Leveraging transparency in a category mgt plan

Leveraging Transparency in a
Category Management Plan

We want to help you sell more data!
To do that you need to understand category management .
That’s what today is about.
We have rules
Rule #1
YOU NEED TO ASK QUESTIONS
Rule #2
There are NO STUPID QUESTIONS…
The only way to learn is to ask questions.
Slide/ 1 Copyright © 2017 LABEL INSIGHT
OUR INTENT AND THE “RULES”

• W.Edwards Deming, the father of Statistical process control
• Category Management grew out of the process awareness engendered
by the Japanese ‘Total Quality’ movement
• The USCPG community realized having no common process added cost
for everyone including consumers
• The canoe trip that spawned action
• The CPG “ECR” Committee (efficient consumer response)
• Category Management as THEdemand side process
THE ORIGIN OF CATEGORY MANAGEMENT

CATEGORY MANAGEMENT DEFINITION
A Retailer-Supplier process of
managing categories as Strategic
Business Units, producing enhanced
business results by focusing on
delivering consumer value

It’s a category plan done once per year and tweaked during the year.
The plan deals with four specific issues:
1) Assortm ent-what item s should I stock
2) Price-how m uch should I charge
3) Presen tation in store and (now) on line-where does the category
reside, how m uch space do I give it and how do I allocate space on
th e shelf or on line?
4) Prom otion- How do I incentivize shoppers to buy?
But to answer th ese sim ple questions requires lots of data, answering
lots of other questions and various tools.
WHAT’STHE OUTPUT OF CATMAN?

• Category management is to a great extent a collaborative process . Some people refer to a CatMan plan as a
“joint business plan”
• On the retail side :
• The primary driver is the retail category manager previously known as the “buyer”
• The buyer reports upward to merchandising managers for dry grocery, general merchandise, perishables
(produce meat, frozen) and HBA/pharma
The retail category manager responds internally to various groups including marketing, advertising, store
operations. He is helped by internal analytics
• On the manufacturer side:
• The category manager works in a matrix responding to sales and brand marketing
• The Manufacturer Category manager’s job is to propose plans that meet shopper needs in a superior
manner. He represents the shopper not his company!
• That means having information and insights about assortment ,pricing, presentation and promotion that
will deliver sales.
The plan is the outgrowth of collaboration between retail category managersand manufacturer sales
and category managers.
They use data provided by both parties. (More about this later)
WHO CREATESTHE PLAN AND WITH WHAT DATAAND TOOLS

For the retailer
The plan must produce the sales and profits or the retail category manager, his
boss the merchandising manager and the overall retail VPGM will lose their jobs.
The category plans for each category are rolled up to the merchandising silo (dry
grocery, etc.) then to the total store.
For the brand owners:
If they do not get the desired assortment, pricing or merchandising decisions in
the plan, they will fail and eventually lose their jobs.
WHY ISTHE PLAN IMPORTANT?

The CPG vertical is in BIG TROUBLE!
Volume is flat. Big brands are losing volume .Big retailers are losing share,
volume or margin sometimes all three.
Shoppers ‘ attitudes are changing. They want more knowledge about the
products they buy. Some refer to this as a desire for “transparency”.
LI’s data identifies the Attributes which drive transparency. This is NEW data in a
changing troubled environment. In the land of the blind, the one eyed man is
king!
Retailers and brand owners need this data to understand opportunities and
threats in a zero sum environment.
The LI data is VERYimportant!! Sell with confidence and pride.
WHY ISTHE LI DATA IMPORTANT?

The primary buyer will be brand manufacturers
The money resides in various internal budgets such as
1) The individual brands and internal marketing
2) Sales account teams, sales management and corporate category
management
3) Market research strongly influenced by brand and sales
4) Individual category managers are rarely buyers just influencers
Retailers will buy but they have a huge role to play as stimulators of
manufacturer sales.
Within the retailer, the major influencer will be the head of merchandising to
whom the retail category managers report, Budgets within retail tend to be more
centralized at the top of specific silos. In this case merchandising,
WHO HAS THE BUDGET TO BUY?

Since the developm ent and deploym ent of CatM an which began 25 years ago, the biggest
changes have been:
1) The growing em powerm ent of the shopper via the internet
2) The growth in data types and sources
3) The developm ent of sophisticated analytical tools
4) The increasing sophistication of the m ajor retailers
5) The developm ent of thought leading 3rd parties
6) Increasing com petitive pressures across the value stream
7) More recently the growth of on line shopping
Overall a m uch m ore sophisticated, data and analytics em powered environm ent that
favors large retailers and squeezes m anufacturers and sm aller retailers.
WHAT ARE THE BIGGEST CHANGESIN THE LAST 25 YEARS?

