CATEGORY MANAGEMENT

DEFINITIONS

 Category
A distinct, manageable group of products/services that
consumers perceive to be interrelated and/or
substitutable in meeting a consumer’s needs.

 Category Management
The distributor/supplier process of managing categories
as strategic business units, producing enhanced
business results by focusing on delivering consumer
value.
 CONCEPTS
 CM involves “ organizing and managing a distinct group of products
or services which the consumer perceives to be interrelated or a
substitute.

 It involves managing promotions , merchandising and logistics so as

to generate and enhance the customer value.

 Examples – Tooth Paste / Bathing Soap / Hair oil / Shampoos.

 Each category is run as a mini business with its own set of turnover /
profitability targets and strategies

 Introduction of CM tends to alter relationship between supplier and

retailer from traditional to a collaborative approach ( sharing of info,
data , joint business building )
RATIONALE FOR CM
 Key Reason for introduction of CM was retailer’s desire for
supplier’s to add value to retailer’s business rather than supplier’s
own.

 Ex – In a category containing brand A & B , situation would arise

every time brand A would promote sales of B would come down
and vice versa.

 Introduction imposed that all actions undertaken like new

Products, Planogram, Promotions, visibility , POS, Advt, were
beneficial to both in terms of sales & Margin.

 Supplier’s expertise about market will help increase and build

category.
8 – STEP CATEGORY MANAGEMENT PROCESS
CATEGORY ROLE
Tactical levers Destination
* Primary provider of
these products
Product / Range Complete assortment,
across price points
   
Prime in-store location
Placement
Easily accessible
Price leader in high
perception sku’s (EDLP:
Competitive price
benchmarking)
Pricing
Balance sku’s to be
competitive
30 days
Features in every
Promotions
promotion communication Heavy use of in-store
Ease of accessibility
Store Design elements
Promotes touch & feel –
drives usage
Preferred Occasional Convenience
Primary provider of
Minimal variety ** Limited variety
these products
Broad assortment Smaller assortment of
Selective provider of
required across 1-2 highest volume SKUs
these products
price points within category
  Completes the shopping
basket
Near cash counter or in
Good in-store location Low space allocation “free spaces” in the store
Position next to traffic Position next to high
Adequate space
& transaction building margin market-basket
allocation
categories categories
Competitive pricing No-insult pricing Not Competition driven
Marginally lower than Matching price with
Drive margins
or equal to competition competition
Promotion cycle every
Attractive promotions,
Selective promotions,
not very frequent with
with vendor support
vendor support
signage
Generates excitement Spartan touch Available where needed
Within line of sight if
Pulls Customers/ Kids Provides bare essentials
possible
 CATEGORY SCORE CARD

 Score card is Report card of the category.

 Set Objectives
What you will do for the category?
What Themes you will run?
What do you want to achieve?
In terms of Category Tactics? Traffic Builder etc……
 Set Targets
 SALES
 MARGINS
 INVENTORY & STOCK TURNS
 PROMO SALES
 PL SALES
 FILL RATES.
SCORECARD
 Consumer Current Target
 Retention Level _______________ _______________
 Purchase Incidence _______________ _______________
 Satisfaction Rating _______________ _______________
 Share
 Category of Department _______________ _______________
 Category of Market _______________ _______________
 Sales
 Category $ _______________ _______________
 Growth _______________ _______________
 Sales/Sq. Ft/Week _______________ ______________
 Profit
 Gross Profit $ _______________ _______________
 Gross Margin _______________ _______________
 Gross Profit Sq. Ft/Week _______________ _______________

 Private Label
 Sales _______________ _______________
 % of Gross Profit _______________ _______________
 Gross Margin _______________ _______________

 Product Supply
 Days of Supply _______________ _______________
 Inventory $ _______________ _______________
 Turns _______________ _______________
 GMROI _______________ _______________
 Service Level _______________ _______________
CATEGORY TACTICS
CATEGORY CAPTAIN
 One particular supplier in a category is nominated by the retailer as a CC.

 He is the closest, and is in regular contact with the retailer.

 He is expected to invest time, effort , & often financial investment in to the

strategic development of the category within the retailer.

 He will help in deciding the range and promotions.

 In return, the supplier will gain a more influential voice with the retailer.

 The CC is often the supplier with largest turnover in the category.

 Recently this role has been switched on to PL supplier.

 The supplier is granted access to a greater wealth of data sharing.

CATEGORY MANAGEMENT BUSINESS PROCESS

Define cat
Identify &  Space Planning
Analyze suppliers Range Planning
Cat Role Assortment
Category Mix

Category
Business
Process

 Planning Cat Strategy

Implementation
& Cat Tactics
Review
RETAIL IS DETAIL
THANK YOU