Category Management

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Category Management

  1. 1. is an assortment of items which the consumer may perceive as substitute for each other.
  2. 2.  -is the process by which a retail business is managed with the objective of maximizing the sales and profits of a category.
  3. 3.  - is a distributor/supplier process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value
  4. 4.  Categories are managed as strategic business units  Categories are managed strategically through category plans and strategic roles  Category Managers control their share of company assets  Asset Returns measure performance and establish priorities
  5. 5.  Responsibility for category performance/ownership is clearly defined and not fragmented across organization  Category Management leverages distributor and supplier expertise for mutual benefit … neither party can do the job alone
  6. 6.  Strategy Business Process
  7. 7. Scorecard Organization Capability Information Technology Collaborative Relationships
  8. 8.  Categories are strategic business units  Overall company strategies provide a infrastructure for category level strategies  Strategies must be clearly understood throughout the Retailer’s organization
  9. 9.  A formal, disciplined set of activities designed to produce a specified output  Development and implementation of Written Category Business Plans
  10. 10.  A tools that defines, measures and monitors the progress of Category Business Plans
  11. 11.  Development of the organization’s core competency  Through organizational structure  Roles/Responsibilities  Skill/Knowledge development  Reward Systems
  12. 12.  Critical elements of the Category Business Planning Process  Need data-driven, fact-based analysis and performance measurement
  13. 13.  Relationships with suppliers who acquire unique perspectives, resources and skills  Common objective -- delivering superior consumer value more profitability
  14. 14. - Category Management is underpinned by a structured process which provides a framework for retailer & supplier to work together strategically. A formal 8step category management process was developed just over a decade ago by the Partnering Group.
  15. 15.  Category Definition is the 1st step in the procedure. The definition of the category has a significant impact on the subsequent steps. A category definition ought to be based on how the customer buys, and not on how the retailer buys.  The trading partners need to define the new category with a name  What is it?  What are the sub-categories?
  16. 16.  The distributor (with supplier input) would define the overall role the selected category is going to play in the distributor’s total business    How important is the category? How to leverage the importance? The category role determines the priority and the importance of the numerous categories in the overall enterprise. These aids in resource allocation. Traditionally, four categories have been identified. They are:
  17. 17.   To be the primary category provider and help define the retailer as the store of choice by delivering consistent, superior target consumer value  To be one of the preferred category providers and help develop the retailer as the store of choice by delivering consistent, competitive target consumer value 
  18. 18.  To be a major category provider, help reinforce the retailer as the store of choice by delivering frequent, competitive target consumer value  To be a category provider and help reinforce the retailer as the store of choice by delivering good target consumer value
  19. 19.  Category Assessment: In this step, the existing performance of the category is evaluated with respect to the turnover, profits and return on asses in the category. It involves an assessment of the buyers, the marketplace, the retailer and the suppliers.  The process of Category Assessment  Consumer Assessment  Market Assessment  Retailer Assessment  Supplier Assessment
  20. 20.  Establishment of the performance measures by which the category manager will measure the quality of the execution of the plan    What are the goals & objectives? How is the progress? The development of category performance measures involves the setting of measurable targets in terms of sales, margins and Gross Margin Returns on Investment (GMROI).
  21. 21.  Typical Category performance measures include:  Good performance measures are characterized by:  Sales   Profits A balanced Architecture of Measurement  Total system  Allow for comparison of Performance Over time  Timely, Accurate, Understanda ble Measures  Related to Corporate Strategy  Market Share  Inventory Turnover  Changes in the Assortment  Consumer Transactions
  22. 22.  Assignment of specific strategies to key elements of the overall category    What is the business plan? How will it achieve the role & scorecard? The purpose of this step is to help the retailer and supplier to develop methods that capitalize on category opportunities by means of creative and efficient use of the resources that are accessible to the category. Category strategies can be aimed at developing traffic or transactions, generating cash, generating profit, enhancing the image or developing excitement.
  23. 23.  The seven most typical category marketing strategies are:  Traffic Building  Transaction Building  Turf Defending  Profit Generating  Cash Generating  Excitement Creating  Image Enhancing (Price, Quality, Service & Variety)
  24. 24.  Specific activities supporting the category strategies which would include item variety, everyday and feature price targets, shelf presentation, etc.    What do we do to achieve the strategy? Who does what? Category tactics are developed in the areas of assortment pricing, promotions and the presentation of the merchandise in the store.
  25. 25.  A specific implementation schedule is developed and responsibilities are assigned. Accurate implementation is the key to the success of the Category Management.
  26. 26.  Key Components of Plan Implementation  Approval Process  Strategic Fit  Scorecard Impact  Resource Allocation  Impact on Other Areas  Assigning Responsibilities  Scheduling
  27. 27.  Ongoing review and measurement of the progress of the plan toward the category role and scorecard, and modification of the plan when appropriate
  28. 28.  Category captains is a supplier who forms an alliance with the retailer to enable the latter to develop consumer insight , satisfy consumers and improve performances and profit across the entire category.  Category captains receive downstream data for all SKUs, including competitor products, in the category they manage. The category captain advises the retailer on the best way to price, display, and promote all products in a category, including those of competitors. While this arrangement ensures retail efficiency, it does raise concerns about possible misuse of power by the category captain.
  29. 29.  The grocery industry is in a major state of transition. This change is a function of a complex mix of consumer, technological and market factors.  Category Management represents a business oriented approach to achieving business results -- both for distributors and suppliers

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