LET’SUNDERSTAND WHERE LI DATA ISUSED IN THE PLAN
IT STARTS WITH THE PROCESS

Etc.
CATMAN 2.0 PROCESS

THE ICE CREAM CATEGORY PLAN FOR
JONES GROCERY
Slide/
12
Copyright © 2017 LABEL INSIGHT

Jones m anagem ent required that we incorporate your corporate
strategic im peratives:
1) Building shopper trust through transparency
2) Re-enforcing the value of health and wellness
3) Targeting category heavy buyers and Millennials
4) Leveraging your shopper ’s specific multi-category “need
states”
5) Utilizing the most advanced data and analytics solutions
STRATEGICBACKGROUND OF THISPLAN
STEP 1: CATEGORY DEFINITION
Slide/ 13 CATMAN THEORY & PROCESSCopyright © 2017 LABEL INSIGHT

Shoppers have lost their trust in many aspects of American life
Brands and retailers are no exception.
75% (!) say they no longer trust the information on food labels
The answer they say is “transparency” . Giving shoppers all the
information they want.
35% of shoppers say they will switch to a more transparent brand.
The new transparency related attributes help understand why shoppers
are buying
For all these reasons, Jones is embracing transparency as a corporate
strategy
This plan leverages transparency primarily by using the new transparency
related attributes across every step in the CatMan process.
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14
1) BUILDING SHOPPER TRUST THROUGH TRANSPARENCY

• The shopper’s concern over health and wellness is one of the strongest trends in
today’s society.
• Jones has made responding to this trend a central strategy across the store.
• Shoppers often make their H&W buying decisions based on what bad things are
left out or what good things are included in a product.
• Fortunately, the new transparency related attributes can help jones shoppers
make previously impossible informed decisions
• That is why this plan for the first time uses these new attributes to help Jones
meet shopper needs and thereby re-enforce the corporate strategy
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2) RESPOND TO THE SHOPPER’SCONCERN OVER H&W

• Jones knows that some shopper groups are more valuable than others
• You have targeted two groups
• The huge, growing and demanding Millennials
• Those shoppers who are heavy buyers in any given category in your trading
area
• Your own loyalty card data plus advanced analytics enables us to target these
strategically valuable cohorts
• The data shows that Millennials are demanding transparency and are strongly
oriented towards health and wellness
• The new transparency related attribute data helps execute against millennials
needs
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3) TARGETING CATEGORY HEAVY BUYERSAND MILLENNIALS

• Jones understands that shoppers buy products to meet needs. You
realize that needs span categories. Therefore you want to satisfy
more of the multi-category needs within any given need state such
as planning a birthday party or a week’s worth of healthful meal
• At the same time, you realize that you are losing volume by NOT
making it easy for shoppers to meet all their needs in any one need
state. So you have asked vendors to focus on a few need states such
as health and wellness.
• The new transparency attributes help you identify items that meet a
“need state’ such as those qualify within a vegan diet or those
without a specific allergen
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17
4) LEVERAGING SHOPPER’SMULTI-CATEGORY “NEED STATES”

• Jones understands that new data sources and new analytics are transform ing CPG
marketing
• Therefore you are m andating that all suppliers bring the newest and best analytical
techniques to planning
• We are bringing the following advancem ents to bear in this plan
• Label Insight data identifying new product attributes and packaging claim s driving
shopper decisions
• Data identifying heavy using households in every category in your service area
• In-store shopper tracking data m easuring the im pact of end aisle displays
• New analyses of all things digital from circulars to iconography
• Pricing elasticity data by item type, price threshold, price gap and price description
• We are using virtual testing techniques perm itting rapid, accurate and relatively
inexpensive m easures of category shelf array and pricing alternatives
• New assortm ent optim ization techniques by store cluster using activity based costing
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5) UTILIZING ADVANCED DATAAND ANALYTICSSOLUTIONS

CATEGORY DEFINITION AND SEGMENTATION
THE CATEGORY DECISION TREE (CDT)
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19

Most categories were segmented in
two or more ways. Shown below are
the primary “attributes” upon which
segmentation was based prior to
label Insight and the transparency
movement/t categories.
Understanding the consumer’s
decision hierarchy by segment is
crucial.
TYPESOF SEGMENTATION BEFORE LABEL INSIGHT
PACKAGIN G
SIZE
IN GREDIEN T OR
FORM ULATIO N
Label Insight data valuable here
PRODUCT
FORM
PRICE
POIN T
USAGE /
LOCATION

Purchasing
Histories:
HH 1
HH 2
HH 3
HH 4
AEEEEEEB
AABCDAACDBDCAC
BADCCDBABCDBA
BBBACDCDCDCDDCB
Summary of
Transaction
Pair Counts:
Brand
Purchased
• This information is summarized to determine the overall level of transaction-to-transaction
switching across brands. This determinesthe importance of the attribute driving purchase.
PREVIOUS BRAND PURCHASED
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21
A M arkov m atrix
exam ines consecutive
purchase pairs within a
household. The iden tity
of the pu rchase is
determ ined by
attributes.
A MARKOV ANALYSIS
A A
2
B
4
C
1
D
1
E
0
B 2 2 1 3 1
C 3 2 1 6 0
D 1 1 8 1 0
E 1 0 0 0 5

