Category Management is a process that involves the strategic management of product groups with a goal to increase customer satisfaction, sales and profitability for the retailer. Product groups in this context are defined as a group of SKUs that match a similar consumer need such as Dishwasher Detergent or Toothpaste.
When utilizing Category Management, roles usually titled ‘Category Manager’ are created to give responsibility for a set of product groups. A Category Manager runs their business like a mini strategic business unit, always on the look for opportunities to improve sales and profit results as this is what they are typically measured on. They achieve this through the levers of assortment selection (the products that will be listed), price decisions, promotions and merchandising.
In the absence of category management, the retailer is more than likely influenced by vendor relationships and their own intuition rather than data. In this case, the retailer is missing an opportunity to improve customer satisfaction, sales, and profitability. As an example, if the next promotion simply replaced one brand’s SKUs sales with another, the only one who benefits is supplier of the new brand.
Category management requires you to have an in depth understanding of every aspect of your assigned categories. The category manager is required to become an expert in sales and profit generation, the supply side and the supplier community and the competitors within the industry. The category manager must understand trends within their business, potential new innovation options, and the relative strength of suppliers. It is only then that this in depth knowledge will translate into better business management, working to increase customer satisfaction and having the most information you can possibly have to ensure you are in the best position to negotiate effectively for your organization
The implementation of category management requires: Senior leadership/ownership alignment, Role design, Job expectations and accountabilities, Talent matching, People development, balanced portfolios, Tools and Processes. If you want to improve your category management through a consulting engagement, ToolBox Solutions is here to help you!Tags: assortment selection, category management, category management reporting, category manager, merchandising, retail analytics, retailer