Category Management is the primary platform from which CPG (Consumer Packaged Goods) brand owners interact with retailers. Category Management provides the language, process framework, and metrics for communicating all strategic and tactical recommendations to the retailer.
Where did it start?
Back in the early 90’s a process was developed to help retailers and suppliers manage the category management process, many retailers and manufacturers refined the process for speedier strategy/opportunity fulfillment, smoother execution, and more robust results. A ninth step was added (nowadays forgotten about) called the readiness stage i.e. is the company ready for the process, does it have the capabilities and resources needed (a valid question well worth asking).
Category Management is not just about pushing buttons or running various reports, it’s about truly understanding the shoppers path to purchase and understanding how you can influence that path or at the very least understand how a shopper arrives at making the final decision, something that online retailers are beginning to make real headway in and convert many traditional brick-and-mortar shoppers to online shoppers.
The eight step process
1. Define category
Possibly the most important step as it will define your understanding of the retailer, their customers and who buys your brand. This step will look at the consumer decision tree to see how customers shop the category. You will find out if they shop by brand, sub-brand, packaging, quality, flavour etc. Upon completion you will define a category or a product grouping based on the results.
2. Category role
The role identifies the importance of the category. For example a retailer may want the category to bring new consumers into the store, be a traffic generator, meet their routine needs or be a destination for seasonal or occasional purchases. So retailers may assign different roles to categories depending on the customers they want to attract. The four types of roles are destination, routine, seasonal and convenience.
3. Category assessment
Possibly the most time consuming part of the process this stage looks at all the data available including any market or consumer research and may even require new research based on its outcome. You will look at Sales by category, sub-category, brand, SKU, promotions, market growth/decline as well as any consumer trends or changes in consumer buying habits.
4. Category scorecard
The scorecard is an important step in the process as it connects the analysis part of the process (category
definition and segmentation, role development, and assessment) to the strategy part of the process (strategy development, assortment, pricing, in-store presentation and promotion) In this part you summarise what you have learnt and create the goals or objectives for the category.
5. Category strategies
The category strategy will define what is needed to achieve the categories role. Examples of category strategies are; traffic builder, transaction builder, profit generator, share protector, excitement generator or image enhancer. To achieve these strategies a combination of assortment, price, promotion and merchandising tactics will be used.
6. Category tactics
Tactics include specific actions to be taken to achieve chosen category strategies. They will look at what marketing activities, types of promotions, changes to assortment, communication strategy and planogram or fixture changes.
(This is the stage where new planogram and range assortments are planned)
7. Implement plan
This is the action step that brings your strategies and tactics to life and the part where responsibilities are assigned to implement the changes. It is also the part where many processes fail due to the failure to get buy in or the failure to agree the changes. The degree to which you accurately implement the plan will dictate its success.
8. Review and assess performance
Analyse, measure and review the results. This should be ongoing and used to help you refocus and make changes if necessary.
Workshops & Training available
If you would like to know more about Category Management or how to implement it into your business why not contact Shelfstock today and we can walk you through the process, we run workshops covering all the key steps of the process.
Fill in your details in our contacts page and we will send you some options available
Really excellent points here. I’d like to mention that a lot of this doesn’t require a person in a designated category management position. A lot of the tasks and knowledge here can be accomplished with a software, My business is in the process of starting a CM initiative, and this is the route we’re going.