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    Category Management in Transition, Says ACNielsen

    SCHAUMBURG, Ill. -- Retailers and manufacturers say category management is still "critically important," but that doesn't mean they are applying the discipline as much as they once were, new research from ACNielsen U.S. indicates. Category management is in the throes of a transition, as traditional ways of applying the practice are apparently losing favor with the industry, according to the marketing information firm's 14th Annual Trade Promotion Practices and Emerging Issues Study, released yesterday.

    SCHAUMBURG, Ill. -- Retailers and manufacturers say category management is still "critically important," but that doesn't mean they are applying the discipline as much as they once were, new research from ACNielsen U.S. indicates. Category management is in the throes of a transition, as traditional ways of applying the practice are apparently losing favor with the industry, according to the marketing information firm's 14th Annual Trade Promotion Practices and Emerging Issues Study, released yesterday.

    One surprising finding is that all the industry's talk of the need to mate category management with consumer insights might just be lip service. "There's a lot of experimentation going on right now, with manufacturers and retailers searching for the most impactful, yet cost-effective, overall planning process and merchandising and marketing techniques," said Rob Holland, ACNielsen s.v.p., retail marketing, in a statement. "One surprise was the fact that less than 85 percent of all companies surveyed rated 'understanding the consumer' as a critically important issue. We believe that category management needs to begin with a complete understanding of the consumers that CPG companies are trying to serve."

    While category management continues to be viewed as important to manufacturers and retailers, when asked which of several category management processes or tactics they used in 2004, both industry segments said they are using less of almost every one. Those tools include assortment planning, promotional planning, shelf management, everyday low pricing, frequent shopper/loyalty programs, and micro-merchandising and micro-marketing.

    Meanwhile, manufacturers and retailers continue to perceive the value of trade promotion spending differently, according to the study. Thirty-five percent of manufacturers indicated that they receive excellent or good value from their trade promotion expenditures -- up from 31 percent in 2003. By contrast, 36 percent of retailers indicated that the share of manufacturer trade promotion dollars they receive is sufficient or more than enough -- up from just 22 percent in 2003. Holland called this "a noteworthy improvement," but said manufacturers and retailers need to continue better aligning their trade promotion efforts.

    The full 100-page report is available for $495; go to http://store.vnuemedia.com/acn/store/index.jsp.

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