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Who's Minding the Store?
Greg Josefowicz rose from grocery bagger to president at Jewel-Osco supermarkets before taking the top job at Borders three years ago. He helped Jewel implement category management, which he first learned about at a 1991 talk by Harris.
"Rather than build strategies for this thing called 'books,'" he says, "we have to meet customer needs within more finite segments." Publishers' in-depth category experience, he asserts, makes them a necessary part of the process. The sushi-book cuts, for example, came about because HarperCollins helped Borders pore through consumer interviews to discover that too many titles on a specific subject were overwhelming people. "That's a classic category management result," says HarperCollins VP for sales Josh Marwell, who participated in the analysis. "You may not need as many items in the category."
Borders so far has appointed "lead suppliers" in 20 categories -- including Random House (kids), Pearson (computer books), and Sony (easy-listening CDs) -- and is on track to roll out the program storewide by 2004. If the supermarket and mass-merchant experience is any guide, what that means for Borders and its customers depends on whether the bookseller can remain the true captain of its categories.
Toward that end, Josefowicz has hired Harris's Partnering Group to train its employees on how to market a category. He also insists that Borders has final say over the titles it stocks. And he says he'll be updating analysts every quarter on how things are going. Of course, if you miss his calls, you can always visit a Borders store to see how category management is working out.
Don't forget the blindfold.
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Retailers say any manufacturer can be a category captain, but antitrust activists worry that only dominant suppliers can afford to be. These vendors have locked up captaincies at most retailers:
| CAPTAIN |
CATEGORY |
| Coca-Cola |
Soft drinks |
| E&J Gallo |
Wine |
| Gillette |
Shaving |
| Nestlé
Purina |
Pet food |
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Procter
& Gamble
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Detergent |
SOURCE: Industry category-management experts
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| How to Captain a Category |
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Marketing guru Brian Harris breaks the art of category management into seven steps. Here's how a joint Borders-HarperCollins team applied them to cookbooks.
| Step |
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What
It Means |
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How
Borders Applied It |
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| 1.
Define the category. |
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Decide
where you draw the line between product categories. For example, do
your customers view alcohol and soft drinks as one beverage category, or
should you manage them separately? |
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Named
the cookbook section Food and Cooking because consumers expected to see
books on nutrition there as well. |
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| 2.
Figure out its role. |
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Determine
how the category fits into the whole store. For example, "destination"
categories lure folks in, so they get maximum marketing push, while "fill-ins"
carry a minimal assortment. |
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Decided
to make Food and Cooking a destination category. |
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| 3.
Assess performance. |
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Analyze
sales data from ACNielsen, Information Resources Inc., and others. Identify
opportunities. |
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Learned
that cookbooks sell faster than expected during holidays. Responded by creating
gift promotions. |
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| 4.
Set goals. |
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Agree
on the category's objectives, including sales, profit, and average-transaction
targets, as well as customer satisfaction levels. |
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Aimed
to grow cookbook sales faster than the store average and to grab market
share from competitors. |
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| 5.
Choose the audience. |
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Sharpen
your focus within the category for maximum effect. |
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Decided
to go after repeat buyers. "Since 30% of shoppers buy 70% of the cookbooks
sold, we are aiming at the enthusiast," says Borders chief marketing officer
Mike Spinozzi. |
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| 6.
Figure out tactics. |
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Decide
the best product selection, promotion, merchandising, and pricing to
achieve the category's goals. |
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Gave
more prominent display to books by celebrity chefs like Mario Batali. Created
a more approachable product selection by reducing the number of titles on
certain subjects. |
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| 7.
Implement the plan. |
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Set
the timetable and execute the tactics. |
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Has
been introducing changes to its cooking sections since November. |
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