Many food marketing veterans spoke of sacrificing individual brands for the good of the category. Squeezing maximum sales from each category means stocking and promoting only the products customers want, experts said. Prioritizing category success benefits retailers and marketers, they added.
But looking around the convention floor at the monstrous brand icons-the shiny red cans flanking the Coca-Cola booth, the giant Dove bar hovering over the M&M/Mars arena-the prospect of compliant marketers sacrificing for the good of category and customer seemed shaky at best.
"Cooperation in the category is a noble, utopian idea," said Don Stuart, a partner at marketing consultancy Cannondale Associates, Wilton, Conn. "But even at the best stores, like H-E-B, Wegmans, and Schnooks, while the goal is to maximize long-term sales, there's always the temptation to accept short-term deals like slotting allowances or high promotional allowances."
Ideally, marketers will have to move beyond such deals to woo retailers practicing category management. And FMI attendees agreed that information about customers-how they shop, which product characteristics most influence purchases, why customers switch brands-is the most useful tool for wooing.
"In the past we said, `This is what I want you to do for me,' even though the retailer might not have nothing to gain, just moving share from one manufacturer to another," said Glen Fleischer, senior director, category management and sales operations, Nabisco Biscuit Co. "With category management, we're saying, here's an opportunity for the retailer to leverage our consumer insight into real profit."
Narrowing in on the products consumers most want eventually will eliminate "me-too" brands, leaving only the top brands and niche products that offer real variety, Mr. Fleischer added.
"We don't care to have several manufacturer partners in a category-it's too cumbersome," agreed Claire D'Amour, VP-corporate affairs, Big Y Supermarkets. "We prefer to deal with one manufacturer who isn't afraid to change, to try something new. And we have to develop partners with the information we need."
Leading a workshop on category management with Ms. D'Amour was Mark Stewart, sales development director of M&M/Mars, who cautioned retailers not to turn a deaf ear on all but the top marketer in each category.
"If I were on the retail side, I wouldn't limit myself to one manufacturer," he said. "Other suppliers can bring valuable information in."
Relying on marketers to analyze customer and category sales data alleviates much of the work for retailers, Mr. Stewart added. Mars' category management team evaluates data from many sources, including internal shipment information and scanner data from A.C. Nielsen.
"We looked at Nielsen's [category management] solutions and they weren't quite right for what we needed," Mr. Stewart said after the workshop. "We wanted to be able to take Nielsen sales data and other sources of data we deemed important and put them in our own software."
Both Nielsen and rival Information Resources are hoping to change this practice, positioning themselves as the standard source for category management.
IRI unveiled at FMI its Category Manger software, now being tested by Hunt-Wesson, Ralston Purina Co. and retailer Giant Eagle.
IRI developed the product with Cincinnati-based consultancy the Partnering Group, a key contributor to the ECR Category Management Best Practices report, an FMI-endorsed document that defines the terms and goals of category management.
Nielsen's Category Manager software will be available later this year. Last August, Nielsen tapped consultancy Winston Weber & Associates, Memphis, Tenn., to help guide its category management efforts.
"Retailers and manufacturers aren't focusing enough on the sell side of ECR," Mr. Weber told an audience at Nielsen's FMI booth. "You won't get the incremental benefits of ECR if you only focus on back-end cost reduction."
Mr. Weber said his client H-E-B Grocery Co., the 165-unit retailer based in San Antonio, adds $1 million to its bottom line for every category it converts to category management. The chain is adding 44 new categories this year