The AWG Category Management Glossary of Terms

AWG GLOSSARY OF TERMS

Activity Base Costing !ABC" # 1.) Cross-functional cost-accounting to determine the true business cost and profitability of a business process of activity. 2.) An accounting method that enables a business to better understand how and where it makes profit. In A C! all ma"or activities within a cost center are identified and the costs of performing each are calculated! including costs that cross-functional boundaries. #he resulting costs are then charged to the product! product line! customer or supplier that caused the activity to be performed. A C provides a more complete picture than traditional accounting methods of the profits and the costs of doing business! fine-tuned to a particular category! vendor or item. It also includes those costs that add or delete value for the consumer. All Commo ity $ol%me !AC$" - #he dollar volume of all goods sold through a specific market$channel over a specified period of time. %arket level AC& is the pro"ected dollar volume of all goods sold within a market. Alternative Formats # Channels of distribution other than the traditional supermarket channel 'e.g. club! mass! drug). Ann%al E&%ivalent $ol%me'(o%sehol ( A method of e)uivali*ing volume! enabling analysis of purchases or consumption without regard to product form 'e.g.! creates an +apples to apples+ comparison, li)uid to powder detergent! 2-liter soda to 12-pk soda) Balance Sheet # -ne of the ma"or summary financial statements of a company. It summari*es the value of a company.s assets! liabilities and resulting net worth 'total assets minus total liabilities) at a certain point in time 'e.g. at the end of a company.s fiscal year). Blen e Gross Margin - #he total gross margin generated by a group of categories or subcategories 'see Contribution to Margin). B%ying Rate !Ann%al E)*en it%res" ( #he total volume '/ or units) purchased among the total number of households purchasing the product group. B%ying Rate 0 ##1 &olume 2urchased 3 of uying 4ouseholds

Cash Generator # A Category strategy which focuses on the ability of a category or products within a category to generate cash flow 'i.e. high product turns relative to payment terms). Category # A group of products and services that the consumer identifies as being interrelated and substitutable. Category B%siness +lan # A structured! detailed document comprised of the following elements, category definition! category structure! category role! summary of the category assessment! category scorecard! category strategies! category tactics 'assortment! pricing! promotion! shelf presentation! product supply)! and implementation plan. Category ,efinition # #he process of determining the products and services that make up a category and its segmentation or structure.
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Category ,evelo*ment -n e) !C,-" ( #he level of development of a category for a specific region! market or retailer! compared with total development 'e.g.! ##1 8.9.). 9imilarly! a rand :evelopment Inde; compares a brand<s development within a region or market to its total development. C,0 = of Category / 9ales in %arket +>+ = of ##1 8.9. Category / 9ales ? 177

Category Management - A supplier-distributor process of managing categories as strategic business units! producing enhanced business results by focusing on delivering consumer value. #he practice empowers a category manager with full responsibility for the assortment decisions! inventory levels! shelf space allocation! promotions and buying. 5ith this authority and responsibility! the category manager is able to "udge more accurately the consumer buying patterns! product sales and market trends of that category. y emphasi*ing business results for entire product groups - rather than individual items or brands - Category %anagement encourages a longer-term! "oint distributorsupplier focus in marketing and product supply. Category Management B%siness +rocess - A core component of Category %anagement which refers to the day-to-day work re)uired to achieve the strategy@ the se)uence of activities! the methodology and the accountabilities within which the work of Category %anagement will be transacted.
Category Definition

