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Retailer dialogue 2017
[Current questions]

  1. Retailers and manufacturers mostly share the same target. Growth of the category.
    Nevertheless, retailers often decline proposals from the manufacturer. Why?

    Bierman: The targets of trade and industry don't always match. Sometimes they do, sometimes they don't. Growth of the category is a shared target, but not always. And maybe not with you, but with the opponent. Optimizing the profit of a product group or improving customer loyalty are different targets. But if the retailer has set his mind on profit improvement and he is on a crash course to get there, you know that today's buyers' strategies are not gentle.

    The retailer has a kind of love/hate relationship with strong brands. Sometimes he needs them, sometimes he opposes them. The manufacturer profits from brand loyalty and brand operations. And from activities, even with products that are minor considering their relatively modest turnover. But every week, the ratailer has free choice out of dozens of activities from dozens of manufacturers.
    Every single one is at least as interesting as the previous one. Why would he take your activity? Using a critical approach to evaluate promotional targets, manufacturers can improve their promotional management significantly.
    See our website : ''Promotion management in FMCG''
    Retailer preferences do not exclusively depend on profit. The retailer's preference for a manufacturer certainly also and maybe even primarily depends on how well the manufacturer understands the view on the category from the retailer's standpoint. Still, research on the retailer is rarely done.

  2. Why does the retailer rarely use the manufacturer's know-how even though he himself often hasn't got access to this knowledge?
    [Anyway, if he has the know-how he doesn't show it]

    Bierman: Retailers receive an overload of information. They have to inhale plenty and ventilate much. It's not that simple to select the right information from the enormous mountain provided by many manufacturers.
    Also, eliminating the dead weight is not really simple.
    In that process, much goes wrong. Not just at the retail side, but also in the industry.

    The manufacturer is increasingly well informed, but lots of numerical data provide a false feeling of security and depth. Sales and marketing people think they have everything under control. But despite the ever bigger mountain of information, you see superficiality increase at a time when the market and major retailers are actually asking for depth and visions.
    For Management recognizing this development it's is a source of concern. And for Bierman it's a fundamental field of interest; for example in ment.

  3. Why is the retailer hardly willing to feedback information?

    Bierman: This is a consequence of the commercial relationship. Lots of information is located under the skin of the organization. And a retailer will not want to provide an inside view because he has this commercial relationship with the manufacturer.
    'How do you convince retailers to supply the information they prefer to withhold and what do you do with it.' This is part of our ping pong sessions for sales, account management and trade marketing.

  4. Is the manufacturer equipped with Bierman's category view stepping into the space management of the retailer?

    Bierman: Yes. And that's an essential task for account management and trade marketing. The best category view is developed from the retailer's point of view, so you may count on maximum acceptance from the retailer. We use the retailer's own arguments. This is where Spaceman failed. Spaceman is not to blame here, it's the way that Spaceman was implemented.
    Seven out of ten manufacturers fail to deal with this in optimal fashion. The other three are Bierman's clients.

    Gaining influence on space is not a matter of some simple technique, and it's not about a mountain of "convincing" figures either. Retailing is not algebra. A number of things are prevalent here. Like mapping Category management after category analysis. That means Category management from the retailer's point of view.
    But trade marketing and account management tend to tackle this issue using figures, Nielsen, IRI, shoppers research and decision tree. That's not what the retailer needs, even though he usually sits through your presentation politely.

  5. Can you provide practical examples of the category view?

    Bierman: our clients wouldn't appreciate this, but with the consent of Cono Kaasmakers -one of our clients- we can tell you something. We are closely involved at the introduction of BeemsterKaas in Food Retail. Interested manufacturers can invite us over and we will provide an insight of the approach that resulted in the very successful introduction in a market where retailers aren't welcoming a brand article operation.
    We have a strongly condensed and effective catman approach.

  6. Retailers are less responsive now to Nielsen, IRI and shoppers research data from the manufacturer. How come they are interested in Bierman's category view?

    Bierman: Actually, with Nielsen and IRI the manufacturer merely demonstrates how important he thinks his marketposition is. Retailers don't need what they find self promoting success stories from the manufacturer. They want to hear about vision, and they don't want that once, but all the time.

