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Category regeneration: Most retailers and manufacturers aren’t asking the right questions. Are you?

by James Llewellyn , 24.10.2017

Traditionally, product categories don’t get any attention unless it’s absolutely necessary. It’s only when KPIs start flashing red that it’s time to hit the refresh cycle. But a new environment of hyper-competition combined with an increasingly unpredictable consumer has changed all that. Welcome to the world of continuous category improvement.

The overall philosophy of category regeneration is to continually assess the category and make improvements which generate a sales return. But rarely does anyone ask the real question “Why do people buy these products?” And if we ignore it, we get trapped in a conflagration of competing retailer and manufacturer interests. The result? A shelf that does not service the interest of its owner, the shopper.

Selling solutions, not categories

Examples of effective shopper marketing in UK grocery stores are few and far between. Many would argue that retailers simply can’t be bothered. We believe that more innovation is urgently needed, specifically initiatives which attempt to forge a better connection with consumers and their needs in store. Marks and Spencer is one such example of a retailer who has bothered to ask that all important question, “Why do people buy these products?”

They were not satisfied that the reason consumers visit their ready meals aisle is purely because they want something quick to eat. Instead, they recognized that the desire for something indulgent was often the motivation behind a visit to this shelf. In response, they have dual-sited beer as they have recognized that it completes this experience for many consumers. In doing so, they are selling solutions, not categories. This is modern category management, and the sort of philosophy more companies should subscribe to.

Of course, practically speaking, it’s not physically possible for all products to be situated next to the many other items that are consumed on the same occasion. Nevertheless, this mentality of considering the need states or occasions which motivate the shopper and then organizing the product shelf accordingly should be much more widespread. Retailers need to think like shoppers – and go out of their way to try and help them. This is where virtual stores prove to be invaluable.

Think like a shopper

Virtual store environments can help you see how shoppers think. A shopper decision tree can reveal the structure of the category in the shopper’s eyes quickly and cost effectively. We often find that the way shoppers understand the category is radically different to how it is organized. By understanding the triggers and barriers at a category and SKU level, virtual stores can also help identify the cues needed to entice the shopper into the aisle and help them understand the choices available to them when they arrive.

As category management moves to a process of continual improvement, companies must keep their eye on who it is they are serving. Shoppers are the ones who count. They are the focus of category management. Retailers and manufacturers must make it their business to identify and connect with them and meet their needs every step of the way. With its combination of behavioral data and survey results, virtual testing is both a cost effective and time efficient way to maximize the effectiveness of category marketing.

James LLewellyn is the UK Head of Shopper. Please email James.Llewellyn@gfk.com or leave a comment below to share your thoughts.

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