Category Role CategoryReview

Category Assessment

Category Scorecard Assortment Category Strategies Pricing Shelving Promotion

Category Tactics

Plan Implementation

Category Role # #he process of assigning a category role 'purpose) based upon )uantitative and )ualitative cross-category analysis considering the consumer! distributor! supplier and the market place. Cens%s ,ata ( Census data represents every individual in a given population 'e.g.! the 8.9. Census! which surveys every household in the 8nited 9tates). Census data differs from panel data! which collects a representative sample of the population from panel participants 'e.g.! 44 panels capture the shopping behavior of a representative sample of the 8.9. population! and then pro"ect them to 8.9. levels). Cl%stering ( A geodemographic 'lifestyle$lifestage) approach to grouping stores based on similarities of trading area profiles! or +clusters.+ Clustering reveals shopper composition for each store and percent of each type of shopper living in a store<s trading area! and it may be useful to align retail strategies and operations. Clustering is also known as +%icromarketing.+ Colla.orative Relationshi*s # #he co-development of category business plans among trading partners presumably creating synergy when the trading partners collaborate to optimi*e their uni)ue perspectives and resources for a common ob"ective - delivering superior consumer value more profitably.
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Com*%ter Assiste Or ering # 1.) 4aving the computer! in concert with scan data! generate store orders for warehouse and :9: items. 2.) A retail-based system that automatically generates replenishment orders when the shelf inventory drops below a predetermined level. #he computer system tracks inventory of all items in the store! ad"usting for receipts and sales. Assential to the success of CA- are complete store-level inventories and accurate point-of-sale scan data. CA- generally reduces the labor re)uired to generate orders and provides timely information on item movement and inventory turnover at the store level. Cons%mer Worth/ Cons%mer Worth -n e) - Bepresents the total amount of category purchases by the consumer who purchases a particular brand 'si*e! type! flavor! etc.). #his measure enables the distributor to discriminate in favor of those items which attract the highest overall category spending. Consumer 5orth is converted into an inde; by taking the total category spending associated with the brand 'consumer worth) and dividing it by the average category spending for all brands. #his measure can be determined at all levels of data analysis 'brand! si*e! flavor! 9C8! etc.). Cons%m*tion -n e) ( #he percent of a product<s sales volume in relation to the household penetration in the category. C0 = of / &olume Consumed ? 177 = of 44<s 2urchasing Category

Contri.%tion to Margin !CTM" - A tool used to determine the blended gross margin for a group of categories or subcategories. #he formula is, C#% 0 = of 9ales ; 6ross %argin =

C#% recogni*es the velocity of a category! crediting faster selling items of smaller 6ross %argin =! for their overall contribution to the operations / profits. Contri.%tion to Margin !CTM" 0%a rant Analysis # A )uadrant analysis showing the relationship between the si*e of a category 'or its subcategories) measured in dollar sales and gross margin =.

Convenience Role # #he role 'purpose) designated for categories which will be managed to reinforce the distributors image as a full service store by providing good value to the target consumer in meeting less-planned! fill-in needs. #he distributors focus is to generate profits while providing the target consumer value via time savings creating an image of Done-stop-shoppingE. Conversion !B%yer" ( #he percent of category buyers who shopped in a certain channel and also purchased the category within that channel. B%yer Conversion 0
Category uyers Purchasing the Category in Channel Category uyers Shopping the Category in Channel

Conversion !Tri*" ( #he percent of total channel shopping trips by category buyers that included a purchase of the category. Tri* Conversion 0 Category uyer #rips in Channel Category uyer #rips 'A11 Channels)
F

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Core Sho**er ( A shopper responsible for the ma"ority 'e.g.! more than half) of all grocery dollar sales at a given retailer. Cross#Category Analysis # #he process of e;amining multiple categories within a distributor.s category portfolio for the purpose of determining their relative importance in terms of the consumer! the market! the competition! and the distributor. Cross#,oc1ing # #he practice in which products are transferred from manufacturer to storebound vehicles at the distributors warehouse without e;tensive handling or long term storage. Cross +%rchase -nteraction ( #he likelihood of a consumer purchasing similar or interrelated items in con"unction with their current transaction 'e.g.! the percentage of times a consumer purchases bleach with laundry detergent). ,ays#of #S%**ly # #he number of days of product stock on hand within a distribution system or retail store. ,eman -n e) !,-" ( A number indicating a product<s e;pected demand! or volume potential! based on comparing its shopper profile to the demographic composition of a specific geography. A demand inde; may be calculated for a store<s trading area! store! cluster! chain! or *ip-code. 1. :emand Inde; 0 2. F. ,- !TTL 0 Tra ing Area" 0 = of #otal 9tore 44<s ? in demographic segment Consumption Inde; in demographic segment