    This poses some problems for the manufacturer and his people. One single vision already involves substantial research, let alone multiple visions. Bierman utilizes a practical communication model for these cases. Tested with the visionary retailer, time and time again. Since 1976. Way back then we were already conducting pertinent studies in category management and ECR, even though these specific terms weren't yet in use.
    In 1976 we started with category analysis and from the start we archived relevant retail information. The result is a retail-database many megabytes in size, spanning all product groups. This database is an inexhaustible source and an important reference for our work.

    In cooperation with the retailer and within the category there are about 150-180 relevant fields to focus on, pointed out by the retailer. These provide as many handles and visions for account management and trade marketing. We explore these with our customer research and our category analysis. No manufacturer's lingo, but retail language. That is the quintessence.

  7. 180 relevant fields of interest. How do you make the retailer see that there are 178 fields of interest besides margin and turnover?

    Bierman: To do this, you first of all need knowledge about these other 178 fields of interest.
    A professional account manager -a "commercial animal"- will subsequently and promptly see what he/she can do with this knowledge.
    By the way, during our training sessions I frequently get this response from expert old hands: “so I've been doing it wrong all those years?” I tell them no. But it can also be done differently. And more efficiently.

  8. At the end of the day it's the consumer and not the retailer who decides if a product is bought?

    Bierman: Yes and no. A manufacturer has two target groups: the consumer and the retailer. The influence of the retailer is often underestimated, the consumer's influence is often overrated. You see the same overestimation in consumer research. Insufficient weight is given to the fact that a consumer states the intention of buying a certain product whereas the same consumer then reacts quite differently when standing before the actual shelf.

    The bias in consumer research is quite extensive. That's why so much goes wrong in the innovation and launching process.
    There's a proverb saying that “7 out of 10 new products are doomed to fail.” We see it differently. “7 out of 10 failed products are doomed to fail because many (often classic) mistakes, have been made before, during and after the introductory phase.”
    Our research method -the category analysis- prevents this. The analysis on retail level is the most important part of the job. Therefore I don't contract this out. I do all field work myself and also the interpretation of the information and the translation into practical steps.

    Manufacturers often brandish large scale consumer research and a vision based on it. There's nothing wrong with that and it often yields valuable information. But it's mostly ad hoc information. Valuable only once and quickly outdated. A retailer wants to hear this information once or maybe twice and that's it.
    A continuous rerun of the same message gets irritating. Account managers sense this very well. And they take care not to get repetitious.
    Account managers need a continuous stream of relevant information to make them perform commercially. The Bierman analysis enables them to do just that.

    Large scale consumer research by market leaders are characteristically wide in scope. “This research involved 300 consumers.” But this says nothing about the depth of the research. Not even if 3000 consumers have been researched. It tells you nothing about depth. Bierman enters the depth. Quality beats quantity. Always. Depth information leads to multiple views and visions that can be presented by Sales and Marketing on different occasions. Over a longer period in time. And in-depth research hands retailers solutions for practical issues. So you're always welcome on head office level.
    For today's strategic questions in FMCG see our website

  9. What if the manufacturer's category view and the retailer's view don't match?

    Bierman: Why shouldn't they differ? A retailer taking another standpoint will nevertheless recognize the effectiveness of the manufacturer's category view as long as it's developed from a retail point of view. And this provides for interesting discussions. We frequently conduct pingpong sessions this way at head office locations about the category management of the product group. With category managers and unit managers.
    Always from the retailer's point of view. Nielsen, IRI and shoppers research are used as supporting evidence of our categoryview; not as leading data.
    In essence, category management is the property of the retailer, not of the manufacturer. Still, the manufacturer must focus on category management of course.

  10. To what extent is Bierman involved in the implementation of research?

    Bierman doesn't stop at the conclusion of the research. We help clients by translating the findings of research into tools for supporting, sales, account management and trade marketing.
    For instance, we frequently participate in presentations for Albert Heijn, Superunie and other retailers. That's when we, as market researcher, defend the research results and the category view.
    Today, manufacturers get just one shot at convincing retailers that their product deserves a place on the shelf. Or that their products deserve a place on the shop floor, even if they don't comply with high yield requirements.
    The right story, the proper presentation is of decisive importance in such cases. It has to be perfect. We can provide a helping hand with this.