A MARKOV MATRIX OF SWITCHING
Probability of Last
Purchase for Brand
with attribute A,B, C, D
For example, out of the
eight purchases
immediately before a
purchase of Brand A,
Brand Awaspreceded
by:
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22
A B C D E
Brand
Purchased
Brand A 2x 2/8 = 25% of the time
Brand B
Brand C
4x
1x
4/8 =
1/8 =
50% of the time
12% of the time
Brand D
Brand E
1x
0
1/8 =
0/8 =
12% of the time
0% of the time
A 25% 50% 12% 12% 0%
B 22% 22% 11% 33% 11%
C 25% 17% 8% 50% 0%
D 9% 9% 73% 9% 0%
E 17% 0% 0% 0% 83%

Multi-dimensional scaling and cluster analysis techniques based on attributes are used to analyze interactions between brands
and to group similarly interacting items into clusters.
Once clusters are formed, the category hierarchical structure is defined in terms of common attributes of brands within
clusters. Additionally, a multi-dimensional scaling representation of the major category segments is provided.
SCALING AND CLUSTERING
TWO-DIMENSIONAL MAP
High
Price
Flavored Regular
Low
Price
HIERARCHICAL TREE DIAGRAM
Sample Category
Regular Flavored
Brands
A&C Brand B Brand A
Brands
B&C
Low Price
Brands
High Price
Brands
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THE STANDARD ICE CREAM CDT
This is the Category Decision Tree that Jones has used to
manage the category. It still has value but it does not yield
the new insights such as on derived from the new
transparency attribute approach enabled by the Label
Insight data.
Ice Cream Category
Ice Cream Ice Milk Ice Cream
Flavor
Premium Regular Value Premium Regular Value Premium Regular Value
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THE NEW TRANSPARENCYATTRIBUTEDRIVEN CDT
The availability of ingredient and claims information
from Label Insight down to the item level enables new
analytics that reveal new insights on how shoppers
segment and then buy ice cream products.
Attribute-Driven Ice
Cream Category
NothingArtificial Good Things Things To Avoid
Flavor
No Artificial
Colors
No Artificial
Flavors
No Artificial
Sweeteners Protein Organic Allergens GMO’s
High
Calories
Slide/
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CATEGORY ROLE DEFINITION
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• Category role designation is about retailer resource allocation therefore
• The proper role for a category is a retailer decision. Retailers must allocate their total
resources (space, inventory, promo $’s, service levels) among all the categories in
accordance with the retailer’s overall merchandising strategy.
• Brand owners can assist the role decision by providing data comparing their category to
other categories in various key metrics. But, in the end, brand owners must recognize that
under category management best practices, the role decision is ultimately the retailer’s.
• Brand owner’s can help the retailer answer one key question:
– If I devote incremental resources to Category X, will it cause my target shoppers
to choose my store for the overwhelming share of their consumption
requirements in the categories I choose to sell?
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PURPOSEOF CATEGORY ROLE

Here are the role definitions m any retailers use. They represent different levels of
im portance to the retailer and different levels of resource allocation.
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CATEGORY ROLE DEFINITIONS
DEFINITION RANK AMONG
CATEGORIES
PERCENT
OF CATEGORIES
Destination Critically Important Top 5-10% of categories
Routine/Preferred Very Important Next 40% +/- 15%
Occasional/Fill-in Moderately Important Next 40% +/- 15%
Commodity/ Least Important Bottom 10% of categories
Convenience

This means you have decided to devote incremental assets to the ice cream category
based on the following criteria:
• Ice cream’s presence in large baskets indicating it is a planned purchase by large
valuable households
• The heavy buyers of Ice cream are heavy buyers of your other target categories
indicating it is focused on one of your strategy pillars
• Ice cream has high “clean label” penetration thereby re-enforcing your strategy on
transparency
• Ice cream is present at many family celebration “need state” occasions that you
wish to own.
• Snacking occasions are growing and ice cream is a frequent snack across all family
members and occasions
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JONESHAS DESIGNATED ICECREAM ASA
“DESTINATION” CATEGORY

Jones has decided to provided additional assets to destination categories on a priority
basis as follows: Destination categories may request
• Additional space especially end aisle display space
• Incremental placement in special occasion sectors of the Jones website and circular
• Incremental presence and featuring to high value shoppers e-mail program
• Inclusion in Jones “need state” signage across all marketing vehicles
• An “A” feature in every circular printed and digital
• Rapid priority cut ins of new items across the year.
Our plan for the ice cream category will leverage all these aspects of being a destination
category.
ADDITIONAL ASSETSDEVOTED TO
“DESTINATION” CATEGORIES