+5eighted+ Consumption Inde; in demographic segment 9um of 5eighted Consumption Inde;es for all demographic segments

,emogra*hics ( A traditional form of segmentation which identifies target consumers or groups based on characteristics including, 4ousehold age! income! si*e! presence of children! race! gender! education! and occupation. ,estination Role # #he role 'purpose) designation for categories which will be managed to establish the distributor as the dominant store of choice by providing the target consumer with consistent! superior value. #he distributor.s ob"ective is to be identified as the Dstore of choiceE for the target consumer.s needs pertaining to the category. ,irect E)change of B%siness -nformation !,E2'3CS" # A store level data interchange system that e;tends 8C9 to support :irect 9tore :elivery ':9:) and allows direct data transfer between the supplier.s delivery personnel and the store.s receiving agent. #he standardi*ed hardware$software reduces time! costs and inaccuracies at the retail back door. #he vendor.s salesperson or driver is e)uipped with handheld terminal in which the details of the order are maintained. -nce the item count is verified by the receiving agent! the handheld terminal is directly connected to the store.s computer and the information is downloaded. #he data is then transmitted to the retailer.s accounting department for reconciliation and payment. (see NEX/UCS) ,irect +ro %ct +rofita.ility !,++" # #he profit contribution by a product after all revenues! including sales revenue and allowance! have been credited and all the direct costs involved in moving and handling it from a retailer.s warehouse unloading dock 'or store) to the consumer have been allocated. '#he result of Activity ased Costing$2rofitability performed at the product level).

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,irect Store ,elivery !,S," # 1.) A program that allows direct store delivery of product to a store door at best price versus a warehouse shipment. 1imited availability by brand per )uarter. 2.) A method of delivering merchandise from the manufacturer directly to the retail store! bypassing warehouse facilities. 2roduct supply 'model stock and replenishment) can be managed by the supplier with varying degrees of retailer oversight! although product check-in is done by both the supplier and the store receiver. %a"or :9: categories include soft drinks! beer! bread and fresh baked goods! dairy products and fragile items re)uiring special handling such as potato chips and some gourmet items. ,istri.%tor # Betailer or 5holesaler. Efficient Assortment - A collaborative 9upplier-Betailer process of determining the optimal product offering! within a category! that achieves target consumer fulfillment and enhanced business results. y optimi*ing shelf space with true assortment that meets consumer needs! retailers and suppliers can eliminate the cost of non-re)uired si*es! products with little differentiation and those with low turns. In so doing! efficient assortment helps retailers increase store volume and gross margins. #he key drivers of this initiative are category and space allocation targeted by store! )uicker ad"ustments of products in response to changes in customer purchases! identification and emphasis on higher volume$margin items and improved pricing strategies to increase return on investment 'B-I). Efficient Assortment B%siness +rocess # A core component of the Afficient Assortment %odel. A highly disciplined H-step process by which distributors and suppliers working in collaboration determine the percent of market coverage and product mi; re)uired to optimi*e category performance given its specific role in the distributor.s portfolio.
%arket Coverage
Category Definition

:eletion &alidation Betention &alidation

Category Role CategoryReview

Category Assessment

Category Scorecard Assortment Category Strategies Pricing Shelving Promotion

Addition &alidation Jinali*ation Kuantification

Category Tactics

Plan Implementation

Efficient Cons%mer Res*onse !ECR" - A strategy in which the grocery retailer! distributor and supplier trading partners work closely together to eliminate e;cess costs from the grocery supply chain. #he ACB strategy focuses particularly on four ma"or opportunities to improve efficiency@ Afficient Beplenishment! Afficient 2romotion! Afficient Assortment! and Afficient 2roduct Introduction. Efficient +ro %ct -ntro %ction - Afficient product introduction centers on reducing system costs by finding new and better ways to identify and introduce new products that are more directly related to consumer needs.