  11. Persistent buyer structures frustrate the acceptance and distribution process. How do we speed this up?

    “How can I get maximum distribution in a fully saturated markt in the shortest possible time” is one of the three most crucial issues in these days of prize battles and rationalization.
    If you're not a market leader, building and sustaining distribution is a complex process. And even for market leaders it's not easy anymore.
    Major retailers like Albert Heijn, Schuitema, Superunie, Koopkonsult, Shell are flooded with offers, not just from within The Netherlands but from suppliers all over the world who all want to do business with them.
    Especially Albert Heijn receives the annual attention from hundreds of manufacturers/suppliers. Retailers aren't quivering in anticipation. Access to the retailer's assortment isn't a matter-of-course anymore, not even for market leaders.
    This requires specific knowledge of the path to lead and that's where we can assist manufacturers. If one wishes, all the way up to and including the presentation for Albert Heijn or other major retailers.
    It's fundamental to introduce new products/concepts according to an inevitable process for retailers, under full control by the manufacturer. We know this process.

    With the client, we translate the category analysis into these three tools:
    a. the manufacturer's categoryview
    b. the best cooperation plan
    c. the logistics view

    De logistics view -one of the three parts- encompasses the retailer's logistics and everything that's working well and all that can be improved upon.
    There are product groups that struggle with extreme out of stocks all the time. Frozen foods and dairies, for instance. And cake/bakeries and sweets. Most any product group can suffer from it. Even large groups like coffee, soft drinks, beer, detergents, meats and AGF can't escape towering out of stocks. And out of stock goes on for 52 weeks every year.

    Out of stock is the result of a lot of mistakes in the retailer's logistics, leading back to the logistics of the manufacturer. So all these errors are incorporated into the logistics of the manufacturer.

    Bierman maps the shortcomings of the retailer's logistics and Bierman also hands the solutions. Research conclusions are translated into the logistics view as a presentation for [major] retailers.
    It answers such questions as “how to obtain a significant out of stock reduction.” You bet that manufacturers with such a story to tell are welcomed at Albert Heijn or Schuitema.
    Now, manufacturers are continually making retailers aware of out of stocks without handing them the solutions. Repeated stressing of it without providing any solution leads to irritations on the retail side.

  12. How do you avoid pitfalls while setting up projects in ECR and category management?

    Bierman: By letting Bierman assist you.
    Otherwise you inevitably get lost. By the way, a category management project consuming lots of time, funds and energy must serve all retailers, not limiting itself to one single retail organization.

    Our approach in category management has three advantages:

    a. It doesn't suffer from the limitations of individual projects with individual retailers. Findings from our research are applicable for all retail organizations. From Albert Heijn to Koopkonsult and any one in between. Plus the Out of Home channels, of course.

    b. Considering the time and costs involved but especially in view of the results, retailers like Albert Heijn are losing confidence in the practical use of projects. This is not so with Bierman's category view and logistics view.

    c. With these instruments the manufacturer takes the initiative in the commercial relationship, which is presently in the hands of the retailer.

  13. Which retailers are best equipped for category management projects?

    Bierman: Albert Heijn. All others are -with all due respect for these retailers- “second choice”. If Albert Heijn is discouraging -there may be plenty of reasons for this- then projects are relatively easily forced into motion using Bierman's category view and logistics view.

    Exploratory exchange of ideas.
    Manufacturers can invite us for an exploratory exchange of ideas.
    We prefer to do this tailor made. Meaning about your own market.

    The advice. The implementation
    Bierman's consultancy doesn't stop at providing advice. Translating the findings into practice and supporting Sales and Marketing is part of our core activitities. At the request of our clients we frequently participate on head office level. And we have a view. Sometimes we have a dissenting view. Top management does not need yes men. Top management is looking for creative, innovative solutions for issues that can be complex.

    FMCG-news "on line"
    "Trends in Distribution and Food Marketing" is a publication of Bierman distributed free of charge via e-mail.
    The newsletter is exclusively distributed to manufacturers in FMCG and it comes out infrequently: only when there's something to report.
    Subscription is possible through an e-mail to josbierman@fmcg.nl with the text "free subscription" in the message header or message body.


    Facts and figures often show a semblance of depth
    but do they provide you with solutions
    and visions?

    P.J. Bierman
    telefoon: 0315-24.34.94
    Email: (<josbierman@fmcg.nl>)