I use the term “True Category Management” to differentiate between the common perception of most as opposed to the measurable results Category Management can offer. The reality is that true Category Management, when done properly, can determine your level of success in the marketplace and so much more.
Category Management provides strategies to better connect with consumers, develop brands, manage trade spending, optimize product placement, and grow sales. Category Management is the science and art of combining business intelligence, logistics data, syndicated and POS data, consumer data, etc. to maximize business results. Category Management should touch every aspect of your business from research and development all the way through to the end consumer. It is the essential process that most companies either overlook or say they can't afford to invest in. This is particularly true in the natural organic channel.
Let's break down several of the components in Category Management:
Analytics: Analytics, both advanced and basic, are at the heart of category management. Analytics encompass all aspects of trade management, business planning, assortment analysis, consumer awareness, etc. Analytics go well beyond producing pretty charts and graphs. Analytics, when applied correctly, provide invaluable business insights and actionable recommendations. Analytics are the road map to achieving your goals.
Trade Marketing Support: Trade marketing encompasses all aspects of promotion, pricing, product placement, assortment, merchandising, and brand development. Trade marketing includes analysis of historical events and it also includes projections for future sales trends.
Consumer Insights: Consumer insights encompass all consumer and shopper-related information including consumer buying and shopping habits, etc. Consumer insights provide an invaluable look into customer needs and wants, allowing manufacturers and retailers to focus on strategies. From reducing long checkout lines to providing the best selection of merchandise at the best possible price, the ultimate goal is to improve customer satisfaction. Consumer insights lets you identify and then focus on the needs and wants of the people who want to purchase your products. Your ability to meet their needs will determine your success.
Database Management: Database management, also known as business intelligence, encompasses several different data sources including internal and external data sources, syndicated data, retailer point of sales data, consumer data, marketing data, etc. Talented category managers can help you manage all of the different data sources bringing them together in a useful way. This maximizes efficiencies within the organization while building a strong sales story to help you win at shelf.
Shelf Management: Shelf management encompasses product placement and merchandising on retailer shelves. Shelf management helps the retailer maximize sales per linear foot, drive foot traffic to their stores, increase customer shopping basket size, and have a competitive advantage in the marketplace they serve.
Category Reviews: Category reviews serve as a review of category performance. They provide the framework for retailers and manufacturers to work together in setting goals, expectations, and strategic plans for future category growth. Scorecards can be used to help obtain and measure category growth objectives.
Retail Sales Support: Category managers can and should support sales at retail. Category management should offer an unbiased objective with the purpose of increasing retailer’s sales. Category managers provide fact-based selling to help support the traditional sales efforts. A savvy brand realizes that their ability to help the retailers sell their products while growing the retailer’s category is a true win-win. Most retailers will work hard to support manufacturers willing to help them compete more effectively.
Category management truly is the glue that unites the different business functions. It helps retailers identify opportunities for sustainable growth, increased sales, and increased foot traffic. When done correctly, it grows brands.