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Efficient +romotion - y shifting away from a buying strategy to a consumer-oriented selling strategy! costs for inventory handling! storage and uneven manufacturing runs will be reduced. At the same time! more effective promotions at the retail level are e;pected to generate growth in volume and improve competitive position. Consumer promotions! such as couponing! are highly ineffective! and the move toward one count processing and scan validation will ultimately drive costs down. Efficient Re*lenishment - Afficient replenishment focuses on the integration of the flow of information and product from supplier to store shelf. 9ome of the practices that make up efficient replenishment are accurate scan data needed to drive information systems! electronic store receiving! Alectronic :ata Interchange communications! manufacturing! distribution! electronic accounts payable systems and dynamic computer-assisted ordering. Electronic ,ata -nterchange !E,-" # #he computer-to-computer transmission of business information between trading partners. #he information is usually organi*ed in standard file formats or transaction sets following guidelines administered by the 8niform Code Council '8CC) for the grocery industry or the &oluntary Inter-Industry Communications 9tandards 6roup '&IC9) for the general merchandise industry. 9tandards have been developed for all regular business-to-business communication! including purchase orders! invoices! shipping notices and funds transfer. y eliminating the clerical! mailing and other costs associated with paper-based information! A:I reduces costs! time delays and errors. Every ay Lo4 +rice !E,L+" # A permanent competitive pricing strategy where retail prices continually reflect all off-invoice! bill-back! and other promotional funds eliminating short term Dhot sale pricesE. E)citement Creation # A category strategy which communicates a sense of urgency or opportunity to the consumer 'e.g. impulse! lifestyle oriented! seasonal). E)cl%sivity/ E)cl%sivity -n e) - A measure representing the percent of consumers purchasing a particular brand 'si*e! type! flavor! etc.) that fulfill 177= of their category needs e;clusively with that brand. As e;ample! if G7 4ouseholds out of 177 surveyed fulfilled 177= of their annual category needs with rand A! rand A would have an e;clusivity of G7=! 'G744$17744 0 G7=). #his measure enables the distributor to discriminate in favor of those items where targeted consumers have shown an unwillingness to use other products within the category. #he discontinuation of these products could result in the target consumer leaving the store. A;clusivity is converted into an inde; by taking the e;clusivity associated with the particular brand and dividing it by the average e;clusivity measure for all brands in the category. #his measure can be determined at all levels of data analysis 'brand! si*e! flavor! 9C8! etc.). Geo emogra*hics ( Consumer segmentation which aggregates households by cross-tabbing the principal drivers of consumer goods 'Income! 8rbanicity! Age! Absence or 2resence of Children). ecause 8.9. Census data can also be cross-tabbed in this way! geodemographics can directly link product consumption to geographies 'states! :%As! channels! stores! *ip-codes) so that high potential consumers can be found on the ground! in restaurants! in stores and through media. Gross Margin - #he difference between an item.s retail price and its cost e;pressed as a percentage of the selling price. #hat is, 6ross %argin 0 Betail 2rice ( Cost Betail 2rice

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Gross Margin Ret%rn on -nventory !GMRO-" - 8sed to )uantify assortment decisions made for the category. Bepresented as Current and Lew 'estimated) 6ross %argin Beturn on Investment. Calculated by dividing Annual 6ross 2rofit / by Inventory / at Cost. 6%B-I #urns are calculated as follows, Annual / 9ales at Costs Average Inventory / at Cost Gross Margin Ret%rn on -nventory !GMRO-" 0%a rant - A )uadrant analysis showing the relationship between the gross margin and the annual turns among categories or subcategories. It helps identify which actions are most appropriate to increase the overall return on assets in a category. Gross +rofit # #he dollar difference between the sales of a product and its cost. It usually refers to the profit generated from the sales of a number of units 'e.g.! a case) of an item. (eavy 3ser ( A category user whose product consumption is significantly higher versus the category 'e.g. inde;ed at 127 or higher versus the category average). (eavy 3ser +%rchasing Behavior ( :escribes purchasing behavior among heavy users based upon number of criteria! including, Annual purchases! typical purchase si*e '/ or units)! percent deal volume! etc. (o%sehol +anel ,ata ( 2roduct purchase behavior data collected from a +panel+ of households which are pro"ected to represent a targeted area 'e.g.! a region! local market! or total 8.9.). All purchases are captured at the point of sale! or in-home via hand-held scanners. Captured sales conditions may include, pricing! trade channel! display! feature! #2B! etc. -mage Enhancing # A category strategy which communicates the distributor.s desired image to the consumer in one or more of the following areas, price! service! )uality! and variety. -nventory T%rnsM#he number of times a retailer sells out of his complete inventory in a given period of time. It represents the speed with which inventory is sold. #he most common way to compute #urns is, Inventory #urns 0 9ales Average Inventory 0 6ross %argin 177 - 6ross %argin > #urns