ASSESSMENT “WHAT” PHASE
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ASSESSMENT PERSPECTIVES
The Shopper
The
Geographic
M arket
Slide/
32
The
Suppliers The
Target
Retailer
The
Consum er

Category Managem ent is a fact-based initiative.
The assessm ent step provides the facts.
It aligns trading partners around the truth.
To arrive at the facts in the category and at retail, category m anagem ent partners m ust
com m it to an intensive evaluation of all relevant data.
Perform ance should be reviewed by
• segm ent, brand ,and sku attributes
• shopper type (H/M/L user, dem os)
• store geo-dem o clusters
• in m arket com petition
• assortm ent variation
• pricing variation versus com petitors
• in store m erchandising response
• new brand and item trends
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IMPORTANCE OF ASSESSMENT

One of Jones’ corporate strategies is m andating use of the latest advanced data and
analytics. The following are the various advanced approaches we have used:
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34
ASSESSMENT “WHAT” ANALYTICSAND TOOLS
Studies
• Heavy user study ( using Jones loyalty card and Experian
data)
• Assortm ent variety study (activity based costing )
• Total store space optim ization study
• Price elasticity study
• End aisle placem ent study
• Need state m erchandising study
• Attribute m erchandising study
• Cross segm ent Ice cream prom otional study
Data
• Label Insight attribute data used by the USDA and
FDA
Experian household purchase data, 80 m illion loyalty
cards
•
Tools
•
•
•
In store tracking data
Artificial intelligence cross enterp rise analytics
Virtual reality pricing and planogram ing data

These critical findings will be used to drive the scorecard, category strategies and
tactics
1) Jones’s Category performance trails its competitors
2) Individual attributes are driving deprotonate growth in the category
3) Replacing slower moving items with these power attributes will grow the category
4) Certain attributes/ brands are price inelastic thereby offering margin enhancement
5) > ice cream category space will > total category and frozen $
6) Adding permanent ice cream end aisle display freezers will build volume
7) Special occasion “need state” promotion will drive volume in ice cream
8) Simultaneous promotion of distinct category segment drives volum e
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8 CRITICAL “ASSESSMENT WHAT” FINDINGS WITH LI DATA

These critical findings will be used to drive the scorecard, category strategies and tactics
1) Jones’s Category perform ance trails its com petitors
2) Individual attributes are driving deprotonate growth in the category (requires LI data)
3) Replacing slower m oving item s with these power attributes will grow the category
4) Certain attributes/ brands are price inelastic thereby offering m argin enhancem ent
(LI )
5) > ice cream category space will > total category and frozen $
6) Adding perm anent ice cream end aisle display freezers will build volum e
7) Special occasion “need state” prom otion will drive volum e in ice cream
8) Sim ultaneous prom otion of distinct category segm ent drives volum e ( LI data helps)
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8 CRITICAL “ASSESSMENT WHAT” FINDINGS WITHOUT LI DATA

Jones is not doing well in the Ice cream category versus its principal retail com petitors.
1) Jones m arket share in ice cream (23.0) trails it’s overall grocery share of m arket (25.0)
2) Jones share of specific health attribute intensive segm ents such as “horm one free”
and “lactose free” lags com petition badly.
3) Jones has m ore Item s in its assortm ent than any com petitors yet trails in share
suggesting its return on space is poor vs. com petitors
4) Despite having m ore ice cream item s than com pletion, Jones gives less overall space
to the category suggesting Jones is vulnerable to O-O-S especially on prom otion.
5) Jones volum e sold on prom otion is 36% far below its m ajor com petition ,who average
41% on prom otion.
6) The annual num ber of brand prom otions /year is less at Jones. Surprisingly, the
num ber of private label prom otions at jones is higher per year than com petitors.
Label Insight data valuable hereSlide/ 37 Copyright © 2017 LABEL INSIGHT
1) JONES’SCATEGORY PERFORMANCETRAILSITSCOMPETITORS

The new analytics enabled by
Label Insight provide unique
insights into shopper
motivations and behavior.
The ice cream category as a
whole is growing modestly but
the new analytics revel that
items with specific attributes
are driving total category
growth.
For example, items with no
hormones have grown 8.0
share points vs. Year ago, That
is over 4Xthe growth rate of
the total category
2) INDIVIDUAL ATTRIBUTESARE DRIVING CATEGORY GROWTH
Attribute %acv
w/attrib
ute
Share
vs. yr.
ago
∆ growth
Index vs
total
category
No artificial flavors 67% +3.7 194
Gluten free 55% +3.5 184
Protein group
ingredients
49% +3.1 163
No hormones 17% +8.0 421
Non GMO 17% +2.9 152
Lactose free 3% + 19.3 1042
No aspartame 88% +2.6 137

