who remain focused on the consumer will make the right decisions on products when the decision needs to be made.

That said, another challenge of today’s category managers is the need to embrace the power of marketing synergy when managing their categories from a promotional perspective. To not make timely decisions around the media and trade marketing expenditures of their suppliers is a “miss” in managing their categories from a consumer and competitive perspective. Building a flexible and responsive retail execution process is a key enabler to good category management decision making.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
11 years 2 months ago
At Kroger, at Safeway, at Fleming Foods, and at SuperValu we annually gathered the advertising staffs from every division across the country for mini-conventions. Perhaps other supermarket companies do this, too. During these meetings we introduced campaigns, and each Ad Manager presented a unique program from their division that could be considered by the other divisions. Vendors also made presentations, offering printing services, agency services, production equipment, and product co-op advertising programs. It was extremely efficient, and was paid for by vendor marketing funds, not by trade dollars. Rather than standardizing product introductions nationally, it seems more efficient and category-buyer-sensitive to do it category by category, chain by chain, wholesaler by wholesaler, and co-op by co-op. Gather the category’s buyers together at a central location and have category-specific suppliers make single presentations. Professional product demos could be made, rather than relying on a microwave in a buyer’s cramped office (we’ve all been there). Once upon a time, this was one of the functions of the FMI Convention each May in Chicago. This eventually went away… Read more »
John Rand
Guest
John Rand
11 years 2 months ago

I am rather surprised no one pointed out that the restrictions on labor availability have created a de facto set of limits for many companies, especially those who keep a very lean or third party work force.

If a complex category comes up for a total reset in 30,000+ stores in a single month, the system, already stressed, will probably collapse–companies already use all sorts of poorly trained surge workers for resets, I can’t imagine how much worse this might get but I’m sure it can erode further.

Sometimes apparent chaos is sort of practical. Far faster to just cut an item in and come back and re-do the entire section later on.

Kai Clarke
Guest
11 years 2 months ago

This is a non-question. It is the differences in category reviews that allow the industry to become more efficient. If we had to have all of the same category reviews available at the same time, who would coordinate the presentations, address the issues and create new product prototypes for availability all at the same time? Crazy! Instead, the offsetting schedules of different companies is a welcome reprieve for companies to first focus on one retailer and then another without having to do them all at once. Although disorganized, it is better than the alignment of reviews that this article proposes.

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