If a retailer turns his inventory 22 times a year! it means that on average he purchases and sells a product 22 times a year. 9ales and inventory must be in the same units 'e.g.! both at retail or cost or units). Lifestage( A form of consumer segmentation! which combines age and presence of children in a particular household 'e.g.! 1N-FG households w$ no children). Lifestyle - A form of consumer segmentation which combines demographic data such as occupation! household income! and level of education with geographic data such as family dwelling status and location 'e.g.! %etro Alite! Bural #owns and Jarms! %id-8pscale 9uburbs). Light 3ser ( A category user whose product consumption is significantly lower versus the category 'e.g. inde;ed at N7 or lower versus the category average).
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Loyalty/ Loyalty -n e) - #hat share of annual category re)uirements that the consumer is able to satisfy with a single brand 'si*e! type! flavor! etc.). As e;ample! if a consumer makes 17 purchases annually in a given category! F of which are made of rand A! rand A would have a F7= loyalty! 'F$17 0 F7=). #his measure enables the distributor to discriminate in favor of those items where targeted consumers have shown a higher loyalty to purchase versus other products within the category. #he discontinuation of these products could result in the target consumer leaving the store. 1oyalty is converted into an inde; by comparing 'dividing) the loyalty of rand A by the average loyalty of all brands within the category. 1oyalty and the loyalty inde; can be measured at all levels of data analysis 'brand! si*e! flavor! 9C8! etc.). 1oyalty is often referred to as Dshare of re)uirementsE. Mar1et Bas1et Analysis ( 8nderstanding the value of total market basket relating to a category! subcategory! segment! brand! or 9C8. #his measure is effective when compared to average market basket. Mar1et Coverage # #hat percent of market demand that a :istributor chooses to meet with a category.s assortment. 8sing a market level item ranking report! the distributor identifies those items in the market that represent a determined percentage of each segments sales within the category. #his percentage 'market coverage) is set at levels that enable the :istributor to achieve the specific strategies! scorecard! and role performance that have been established for the category. Mar1et Share # #hat percent of / sales in a given category controlled by a distributor in a specific geography. %arket share is also captured in terms of a distributor.s all commodity volume 'AC&) which represents the average weighted market share for all categories within the distributor.s operation. Mar1et 5'5MM AC$ -n e) # An items / 9ales for each million dollars of all commodity volume 'AC&) in a given market place. #his figure is converted into an average by taking the items factor! dividing it by the average for the segment. Mar1#3* # #he penny difference between the selling price and the cost of a single unit. Most +referre S%.stit%te - A data point collected via household panel which provides insight on those products within a category that consumers will most likely switch to! when not purchasing a competitive product within the same category. #his data allows distributors to better predict where consumer purchases will shift when delisting items that have been identified as having low consumer loyalty within their product mi;. 6et4or1 E)change !6E2'3CS" # 8C9 provides two communications links between store and supplier, :A> and LA>. LA> supports communications between office-based computer systems over public communications networks! while :A> provides direct linkage between trading partners at the store.s back door without the need for other 'or public) networks. LA>$8C9 is used by both the grocery and mass merchandise industries. It provides additional benefits when used with :A>@ automates post-delivery accounts payable and receivable@ maintains data files on products! costs! promotions! and delivery authori*ation. Additionally! it minimi*es payment discrepancies and the time re)uired to correct them. Occasional !Category Role" # Also known as -ccasional$9easonal. #he role designation for categories which will be managed to reinforce the image of the distributor as a store of choice by providing timely! competitive value to the target consumer. 9uch categories do a ma"ority of their volume in a shorter time period's) during the year. Occasional Sho**er ( A shopper responsible for the minority 'e.g.! less than half) of all grocery dollar sales at a given retailer.
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The AWG Category Management Glossary of Terms