We have m odeled the category assortm en t using advanced analytics and virtual testing. This approach indicates that
current space can be m ade m ore productive by replacing certain types of item s with item s having the grow th attributes
revealed by the Label Insight data.
Jones currently has over 400 approved sku’s in the valuable confined freezer case. We m odeled replacing 60 SKU’s with
4 options involving 4 sets of pow er attributes and four different replacem ent options. All com binations increased
estim ated category $.
3) REPLACING SLOWER MOVING ITEMS WITH THESE
POWERATTRIBUTESWILL GROW THE CATEGORY
Test attributes of
Added items
Items removed $ ∆ vs. current
assortment
#1 No artificial colors/
Colors/sweeteners
low price brand +
Low share dupe flavors
+5%
#2 No hormones/non GMO 60 lowest share items +8%
#3 Lactose free/gluten free #2low price brand/#3 popular price
brand
+ 9%
#4 Protein group/no
Artificial sweetener
Dupe vanilla + choc in every brand +3%

Intensive analysis of pricing in Jones market area reveals some valuable insights about segments and
items in the category.
These findings tend to corroborate attitude research findings wherein shoppers claim they would pay
more for certain attributes especially health and wellness attributes.
Here are the key findings
1) Hormone free and lactose free items are price inelastic within a 10 cent/half gallon spread versus
competition
2) No artificial colors, flavors or sweeteners are inelastic within a 5 cent spread versus competition.
3) Jones value priced private label is price inelastic within a 20 cent per half gallon spared versus
branded economy brands
4) Jones premium private label brand is inelastic within 15$ per half gallon versus both leading
premium brands.
When modeling a combination of the various pricing flexibility options revealed above, Jones has the
realistic possibility of increasing its category gross margin from its current 31%to something
approximating 33%.
4) CERTAIN ITEMSAND ATTRIBUTESARE PRICEINELASTIC

Jones currently gives leas space to the ice cream category than com petitors. At the sam e tim e Jones has m ore item s than its
com petitors but a low er category share versus its overall grocery m arket share.
M odeling driven by artificial intelligence helps explain what is happening. We m odeled adding one m ore door to ice cream
while changing the assortm ent in various ways We left the assortm ent unchanged in larger space, reduces the current
assortm ent in larger space and then both reduced and changed assortm ent in greater space
The m odeling suggests that adding space while reducing and changing the sku count increases Jones volum e by 10% and
has a sm all positive effect on the balance of the frozen section in the ice cream aisle.
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5) > ICE CREAM CATEGORY SPACEWILL
> CATEGORY AND FROZEN $
Test cells Base
period
Test period
Simulated 26weeks
Difference
1,Same space & items 100 102 +2
2, > Space /same items 100 106 +6
3. > Space 20%/< items 10% 100 110 +8
4, > space/< but change items 100 118 +10

Using shopper tracking technology com bined with loyalty card data, we learned that only
40% of Jones Ice cream category buyers go down the ice cream aisle on the average visit.
But when end aisle display freezers are put on the end caps, shoppers are driven down the
aisle in greater num bers.
The extra traffic effects not jus the item s in the end cap but the category as a whole.
Apparently the end cap rem inds shoppers of their “need “ for ice cream
The table below shows how volum e in the test stores significantly out paced the stores
without Ice cream end cap freezers
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6) ADDING PERMANENT END AISLE DISPLAY FREEZERS
WILL INCREASECATEGORY VOLUME
Store groups Base period Test period (13 weeks) Difference
End cap test stores 100 118 +18
Control stores 100 103 +3

Copyright © 2017 LABEL INSIGHTSlide/ 43
In one distinct Jones m arketing are , we tested a Birthday Party “need state” prom otion focus .This need state was chosen for
tw o reasons:
The average fam ily has 3 birthday celebrations annually m eaning that at any given two week prom o period nearly12% of
households are celebrating a birthday Secondly , ice cream is a part of nearly 3/4’s of the birthday celebrations.
We created a birthday party need state landing page on the Jones web rite, sent special e-m ails to households with children
and those for which we had birthdates on loyalty cards. We also analyzed past basket purchase data to identify what m akes
up a “Birthday Party” need state.
The table below show s that Ice cream increased nicely vs. Base and control but the other item s in the need state (paper
plates, napkins, various sweet desert cakes) increased d ram atically.
7) SPECIAL OCCASION “NEED STATE” PROMOTION
DRIVES VOLUME
Birthday all items 100 145 +45
Control all items 100 101 +1
Birthday Ice cream only 100 122 +22
Control Ice cream only 100 102 +02

