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Category Management - a New Consumer Oriented Concept in the Swedish Food Retailing Industry

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Category Management - a New Consumer Oriented Concept in the Swedish Food Retailing Industry December 1, 2004 The Department of Business Studies International Business Program Bachelor/ Master Dissertation Category Management - A New Consumer Oriented Concept in the Swedish Food Retailing Industry Tutors: Håkan Pihl Viveca Fjelkner Authors: Camilla Helgesson Jessica Huttula Tobias Roth Preface It was a lot of fun for us to work together as an international team; it was the Erasmus Programme, which made this possible. We learned much from each others’ cultures and languages. We had a very good cooperation and we gained much experience for the future. We want to thank all our interviewees for participating and for being very friendly and complaisant. Further, we want to thank our tutors Håkan Pihl and Viveca Fjelkner who have given us suggestions for improvements both on the content and the language throughout the whole dissertation. Finally, we want to thank our families and friends for the kindness to let us stay at their places when conducting our interviews, both in Sweden and in the US. Kristianstad November, 2004 Camilla Helgesson Jessica Huttula Tobias Roth ABSTRACT Title: Category Management - A New Consumer Oriented Concept in the Swedish Food Retailing Industry Date of submission: December 1, 2004 Course: Bachelor/Master Dissertation in International Business FEC685, 10 Swedish Credits (15 ECTS) University: Kristianstad University, The department for business studies Authors: Camilla Helgesson (Bachelor), Jessica Huttula (Bachelor) and Tobias Roth (Master) Tutors: Håkan Pihl and Viveca Fjelkner Key words: Category Management, Efficient Consumer Response (ECR), consumer orientation, food retailer, supermarket, ACNielsen, Partnering Group Inc. Purpose: The purpose of this dissertation is to investigate if and why food retailers in Sweden use Category Management. It will also examine how food retailers perceive and apply this American concept in Sweden. Further the theories about Category Management will be tested with the help of a created model. Methodology: This dissertation is based upon a qualitative method. We had interviews at the four largest food retailers in Sweden and two supermarkets in the US. Furthermore literature studies have given us a theoretical frame of reference. Theoretical perspectives: ECR theory, theories from ACNielsen and The Partnering Group Inc. Empirical foundation: Three interviews with headquarters in the Swedish food retailing industry and four interviews with specific supermarkets in Sweden and two interviews with specific supermarkets in the US. Conclusions: Category Management is used by the three largest food retailers in Sweden. However it is not used in every detail as the theories suggest, but the food retailers in Sweden plan to implement more elements of the concept in the future. Category Management is a consumer oriented concept. Table of contents 1 Introduction ...............................................................................................................5 1.1 Background .......................................................................................................5 1.2 Purpose..............................................................................................................6 1.3 Limitations ........................................................................................................6 1.4 Definitions.........................................................................................................6 1.4.1 Efficient Consumer Response ...................................................................6 1.4.2 Category Management ..............................................................................6 1.4.3 Category ....................................................................................................7 1.4.4 Category Manager.....................................................................................7 1.4.5 Retailer ......................................................................................................7 1.4.6 Supermarket ..............................................................................................7 1.5 Outline...............................................................................................................7 2 Method ......................................................................................................................9 2.1 Choice of Methodology.....................................................................................9 2.2 Secondary Data...............................................................................................10 2.3 Primary Data...................................................................................................10 2.4 Research Approach .........................................................................................11 3 Category Management ............................................................................................12 3.1 Efficient Consumer Response .........................................................................12 3.1.1 Strategies .................................................................................................12 3.2 Introduction to Category Management ...........................................................14 3.3 Consumer Orientation.....................................................................................15 3.4 Categories........................................................................................................16 3.5 Category Manager...........................................................................................19 3.6 Cooperation between Retailer and Manufacturer............................................21 3.7 Implementation of Category Management......................................................23 3.8 The Partnering Group Inc................................................................................24 3.8.1 Business Process.....................................................................................25 3.8.2 Strategy....................................................................................................28 3.8.3 Scorecard.................................................................................................30 3.8.4 Organisational Capabilities.....................................................................31 3.8.5 Information Technology..........................................................................32 3.8.6 Collaborative Trading Partner Relationships ..........................................32 3.9 ACNielsen .......................................................................................................33 3.9.1 Reviewing the Category..........................................................................34 3.9.2 Targeting Consumers ..............................................................................35 3.9.3 Planning Merchandising..........................................................................36 3.9.4 Implementing Strategy............................................................................37 3.9.5 Evaluating Results...................................................................................38 3.10 Comparison of ACNielsen and The Partnering Group ...................................39 3.11 Outcome of Category Management ................................................................40 3.12 Summary .........................................................................................................42 4 A Model for the Use of Category Management......................................................45 5 Empirical Method....................................................................................................50 5.1 Research Strategy............................................................................................50 5.2 Sample.............................................................................................................52 5.3 Validity............................................................................................................53 5.4 Reliability........................................................................................................54 5.5 Generalisability ...............................................................................................55 3 6 Analysis of Interviews.............................................................................................56 6.1 Industry Background.......................................................................................56 6.2 Results of Interviews.......................................................................................61 6.3 Analysis of Interviews.....................................................................................70 7 Conclusions .............................................................................................................73 7.1 Introduction .....................................................................................................73 7.2 Conclusions Regarding the Statements...........................................................73 7.3 Advantages and Disadvantages of Category Management .............................80 7.4 Applicability of the Model ..............................................................................81 7.5 Summary of Findings......................................................................................82 7.6 Category Management in Other Countries......................................................83
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