On#Sale'Off#Sale Mi) # A means of showing the promotional mi; within a category or subcategory. #he on-sale component is the percentage of the total business supported by merchandising activity 'i.e. price reduction! feature! display)@ the off-sale component is the percentage of business sold at normal cost and retail 'i.e. without merchandising support). O**ort%nity Ga* # 8sing )uadrant analysis during category assessment! opportunity gaps are represented by the linear distance between the current performance of the category versus the desired state 'role). #hese distances can be )uantified to determine the location of the largest business opportunities to be addressed in the further development of the category strategies and tactics. O%t of Stoc1 ( A product is considered +out of stock+ whenever it is not available for purchase. +ayment Terms # #he payment terms offered by a supplier to a retailer. Average payment terms within the industry are D2$17 net F7E 'i.e. the retailer received a 2= discount for payment on or before the tenth day! but the full amount is payable within F7 days). DA;tended termsE are often offered on new or seasonal items. 2ayment terms will vary from category to category! and in some cases! from one manufacturer to another. +enetration !7 of ((8s +%rchasing" ( Jor a specific market$region! the percent of households who purchased a product group at least once within a given time period 'usually annual). +ercent of AC$ Selling ( #he percent of All Commodity &olume 'AC&) that sold at least 1 unit of an item during a specific time period. +ercent of Category 5 Sales ( #he percent of product / 9ales compared with total category and$or demographic segment sales. +ercent !7" of C%m%lative 5 Share !Sales" of Segment - #hat percentage of segment / sales controlled by an item and all other items of higher rank. A;ample, #he top ranked item in a segment controls I= dollar sales. #he 2nd ranked item controls G.I= / sales. #he = Cumulative / 9hare of item 2 would be P.I=. #his measure is used in determining proper market coverage levels in Afficient Assortment analysis. +ercent !7" of Mar1et AC$ Availa.ility - #he availability of an item in the market measured as a percent of All Commodity &olume. If an item can be found in stores within a market that are responsible for OI= of AC& / sales! the item would have OI= AC& Availability. +ercent !7" of Segment 5 Share !Sales" - An item.s share of a category segment.s / 9ales. A;ample, Category A represents /177 sales. -ne of the segments within Category A represents /27 sales. An item in this segment that represented /I sales would be responsible for 2I= of the 9egment / 9hare. +ercent of Transactions *er Sho**ing Occasion ( see +Conversion+ +ercent Sol on ,eal ( #he percent of product purchases on which a consumer perceived that a deal was present 'e.g.! features! displays! coupons! price$bonus packs). +lanogram # #he design of shelf schematics allocating specific space and facings on a per item basis. 9helving software has enabled the input of such schematics to provide specific financial performance e;pectation around inventory /! turns! and 6%B-I.

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+referre Role - 9ee Boutine. A preferred role can also be established as the Dbest in class of tradeE for the retailer. +ro %ct S4itching/ S4itching -n e) - #he cumulative percent of the brand<s users who buy other brands 'si*e! type! flavor! etc.) divided into the average cumulative percent of users buying other brands 'si*e! type! flavor! etc.) in the segment. #his measure enables the distributor to discriminate in favor of those items where targeted consumers have shown an unwillingness to switch to other products within the category. +rofit Generation - A category strategy which focuses on the ability of a category or its components to generate profits 'i.e. high gross margin! high gross profit dollars). +rofit an Loss Statement - Also known as Income 9tatement. A ma"or financial statement of any company summari*ing the sales! gross profits and margins! e;penses and net profit results for the company during a specific time period 'e.g. prior fiscal year). +rofit +ro %ctivity -n e) - #he segment.s 9hare of Category Let / 2rofit divided by the segment.s share of category items '9C8.s). +ro9ecte Ann%al 5 Sales'5MM AC$ for Retailer - #he pro"ected annual dollar sales a new item will generate for a Betailer determined by multiplying the average / 9ales for each million dollars of all commodity volume 'AC&) in the market place! by the amount of million dollar AC& done by the Betailer. +%rchase Cycle ( #he average number of days between purchases of a particular product group among households who purchased at least two times annually 'repeat buyers). +%rchase Fre&%ency ( #he average number of times each buyer purchases an item over a given time period. 2urchase Jre)uency 0 ##1 2urchase -ccasions 3 of uying 4ouseholds +ro9ecte Ann%al 5 Sales for Retailer - #he pro"ected dollar sales the item will generate for the Betailer over a one year period. Re*eat B%yer 7 ( #he percent of buyers who purchase the product group more than once in a given time period. Bepeat uyer 0 3 of Bepeat uyers 3 of ##1 2roduct 6roup uyers