Using artificial intelligence m odeling + virtual testing driven by Jones loyalty card data confirm s
the basic category m anagem ent theory of segm entation. Nam ely that shoppers tend to be
relatively loyal to brands/price tiers and certain attributes and will not deviate even under
prom otion pressure
We m odeled 13weeks of prom otion using Jones typical pattern of prom oting one brand at a
tim e and com pared that to test stores with alternate scenarios in which various com binations of
non-com petitive brands or segm ents were run sim ultaneously.
The m ultiple brand approach consistently perform ed better apparently because the two
brands/segm ents did not cannibalize one another. The table below shows results of the testing.
This approach has one subtle advantage: it allows Jones to tap the prom otion budgets of m ore
brands across the year
Slide/ 44 Label Insight data valuable hereCopyright © 2017 LABEL INSIGHT
8) SIMULTANEOUSPROMOTION OF SPECIFIC
SEGMENTSDRIVES VOLUME
Simultaneous promo 100 122 +22
Control (single item) 100 106 +6

ASSESSMENT “WHY”
Slide/
45

We are using all the tools from assessm ent “what” augm ented by the
following:
Data
• Label Insight attribute data across m ultiple other categories
• NPD m enu census data
• M intel new product audit
Studies
• Health in Am erica study
• M illennial attitudes
• Food Allergies in Am erica-FDA
• Longitudinal study of Out-of-stocks- Colorado State University
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ASSESSMENT “ WHY” ANALYTICSAND TOOLS

5 CRITICAL ASSESSMENT WHY FINDINGS WITH LI DATA
These critical findings will be used to drive the scorecard, category
strategies and tactics
1) Health concerns are driving changes in the category
2) Lactose intolerance (allergy) is a larger issue than previously
understood
3) Hormones in food have a particularly negative attitude
4) Protein a desired plus in the ice cream category
5) Out-of-stocks explain some Jones business trends
Slide/
47

•These critical findings will be used to drive the scorecard, category
strategies and tactics
1) Health concerns are driving changes in the category
2) Lactose intolerance (allergy) is a larger issue than previously
understood
3) Hormones in food have a particularly negative attitude
4) Protein a desired plus in the ice cream category
5) Out-of-stocks explain some Jones business trends
Slide/
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5 CRITICAL ASSESSMENT WHY FINDINGS WITHOUT LI DATA
All red why’s are
LI data dependent

The Label Insight data is very clear.
1) The health oriented items are growing at greater than total category rates
2) By definition they are gaining share in the category
3) Jones somewhat weaker representation of these health oriented items in your
assortment helps explain why your share in the category lags competition.
1) HEALTH CONCERNSARE DRIVING CHANGESIN
THE CATEGORY

The FDA publishes a bi-denial report of the incidence of various allergies in the USA. Lactose
intolerance has one of the highest levels of any food allergy. Moreover it is growing
Part of that growth is probably attributable to a an increasing awareness of lactose intolerance
among the populace and especially new m others
Another reason is genetic. Som e ethnic groups such as Orientals, Hispanics and native Americans
suffer high levels (75%+) of Lactose intolerance. Therefore the growing Asian-American and
Hispanic population is probably driving the growth of Lactose intolerance in The society.
The Label Insight data shows that Lactose free item s are under-represented in the Jones
assortm ent, This same Label Insight data shows that these “no m ilk” item s are growing rapidly in
the category.
This probably explains part of Jones under perform ance in the category.
One final thought: Lactose free item s com prise 7% of the fluid m ile category. We m ight expect that
the ice cream category would attain at least these sam e levels. These item s are no at less than 2%
suggesting a m ajor growth opportunity for Jones which they m ight m eet with a private label entry.
2) LACTOSEINTOLERANCEIS A LARGEAND
GROWING PROBLEM

The Label Insight data points to a growing trend in “free from” items in all categories.
Ice cream is no exception
1) Health concerns are driving changes in many categories
2) Hormones are one of those attributes which health conscious shoppers want to
avoid.
3) Unfortunately, Jones has fewer “no hormone” items in its assortment and as a result,
these items have a lower market share in Jones.
4) This seems to explain in part why Jones overall share in the category is below that of
its share in other food categories.
3) HORMONES IN FOOD HAVE A PARTICULARLY
NEGATIVE ATTITUDE

The Label Insight data shows that the protein group continues to grow strongly in the
category. This should not be surprising because
1) Data from multiple sources including Mintel's new product report show that
products with added or “high” in protein are among the fastest growing new
products in multiple food categories globally and especially here in the USA.
2) Some data from the Health in America” report suggest that many “indulgent “
categories such as ice cream use “high in protein” as an inducement for health
oriented shoppers to consume the category.
3) This is especially true of millennials and especially millennial mothers who are
fixated on maintaining high levels of protein in their children’s diet.
4) Not so surprisingly, the Label Insight data shows that the “high in protein” ice cream
items are under represented in the Jones a assortment and also have a lower share .
This accounts for part of Jones weak performance in the category
4) PROTEIN A DESIRED PLUS IN ICECREAM

