Category Management for My Drug Store By Kongkiat Phanawadee Panyapiwat Market and Consumer Behavior Learning Center Panyapiwat Institute of Management 24 February 2013

1. Category Management
for My Drug Store
By Kongkiat Phanawadee
Panyapiwat Market and Consumer Behavior Learning Center
Panyapiwat Institute of Management
www.pim.ac.th 24 February 2013
www.facebook.com/pimfanpage

2. Today’s Agenda
• Category Management Concept Review
• Assessment of Drug Store’s Shopper
• How to apply Category Management to Drug
Store

3. Retailer Strategy
• Defining the Retailer Strategy is an activity that should
be conducted by every Retailer
• It identifies the drivers of the Retailers Strategy and
includes a complete Cross Category Analysis
• This analysis includes assigning Category roles and
resources

4. What Are Retailers Looking For ?
• A better understanding of their shoppers, and the
market in which they operate
• Suppliers who can provide, interpret and apply this
information

5. What are important to Shopper ?
• Convenience -----> Location
• Assortment -----> Product
 Carried
 Availability
• Service
• Advise -----> Trust
• Environment
• Price

6. Why work together?
• To achieve a common goal. This is typically referred to as
Category Partnering.
• Retailers and suppliers have different information and expertise:
– Buyers manage an average ??? categories
– Suppliers have teams of experts for a few categories
Retailers Suppliers
Point Of Sale Consumer Data
Financial Data Market Data
Costing Data Trending Data
Product Supply Data Expertise

7. Category Management Business
Process
Category definition
Category role
Category assessment
Evaluation
Scorecard
Category strategy
Category tactics
ECR Best Practice Model Implementation

8. CATEGORY DEFINITION
CATEGORY DECISION TREE

9. Assigning Role to a Category
• Having analysed a category relevant to
others, we can then assign a “role” to that
category.
• The category roles are:
– Destination
Discussion on
– Routine Destination of a
– Occasional few retailers
– Convenience

10. Typical Category Role
• DESTINATION
– Primary category provider to the target consumer.
– Assist in defining the target consumer’s image of
the store.
– Deliver consistent superior value to target consumer
– Lead all retailer categories in areas of Sales, Market
share, Consumer satisfaction, service level and
operating expense management.
– Lead all resources toward achieving corporate
mission, goals and strategies.

11. Typical Category Role
• ROUTINE
– Preferred category provider
– Assist in building image of the store
– Deliver consistent, competitive value
– Deliver balanced results across all areas of scorecard.
– Play a primary role in delivering Profit, cash flow and ROA.

12. Typical Category Role
• OCCASIONAL/SEASONAL
– Major category provider to the target consumer.
– Assist in reinforcing the image of the store.
– Deliver frequent competitive value to target consumer
– Play a secondary role in delivering Profit and cash flow

13. Typical Category Role
• CONVENIENCE
– Reinforce image of the store for one-stop shopping
– Deliver excellent, everyday value to the target consumer
– Play an important role in the area of profit generation
and margin enhancement.

14. Category Assessment - Obtain The Data
MARKET DATA
-Retail Tracking Data
-Key Account Data
-In-Store Audit
CONSUMER DATA
RETAILER DATA
- Consumer Decision Tree
- Scanning Data
- Shopper Research
- Loyalty Card
- Consumer Panel
- Space Planning Data
SUPPLIER DATA
- Promotional / Advertising
- Delivery Schedule
- New Product Launch Plans

15. Category Scorecard
DEFINITION
• Reflects the Current
ROLE Status & Desired
CATEGORY REVIEW
ASSESSMENT State (target
CATEGORY SCORECARD
objectives)
STRATEGIES • Measures &
TACTICS monitors
IMPLEMENTATION
performance
against targets

16. CATEGORY STRATEGIES
Category’s strategy defines how a category drives
chain’s overall strategy and target
Traffic builder Strategies are determined by the
Transaction builder
retailer
Profit generator
Cash generator
Image builder
Turf protection
Excitement Creator

17. Category Tactics
• Considering Category Strategy and Score Card
– Assortment Review
– Space Planning
– Price and Promotion

18. Creating the Assortment
Category StrategyAssortment Tactics Implied
Traffic Building Brand selection consistent with market
leadership
Transaction Building larger sizes, Add higher priced product
Add
Cash GeneratingDelete slowest moving of products
Profit GeneratingAdd higher priced products or delete low
priced products
Add high margin products or delete low
margin products
Add high turn products or delete low turn
products
Excitement Creating new products promptly, change
Add
assortment seasonally
Image Enhacing Add products consistent with image

