Category Management Rajnish Kumar

What is a Category ? A group of products with similar attributes Distinct from other products but not necessarily among themselves Can be substituted by each other Stores, stacked and sold in a similar manner We can therefore Sum up : A category is a group of products which meet a similar consumer need so that the products are inter-related or substitutable. Examples – Juices, Shaving products, Inner wear, Toys and Games

A group of products with similar attributes

Distinct from other products but not necessarily among themselves

Can be substituted by each other

Stores, stacked and sold in a similar manner

We can therefore Sum up :

A category is a group of products which meet a similar consumer need so that the products are inter-related or substitutable.

Examples – Juices, Shaving products, Inner wear, Toys and Games

Therefore ,Category Management.. Category Management is a process of maximizing sales and profits while enhancing product value and customer experience It is achieved through active involvement of all stake holders Manufacturer, retailer and customer While it is a business requirement for the retailer and manufacturer to partner with each other, the customer is engaged by the retailer in order to understand buying behavior and preferences to achieve more from less. The value thus captured is retained partially by the retailer and is passed on in good measure to the customer to gain competitive advantage Category management is not an event but a continuous process of course correction through performance measurement and action

Category Management is a process of maximizing sales and profits while enhancing product value and customer experience

It is achieved through active involvement of all stake holders Manufacturer, retailer and customer

While it is a business requirement for the retailer and manufacturer to partner with each other, the customer is engaged by the retailer in order to understand buying behavior and preferences to achieve more from less.

The value thus captured is retained partially by the retailer and is passed on in good measure to the customer to gain competitive advantage

Category management is not an event but a continuous process of course correction through performance measurement and action

Category Management is a Business Process Define the Category (i.e. what products are included/excluded). Define the role of the category within the retailer. Assess the current performance. Set objectives and targets for the category. Devise an overall Strategy. Devise specific tactics and Implementation. The eighth step is one of review which takes us back to step 1.

Category Drilldown and Definition By Brand Branded National Brand Local Brand Private Label Economy/Value Premium By Usage Fresh Canned Juice concentrates

By Brand

Branded

National Brand

Local Brand

Private Label

Economy/Value

Premium

By Usage

Fresh

Canned

Juice concentrates

Category Role Value Pricing Lifestyle Aspirational High cost of acquisition from alternate source Saving Top Ups/Convenience Customer View Apparel Medium Margin High Fashion Perception builder Toys and Games Home Linen Branded Luggage High Margin Destination Cash Cow Fruits and Vegetables Eggs FMCG Lower Margin High Frequency Traffic Builder Example Retailer View Category Role

Category assessment Who is the Target customer ? What Inventory is required to sell profitably How Much Shelf Space is allotted If we use the same space for something else what margins can be generated Is there an impact on sale of other categories How much stock is sold on promotion Shrinkage and pilferage constitute what percentage of margin Is there any Non Sales Revenue being Generated Is there a Potential for growth

Who is the Target customer ?

What Inventory is required to sell profitably

How Much Shelf Space is allotted

If we use the same space for something else what margins can be generated

Is there an impact on sale of other categories

How much stock is sold on promotion

Shrinkage and pilferage constitute what percentage of margin

Is there any Non Sales Revenue being Generated

Is there a Potential for growth

Identifying Gap between current and potential sales

Category Scorecard – taking stock Sale Potential vs. Achievement Target Margin vs. Achievement Target NOM Inventory vs. Avg. Inventory Cost of sales System requirements – cost Manpower allocation Is it Profitable to do Business ??

Sale Potential vs. Achievement

Target Margin vs. Achievement

Target NOM Inventory vs. Avg. Inventory

Cost of sales

System requirements – cost

Manpower allocation

Is it Profitable to do Business ??

Category Scorecard – taking stock Sale Potential vs. Achievement Target Margin vs. Achievement Target NOM Inventory vs. Avg. Inventory Cost of sales System requirements – cost Manpower allocation Is it Profitable to do Business ??

Sale Potential vs. Achievement

Target Margin vs. Achievement

Target NOM Inventory vs. Avg. Inventory

Cost of sales

System requirements – cost

Manpower allocation

Is it Profitable to do Business ??

Category Strategy Retailer Low Margin – High Volume High Margin – Low Volume High Inventory – High Margin Low Inventory – High Turn strategy Customer Market Share/Price Positioning Fashion Driver Bottom line Contribution Top Line Contribution

Retailer

Low Margin – High Volume

High Margin – Low Volume

High Inventory – High Margin

Low Inventory – High Turn strategy

Customer

Market Share/Price Positioning

Fashion Driver

Bottom line Contribution

Top Line Contribution

Tactics to achieve Strategy Product based Tactics Pack of 3 briefs @ Rs 99 with 10 % margin Rs. 20000 wedding collection Sherwani Exclusive range of Leather footwear Fast Moving Consumer goods – Toothpaste,Diapers Operational Tactics High stacks in the action alley to give feel of plenty Exclusive Boutique look with pictures of Models Wide range of Leather Shoes in all possible color,size and brand options

Product based Tactics

Pack of 3 briefs @ Rs 99 with 10 % margin

Rs. 20000 wedding collection Sherwani

Exclusive range of Leather footwear

Fast Moving Consumer goods – Toothpaste,Diapers

Operational Tactics

High stacks in the action alley to give feel of plenty

Exclusive Boutique look with pictures of Models

Wide range of Leather Shoes in all possible color,size and brand options

Key Elements of Category Plan implementation Everyone has to be on the same page Designation of Authority Systems to be in place Approvals have to be smooth as per well defined processes Clear assignment of responsibility Mission critical Timelines Dip sticks for course correction Pre determined measures of success

Everyone has to be on the same page

Designation of Authority

Systems to be in place

Approvals have to be smooth as per well defined processes

Clear assignment of responsibility

Mission critical Timelines

Dip sticks for course correction

Pre determined measures of success

Category Review Can be a 3 stage process : Research and opportunity identification Creation and implementation Metrics, correction and learning

Can be a 3 stage process :

Research and opportunity identification

Creation and implementation

Metrics, correction and learning

Category Captains The best and biggest suppliers having a pan market presence are appointed by several retailers as Category Captains The Category Captain will be expected to have the closest and most regular contact with the retailer and will also be expected to invest time, effort, and often financial investment into the strategic development of the category within the retailer. The Category Captain is often - but not always! - the supplier with the largest turnover in the category.

The best and biggest suppliers having a pan market presence are appointed by several retailers as Category Captains

The Category Captain will be expected to have the closest and most regular contact with the retailer and will also be expected to invest time, effort, and often financial investment into the strategic development of the category within the retailer.

The Category Captain is often - but not always! - the supplier with the largest turnover in the category.