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Category Management
This document outlines the key aspects of category management. It discusses that category management is a process where categories are managed as strategic business units to maximize sales and profits. It involves defining categories, assessing performance, setting goals and strategies, implementing category plans, and ongoing review. Category management is a collaborative approach where retailers and suppliers work together to deliver value to consumers.
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Category Management
- 2. is an assortmentof items which the consumer may perceive as substitute for each other.
- 3. -is the processby which a retail business is managed with the objective of maximizing the sales and profits of a category.
- 4. - is adistributor/supplier process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value
- 5. Categories are managedas 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
- 6. Responsibility for category performance/ownershipis clearly defined and not fragmented across organization Category Management leverages distributor and supplier expertise for mutual benefit … neither party can do the job alone
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- 9. Categories are strategicbusiness units Overall company strategies provide a infrastructure for category level strategies Strategies must be clearly understood throughout the Retailer’s organization
- 11. A formal, disciplinedset of activities designed to produce a specified output Development and implementation of Written Category Business Plans
- 12. A tools thatdefines, measures and monitors the progress of Category Business Plans
- 13. Development of the organization’score competency Through organizational structure Roles/Responsibilities Skill/Knowledge development Reward Systems
- 14. Critical elements ofthe Category Business Planning Process Need data-driven, fact-based analysis and performance measurement
- 15. Relationships with suppliers whoacquire unique perspectives, resources and skills Common objective -- delivering superior consumer value more profitability
- 16. - Category Managementis 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.
- 18. Category Definition isthe 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?
- 19. The distributor (withsupplier 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:
- 20. To be theprimary 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
- 21. To be amajor 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
- 22. Category Assessment: Inthis 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
- 23. Establishment of theperformance 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).
- 24. Typical Category performance measuresinclude: 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
- 25. Assignment of specificstrategies 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.
- 26. The seven mosttypical category marketing strategies are: Traffic Building Transaction Building Turf Defending Profit Generating Cash Generating Excitement Creating Image Enhancing (Price, Quality, Service & Variety)
- 27. Specific activities supportingthe 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.
- 29. A specific implementationschedule is developed and responsibilities are assigned. Accurate implementation is the key to the success of the Category Management.
- 30. Key Components ofPlan Implementation Approval Process Strategic Fit Scorecard Impact Resource Allocation Impact on Other Areas Assigning Responsibilities Scheduling
- 31. Ongoing review andmeasurement of the progress of the plan toward the category role and scorecard, and modification of the plan when appropriate
- 32. Category captains isa 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.
- 34. The grocery industryis 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