19. Space Planning
Visual Inventory
Merchandising Management

20. What is SPACEMAN Planogram?
A planogram is a graphical representation of
store and product data

21. Challenges on Price and Promotion
• Can I increase my price without losing sales?
– What will be the impact on my Share, Volume and Profit
– Cannibalization and Competitive steal
– Optimal price strategy
• Which are the most effective promotions (mix) to use for
my brand?
– What promotion mix works best?
– Effects of a competitive campaign to my brands?
• How much will I grow if I increase my distribution / use
promotions etc.
• How successful is my new product, who suffers when I
launch a new product

22. Implementation
Category definition
Category role • Well-developed business
plans poorly executed do
Evaluation
Category assessment
not deliver either
Scorecard consumer value or
Category strategy results
Category tactics
Implementation

23. Monitor & Review
• Does the Category meet the objectives set ?
• What worked within the plan, what did not
work ?
– Review using Market Data and Scanning Data.
– Check objectives achieved in Test v Control Stores.
– Consumer reaction to new Category Plan -
Questionnaire.

24. Category Management Business
Process
Category definition
Category role
Category assessment
Evaluation
Scorecard
Category strategy
Category tactics
ECR Best Practice Model Implementation

25. Assessment of Drug Store’s
Shopper

26. Methodology
• Qualitative Research
– Explore insight from your customers mind
– Speak right from their hearts
• 2 Groups, Nov 2012, Bangkok
– Male / Female
– Age; 28 – 40
– Socio-Economic Status; C, B
– Career; Employee, Businessman, Government officer,
Freelance

27. Understand your customers
needs by Occasion
Occasion Key value
Self Care Convenience
Special Care Advice / Service / Trust
Big lot Price Driven / One Stop Solution

28. Self Care
• Consumer focus on Convenience or Immediate
need
• Overcharge is possible but led to unpleasant
experience and unlikely to visit again unless
necessary

29. Special Care
• Consumers rely on their Trust to the outlet
• Trust has built on their experience by
– Advice from Pharmacist or Store keeper
– Impression at first sight
– Ultimate service
– Result

30. Big Lot Purchaser
• Consumers concern on Price
• “Klang Ya” is a well known outlet for “cheaper
price” and “one stop solution”
• However, unsatisfied service and long queue

31. Some quote
“เวลาปรึ กษาเรื่ องยาเค้ าก็จะพูดได้ แบบ ... บางทีเคยเอายาที่หาหมอที่
คลีนิคอะไรอย่ างนี ้ ไปถามเค้ า บางตัวมันซาซ้ อน อย่ างตัวนีแก้ ไอ
้ ้
ตัวนีกแก้ ไอ เหมือนเค้ าให้ เรากินยาหลาย ๆ อย่ างเพื่อที่อาการจะได้
้็
หายเร็ ว ๆ เค้ าแนะนาว่ าตัวนีถ้าไม่ มีอาการไม่ ต้องกินก็ได้ แต่ คลีนิค
้
เค้ าไม่ ได้ เขียนบอกเรา”
“เหมือนเราเชื่ อใจไปแล้ วว่ าร้ านนีดี แนะนาดี ถูก ตัวอื่นที่มี
้
ก็ต้องดีและถูก และคาแนะนาที่เค้ าให้ เราก็เลยเชื่ อใจ”

32. Parking lot is considered as an
important attribute to Convenience
“อีกอย่ างที่จอดรถด้ วย บางทีติดถนนเกินไม่ มีที่จอดรถ ก็ไปซื ้อที่อื่นดีกว่ า
ไปซื ้อในห้ างที่เค้ ามีที่จอดรถดีกว่ า เราไม่ ต้องมารี บให้ คนอื่นบีบแตร”
“มีที่จอดรถสะดวก พอถึงเวลาแล้ วจอดได้ เลย ถึงคุณจะเป็ น
ตึก แต่ คุณก็ต้องล็อคไว้ สาหรั บคนที่มาร้ านยา”

33. Some Quote
“เภสัชกรสาคัญมาก แต่ กร้ ู ว่าอาจจะไม่ ได้ อยู่ตลอดเวลา ... คนที่อยู่ในร้ าน
็
ให้ ความมันใจได้ ไหม”
่
“จะเภสัชหรื อไม่ ใช่ เภสัชไม่ ใช่ พ้อยซ์ แต่ คุณรู้ หรื อเปล่ าว่ าคุณจะให้ อะไรผม”
“จังหวะที่คุยสองสามคาแรก ถ้ าดูหน้ าแล้ วไม่ สร้ างความเชื่ อถือ ก็ .....”

