CATEGORY MANAGEMENT
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CATEGORY MANAGEMENT
Category
CATEGORY
- is an assortment of items which the consumer may perceive as substitute for each other.
Category Management
CATEGORY MANAGEMENT
-is the process by which a retail business is managed with the objective of maximizing the sales and profits of a category.
Category Management
CATEGORY MANAGEMENT
- is a distributor/supplier process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value
The Concept of Category
Management 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
The Concept of Category Management
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
Six Components of Category
Management CORE COMPONENTS
(ESSENTIAL)
1. Strategy
2. Business Process
Six Components of Category
Management ENABLING COMPONENTS
(ASSISTING)
3. Scorecard
4. Organization Capability
5. Information Technology
6. Collaborative Relationships
Strategy
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
The Strategic Promotional Process
Business Process
A formal, disciplined set of activities designed to produce a specified output
Development and implementation of Written Category Business Plans
Scorecard
A tools that defines, measures and monitors the progress of Category Business Plans
Organizational Capability
Development of the organization’s core competency Through organizational
structure Roles/Responsibilities Skill/Knowledge development Reward Systems
Information Technology
Critical elements of the Category Business Planning Process Need data-driven, fact-based
analysis and performance measurement
Collaborative Relationships
Relationships with suppliers who acquire unique perspectives, resources and skills
Common objective -- delivering superior consumer value more profitability
The Category Management Process
THE CATEGORY MANAGEMENT PROCESS
- Category Management is underpinned by a structured process which provides a framework for retailer & supplier to work together strategically. A formal 8-step category management process was developed just over a decade ago by the Partnering Group.
The Category Management
Process
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?
Category Definition
Category Role
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:
Category Role- Components
DESTINATION
To be the primary category provider and help define the retailer as the store of choice by delivering consistent, superior target consumer value
ROUTINE
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
Category Role- Components
OCCASIONAL/SEASONAL
To be a major category provider, help reinforce the retailer as the store of choice by delivering frequent, competitive target consumer value
CONVENIENCE
To be a category provider and help reinforce the retailer as the store of choice by delivering good target consumer value
Category Assessment
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
Scorecard orCategory Performance Measures
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).
Scorecard orCategory Performance
Measures
Typical Category performance measures include:
Sales
Profits
Market Share
Inventory Turnover
Changes in the Assortment
Consumer Transactions
Good performance measures are characterized by:
A balanced Architecture of Measurement
Total system
Allow for comparison of Performance Over time
Timely, Accurate, Understandable Measures
Related to Corporate Strategy
Category Strategies
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.
Category Strategy –Components
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)
Category Tactics
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.
Category TacticsComponents
ASSORTMENT
PRICING
PROMOTION
SHELF PRESENTATION
PRODUCT SUPPLY
Plan Implementation
A specific implementation schedule is developed and responsibilities are assigned. Accurate implementation is the key to the success of the Category Management.
Plan Implementation
Key Components of Plan Implementation
Approval Process Strategic Fit Scorecard Impact Resource Allocation Impact on Other Areas
Assigning Responsibilities
Scheduling
Category Review
Ongoing review and measurement of the progress of the plan toward the category role and scorecard, and modification of the plan when appropriate
The Category Captain
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.
The category management 8-step process
Conclusion
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
PRESENTED BY: GROUP 8
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