Modeling has shown that Jones ice cream category is unusually susceptible to out of
stocks. Here’s why:
1) Ice cream is shelved in the valuable limited space of a freezer.
2) Jones has less space than competitors devoted to ice cream but more SKU’s
3) This inevitably means that popular SKU’s receives disproportionately less space than
they deserve. Even a tiny sku must receive at least one facing and that may be “too
much” in proportion to its movement.
4) This problem is exacerbated on promotion especially of larger brands and popular
flavors. These sku’s tend to disappear rapidly in our model of the category and
cause rampant out of stocks
5) This may partially explain why Jones % sold on deal is below competitors.
Slide/
53
5) OUT-OF-STOCKS EXPLAIN SOME JONES BUSINESSTRENDS

CATEGORY SCORECARD
Slide/
54

The scorecard goals below
reflect learnings from
assessment what and why
and Jones corporate
strategies. These goals are
designed to drive strategies
and tactics in the plan.
ICECREAM CATEGORY SCORECARD WITH LI DATA
STEP 3: CATEGORY ASSESSMENT
CATMAN THEORY & PROCESS
Ice creamcategory Current year next year
Category share 23 26
“free from“category share 33 40
%of items with share<0.1 35 20
Healthy attributeitemshare 12 20
Aisle traffic as %of store traffic 40 48
%volumemoved on promo 36 40
Gross margin % 31.2 33.0
GMROI index versus frozen 110 115
Weeks of needstate promo 12 26

The scorecard goals
below reflect learnings
from assessment what
and why and Jones
corporate strategies
developed without the
insights from LI data
These goals are
designed to drive
strategies and tactics in
the plan.
ICECREAM CATEGORY SCORECARD WITHOUT LI DATA
STEP 3: CATEGORY ASSESSMENT
CATMAN THEORY & PROCESS
Ice cream category Current year next year
Category share 23 26
“free from” bad attributes share(N/A) 33 40
% of items with share<0.1 35 20
healthy attribute items share (N/A) 12 20
Aisle traffic as % of store traffic 40 48
% volume moved on promo 36 40
Gross margin % 31.2 33.0
GMROI index versus frozen 110 115
Weeks of need state promo 12 26

CATEGORY STRATEGIES

1) INCREASEMARKETING PRESSURE ON HEALTH
ORIENTED ITEMS
This strategy reflects the following mutually re-enforcing strategies and
findings
1) The Jones corporate strategy of increasing transparency about food
content, ingredient sourcing and production processes
2) The finding that the health oriented items are driving growth in the
category
3) The finding that Jones is currently putting sub-optimal tactical
pressure on these items

2) BUILD THE BUSINESSAMONG HEAVY USERS
findings
1) The Jones corporate strategy of increasing share among heavy users
of every category
2) The finding that ice cream is frequently in baskets of Jones best (heavy
buying) shoppers
3) The finding that Jones share among heavy using ice-cream
households in its trading area is slightly below it’s total market share
4) The logical conclusion that increasing share among heavy users is the
most efficient way to grow share

3) DEVELOP ICE CREAM INTENSIVE “NEED STATES”
findings:
1) The Jones corporate strategy of building total share of wallet by
increasing marketing pressure on entire “need states”
2) The finding that Ice cream is a frequently consumed item at
celebratory occasions such as birthday parties
3) The fact that ice cream can drive shoppers to more less frequently
purchased items in the need state thereby increasing Jones volume
and profit

4) INCREASETHE OVERALL EFFICIENCY OF THE CATEGORY
findings
1) Jones has more ice cream items and less space than competitors yet
lower volume suggesting the current assortment is inefficient
2) Fewer of Jones customers are going down the Ice cream aisle
suggesting that existing merchandising efforts both in store, on-line
and in circulars is not working well
3) The sku/space ratio issue suggests a higher level of O-O-Sespecially
on heavily promoted fast moving SKU’s. This causes inefficiencies
across the category
Slide/
61

5) DRIVE GROWTH OF THE LACTOSEFREE SEGMENT.
findings:
1) The Jones corporate strategy of promoting health and wellness
2) The Jones corporate strategy of promoting transparency
3) The assessment finding that Lactose free is a growing segment
4) The assessment finding that Lactose free items are underrepresented
in the current assortment.
Slide/
62

CATEGORY TACTICS
Slide/
63

Category management involves 5 tactics which are the 5 kinds of actions one may take
to realize a strategic objective and build business . Those 5 tactics are.
1) Assortment-change sku’s in then current array
2) Pricing- change the price of an item or segment
3) Merchandising-change how or where the items are presented to shoppers
4) Promotion- change the type, size or frequency of incentives offered to shoppers
5) Service- change the level or method of personal service to shoppers for certain
categories (e.g. service deli)
Tactics are created to deliver strategies. Therefore we have selected specific tactics to
meet each strategy
Slide/
64
TACTICS: THEIR DEFINITION AND PURPOSE