Retailer ,ollar !5" Sales'S&: Ft: -n e) - An item.s dollar sales per s)uare foot of retail space! divided by the average dollar sales per item for the Betailer.s segment. Retailer GMRO- or ROA -n e) - An item.s 6ross %argin Beturn on Investment '6%B-I) or Beturn on Assets 'B-A)! divided by the average 6%B-I or B-A per item for the Betailer.s segment. Retailer +rofit -n e) - An item.s dollar profit! divided by the average profit per item for the Betailer.s segment. Retailer Share -n e) - Betailer.s share of segment! divided by the retailer share of total market 'AC&).

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Retailer Tren -n e) - Betailer.s share of segment during the latest I2 weeks! divided by retailer share QA6 'year ago). Ret%rn on Assets !ROA" - #he ratio of a company.s net profit in relation to its net worth! derived by dividing the company.s after ta;es net profit by its net worth. Ret%rn on -nvestment !RO-" - A general measure of how well a company.s invested assets are generating profits during a period of time. In general! B-I is measured as, B-I 0 Let 2rofit 'After #a;) Investment

If DinvestmentE in this formula is Let 5orth 'Assets minus 1iabilities)! B-I becomes Beturn on Let 5orth@ if it is #otal Assets! B-I becomes Beturn on #otal Assets. Ro%tine Role # #he category role designation for categories which will be managed to establish the distributor as the store of choice by providing consistent! competitive value in meeting the consumer.s routine$stock-up needs. #he routine role will likely be assigned to a ma"ority of the categories in a Betailer.s operation. Sales +er Million AC$ !5 Sales'5MM AC$" - #he sales of a product for every /1%% of AC& to which a product is e;posed at retail. %ay also be e;pressed as unit sales per million or e)uivalent sales per million. Available through data suppliers! the formula is, / 9ales '/! units or e)uivalent units) All Commodity &olume '%illions) 0 / 9ales$/%% AC&

