Category Management Strategies and Tactics.
Category is an assortment of goods so as to ensure that the customer finds reasonable substitutes for each of the goods on display. Goods are categorized on the basis of similarities to consumer tastes, preferences & liking for its types.
The goods are priced, targeted & promoted based on a particular target customer base. Two retailers selling similar merchandise may have different set definitions & thus it is considered different categories of same product. For instance, one retailer divides its ‘apparel’ under gents, ladies, kids and infants category, while another may define categories in terms of brands like Polo figer be one category and Rivalry be the other.
So in short, whatever you base in by defining the category, it should ultimately suit the customers whose time & money is spent in buying their needs & wants.
Category Management is the process of managing retail business that merchandize category outputs rather than the contribution of individual brands or models. In short in arranges a group of products in SBU (Strategic Business Units) to serve the needs & demand of the customers better. As a matter of fact most emerging retailers are actually following this same model.
Category Management is the strategic management of various merchandise groups through trade tie ups and partnerships which aims to maximize turnover and profit by satisfying consumer needs and want. Category management is a process of managing product categories as separate SBU’s so that customization & satisfaction of customer needs is possible.
Why is Category Management Important?
- One more important reason why category management is important is because all items in the merchandise are not equally important for cost revenue generation for the retailer. Some may be of high value and some may be of low value with terms to profit margins. Hence there is a need to categorize the items into different sub-groups.
- Another fact was only a definite amount of profit could be obtained via price negotiations and that there was more profit to be made for purpose of increasing sales.
- Also the collaboration of suppliers would be made possible only and only when category management is being applied and used properly.
Significance of Category Management
- Increase in sales, good will & market share
- Proper care & devotion to each item of the merchandise
- Increase in sales leading to increasing turnover
- Maximize the shelf efficiencies
- Reduced inventory shrinkage
- Recognize the procurement opportunities
- Enhancement of customer knowledge levels
- Improvement on ROI’s
- Decrease in chance of an out of stock option
- Enhanced monetary return to marketing efforts
- Classification of brand performance as to good, bad & worst
- Purchase of merchandise becomes easy & cost effective
The 8 steps of Category Management Process are as Follows
- Category definition
- Category role
- Category assessment
- Category performance
- Category strategy
- Category tactics
- Category implementation
- Category revision
As of today category management is an important strategic plan, it becomes imperative for a supplier to revisit the dynamics of the category and the appropriate strategies and tactics. This will enable a supplier to measure performance against the appropriate