34. May be not just only for Drug Store
• Waiting for too long without any attention
– Only 2 minutes considered to be too long
– If the Pharmacist does not available, the Assistant need to
be intervene
– Then complete brief to the Pharmacist
• Unreliable
– Operating time (opening / closing)
• Close at 22:00 sounds good !
– Just “Out of stock” without any detail or solution

35. Surely, Medical Appliance
Segregative display would be preferred
• Health and Beauty
– Vitamins, Supplementary food
– Herbal medicine, Dietary products
• Optional for Grocery
– Even “Cheaper Price” will normally not attract enough
– Can I try? …Yes… but start with limit categories

36. I dream for A Drug Store with…
• 2 Blocks will provide enough space to my sight
– Only 1 Block will block me out
• Hygienic feel
– Bright luminance
– Clean and Clear (well organize)
– No dust
• Airy atmosphere (neither too loose nor too tight)
– Wider than its depth
– Enough space for aisle
– Transparency look

37. I dream for a Drug Store which …
• Enough pharmacist (s) who care about me
– Advise me on suitable medicine and usage
– Let me have some appropriate choice
– Tell me the side effect
– But do not rush me or pressure me, give me a break
• I can wait for up to 2 minutes, to please me… I need
your assistant who willing to serve me
– Pay attention to my needs
– Help me explain to the pharmacist when available

38. I dream for a Drug Store where …
• I can find what I want with reasonable price
• Provide some space that I can choose “Self Care” /
health & beauty on my own
– I expect some variety and product range that I can make a
mini-shopping
– Be prompt to advice me on appropriate timing
• If you cannot open for 24 Hours, can you close at 22:00
please?

39. Some more idea from the dream
• Store name can be Thai or English but should sounds
trusty and be modern
– A fine logo will differentiate your store in my
acknowledgement
• I love Blue / White color tone for your signage
– Green does fine but quite simple
• A computer to record my purchase and symptom
– Recall my record to follow up or assess my condition
– Provide knowledge or some useful tips

46. An Example for Applying
Category Management to
My Drug Store

47. My Drug Store Strategy - ตัวอย่ าง
• เป็ นร้ านยาที่ให้ ความสะดวกแก่ ชุมชนรอบข้ างร้ าน
Convenience
• เป็ นที่พ่ งของชุมชนในการให้ คาปรึกษาและแนะนาเพื่อสุขภาพที่ดี
ึ
ของลูกค้ าในชุมชน
Advice / Trust
• ไม่ ค้ากาไรเกินควร
Reasonable Price

48. Assigning Role to a Category - ตัวอย่ าง
• Destination
 Special Care Occasion
• Routine
 Self Care Occasion
• Occasional
 Special Event .....
 Education Exam period
• Convenience
 Urgent needs

49. Assigning Role to a Category - ตัวอย่ าง
• Destination – Special Care Occasion
 Service and Advice quality
 กิริยาท่าทางการให้ บริการ มีความใส่ใจ
 ช่วยลูกค้ าในการตัดสินใจซื ้อยาตามสมควร
 Effective two-way communication
 Varieties ของยา
 Pricing ?

50. Assigning Role to a Category - ตัวอย่ าง
• Routine - Self Care Occasion
 Varieties for self-service ทังยี่ห้อ, ขนาด
้
 ตัวขายดีราคาชนคูเ่ ทียบ
 จัดสินค้ าให้ สะอาดเรี ยบร้ อย พร้ อมขาย ของไม่ขาด

51. Assigning Role to a Category - ตัวอย่ าง
• Occasional – ตามเหตุการณ์
 ช่วงอากาศเปลี่ยน แจกเอกสารให้ ความรู้ในการดูแลตัวเอง และเพิ่ม
การจัดเรี ยงของวิตามินซี, Vics
 ใกล้ สอบ เพิ่มชันวางสินค้ าบารุงสมองให้ เด่น
้
• Convenience
 Ensure top items available
 Maintain price gap to competition

52. In Summary.....
• To response to more complicated shopper demand in
Thailand
– Identify your own strategy to be focused
• Convenience, Price, or Trust
• Could be more than one strategy
– Ensure comfortable shopping atmosphere
• For Self Care and Special Care shopping occasions
– To identify category roles will help more focused
category plan
• Destination / Routine / Occasional / Convenience
– Ongoing learning from your Customer
• Monitor and adjust over time

53. Thank You
Q&A