9ales 2er %illion AC& is useful in that any market can be related to the national average or compared to other markets@ without discriminating against those products which are in limited distribution! but perform well where offered. Sales +er +oint of AC$ - A measure used to e)uali*e a brand.s sales 'or share) position by assuming that all brands have e)ual retail availability. As an alternative measure to 9ales 2er %illion AC&! it relates sales 'or shares) to each 1= of All Commodity &olume 'AC&) to which that brand is e;posed at retail. 9ales &olume 'or 9hare) 0 9ales '9hare) 2er 2ercentage 2oint of AC& 9elling 9ales 2er 2oint of AC& 9elling is useful in offering rationale for additional retail placement! and for estimating potential sales from a new retail placement. Sales +ercent from ,is*lay ( #he percent of product sales '/ or units) which occurred during store display only. Sales +ercent from Feat%re ( #he percent of product sales '/ or units) which occurred during store feature only. Sales +ercent from Feat%re ; ,is*lay ( #he percent of product sales '/ or units) which occurred during store feature and display. Sales +ercent from +rice Re %ction !T+R" ( #he percent of product sales '/ or units) which occurred during any form of price reduction. Sales +ercent from Shelf at Reg%lar +rice ( #he percent of product sales '/ or units) which occurred without any store level promotional support 'feature! display! feature R display! #2B).
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Sales +ercent 4ith Any +romotion -- #he percent of product sales '/ or units) sold on any store level promotional condition 'feature! display! feature R display! or #2B). Sales +ro %ctivity -n e) - #he segment.s share of category / 9ales divided by the segment.s share of category items. Scorecar # A measurement tool used to monitor the progress of the category business plan! improve category planning decision-making! and as a basis for reward and recognition Seasonality -n e) ( #he ratio of / 9ales to average weekly / 9ales within a category! sub-category! segment! brand or 9C8! and plotted over time for a specific retailer or market area. 8seful in comparing retailer and key competitor consumer purchase timing! or +seasonality+ trends within the retailer target market. Segment 5 Ran1 - Lumerical dollar sales ranking of item within segment. Segment 5 Sales -n e) # A segment.s share of / 9ales that are controlled by a targeted consumer group! divided by the share of AC& / 9ales controlled by that same targeted consumer group. #his measure enables the Betailer to discriminate in favor of segments having the greatest appeal$importance to their target consumer. Segment Sho**er -n e) # #he percentage of a segment.s shoppers represented by a targeted consumer households 'demographic)! divided by the percentage of shoppers that the same demographic represents of all shoppers in the market place. A;ample, F of 17 households 'F7=) using -live -il make R/G7C annually. In the market place! 2 of 17 households '27=) make R/G7C. #he 9egment shopper inde; would e)ual 1I7! 'F7$27). #he use of this measure enables the Betailer to discriminate in favor of segments having the greatest appeal$importance to their target consumer. Service Level # Another measure of the ability of a retailer buyer$merchandiser to meet store orders from warehouse stock or a supplier to meet the level of demand for its products in a store! e.g. when a warehouse has a PO= service level! F= of the items ordered by retailers are scratched or back ordered because of out-of-stocks. 9ervice 1evel 0 Cases 9hipped 'or :elivered) Cases -rdered 'or Be)uired)

Jor e;ample! if a store ordered 1777 cases and PO7 were shipped! a PO= service level was achieved. #his is different than an out-of-stock rate which measures the percentage of items 'not cases) that were not shipped. Share !7" of Category 5 +rofit - #he segment profit as a percent of the category profit. DLetE profit is preferred to gross profit! but may not be available. Share !7" of Category 5 Sales - #he segment / 9ales as a percent of the total Category / 9ales. Share !7" of Category S<3s - 9egment 9C8s 'items) as a percent of the total category items. Share of Re&%irements !SOR" - A;pressed as a percentage! the share of a consumer.s total annual purchases of the category that can be attributed to a specific brand! si*e! flavor! etc. Beached by dividing Actual / 9pent 'shopping trips per year ? / spent per trip) by Annual 4ousehold Be)uirements 'for the brand! si*e! flavor! etc.). 9-B is useful as a measure with which to assess consumer loyalty.
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The AWG Category Management Glossary of Terms

S4itching -n e) - #he cumulative percent of the brand.s users who buy other brands 'si*e! type! flavor! etc.) divided into the average cumulative percent of users buying other brands 'si*e! type! flavor! etc.) in the segment. #his measure enables the distributor to discriminate in favor of those items where targeted consumers have shown an unwillingness to switch to other products within the category. #he discontinuation of these products could result in the target consumer leaving the store. Traffic Generation or Traffic B%il ing # A category strategy which focuses on drawing consumer traffic into store! aisle! and$or category 'i.e. items or segments having characteristics such as! high share! fre)uently purchased! highly price sensitive! high = of sales). Transaction B%il ing # A category strategy that focuses on increasing the si*e or the average transaction for a category 'i.e. higher than average ring! larger si*es! impulse purchases). T%rf +rotection # A category strategy which focuses on aggressively positioning the category 'relative to competition) to appeal to the target consumer. 3nits *er Transaction ( 2hysical units purchased during a single shopping transaction. 3nits'Transaction 0 Annual 3 of units purchased Annual 3 of transactions

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