Here are the proposed tactics to deliver against this strategy:
1) Assortment-Increase the percentage of health oriented items by at least 2X
2) Price-review each H&W item to reflect learnings about the price inelasticity of many
H&W items
3) Merchandising- expand the space for the category and increase the facings an the
top 10% of sku’s (approximately 35 SKU’s)
4) Promotion-promote ice cream every 2 week drive period throughout the year
rotating the major segments and brands every 10 weeks often by simultaneously
promoting non-competitive brands,, price tiers or health benefits
1) INCREASEMARKETING PRESSURE ON HEALTH
ORIENTED ITEMS

1) Assortment- Insure that all items , brands and segments preferred by heavy users
are in the assortment.
2) Price- adapt especially competitive prices on the top twenty items bought by heavy
users
3) Merchandising- Give additional space to items bought by heavy users of the
category to insure against O-O-S. Place the items preferred by heavy users at eye
level or use as segment identifiers
4) Promotion- Use AI to Identify every heavy buying ice cream household in the
trading area including those not currently Jones shoppers. Send current Jones
shoppers digital coupons with a large volume high value coupon ( $2 off 3 half
gallons) once a quarter. Send current non shoppers a similar offer every 6 weeks.
5) Promotion-Schedule an in ad offer on preferred heavy user items at least once per
month.
Slide/
66
2) BUILD THE BUSINESSAMONG HEAVY USERS

Here are the proposed tactics to deliver against this strategy
1) Create two “need state landing pages on the Jones website: one for the “birthday
party” need state , the other for a “fam ily celebration” need state
2) For the birthday party need state, group all item s which a party giver m ight need
at special prices. Always include ice cream with a discount coupon good for
different ice cream choices. Give party planners the opportunity to request a
coupon or voucher they m ay use in store for any $20 worth of identified birthday
party item s.
3) For the fam ily celebration defined as an anniversary, graduation, etc. Include ice
cream am ong celebration item s. Offer coupons or vouchers good for discounts on
the m erchandise.
4) Request that celebrants sign up for a loyalty card and include a special inducem ent
to do so.
5) Add the birthday inform ation to the loyalty card file and send incentives annually
ay the appropriate date.
Slide/
67
3) DEVELOP ICE CREAM INTENSIVE “NEED STATES”

1) Assortment- Jones has over 400 SKU’s many with market shares below 0.1. Remove at least 15% of the
current sku’s focusing on small, duplicate or declining sku’s .The space freed up thereby for additional
facings and inventory on the 60 falsest moving sku’s (these => 50%of category volume)
2) Price- Increase the price on all price inelastic items following the findings of the pricing study regarding
threshold pricing, pricing gaps versus competition. Fewer of Jones customers are going down the Ice
cream aisle suggesting that existing merchandising efforts both in –store , on-line and in circulars is not
working well
3) Merchandising- Fewer of Jones customers are going down the Ice cream aisle suggesting that existing
merchandising efforts both in –store , on-line and in circulars is not working well. Place permanent end
aisle stand up freezers at each end of the aisle. Feature H&W items, new Items and heavy user preferred
items in these freezers. This tactic is proven to drive traffic down the aisle and increase total category
volume.
4) Promotion-Follow recommendations of the price /promotion study to adopt the most efficient
promotional price points and messaging by market. Create a special “promo door” which carries extra
quantities of fast moving high volume items thereby stopping promo driven O-O-S.
4) INCREASETHE OVERALL EFFICIENCY OF THE CATEGORY

1) Assortment- double the number of Lactose free items in the assortment
2) Price- create a margin structure for the segment at least 1.5% margin points higher
than the category average
3) Merchandising- Flag the segment prominently on freezer doors. Announce the
section on the allergy landing page on the corporate website. Provide a flagged
“lactose free” look up site on jones’digital look up registry
4) Promotion- attach promo flags on Lactose free milk cartons from suppliers also
manufacturing Lactose free ice cream. Send coupons good on lactose free ice cream
to purchasers of lactose free milk products. Promote lactose free ice cream at least 4
time during the year. Include lactose free items in the need state promotions.
5) DRIVE GROWTH OF THE LACTOSEFREE SEGMENT.

CALENDAR OF EVENTS
Jan Feb
Ice Cream Category Plan – Implementation
Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Assortment
Create assortment< plan X
Create health SKU > plan
Create Lactose Free > plan
Reset stores with new POG's X X x
Pricing
Create heavy buyer plan X
Create Inelastic item plan X
Implement new price plan x X X X
Merchandising
Develop end cap freezer plan x x
Install end cap freezers X X
Begin end cap feature rotation X x x x x x x x x
Flag new lactose free section X X X
Allocate space for promo door x x x x x x x x x x
Promotion
Execute heavy user promos X X X
Lactose Free coupons on milk x
Lactose Free coupon drop X x x X
Birthday promo X X X X
Celebrations promo X X X X X
Bi-weekly ice cream feature x x x x x x x x x x x x
Marketing
Lactose Free landing page X X X X X X X X X X
Birthday landing page X X X X X X X X X X X
Celebrations landing page X X X X X X X X X X X
ice cream on allergy page X X X X X X X X X X X

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