CHAPTER 14
CATEGORY MANAGEMENT
Learning Objectives
2
The concept of Category Management
The reasons for the emergence of Category
Management
The Category Management business process
The Concept Of Category Management
3
What is category management?
Category management is a retailer-supplier process
of managing categories as strategic business units
(SBU’s), producing enhanced results by focusing
on delivering consumer value’.
What is category?
A ‘category’ is a distinct manageable group of
products or services that consumer perceive to be
inter-related and/ or substitutable.
Classical Buying Vs Category
Management
4
Reasons For The Emergence Of Category
Management
5
Consumer Changes
Economic and Efficiency Considerations
Competitive Pressures
Information Technology Advances
Components Of Category Management
6
Category Management Business Process
7
Step 1: Category Definition
8
A distinct, manageable group of products/services
that consumers perceive to be interrelated and/or
substitutable in meeting a consumer need
Consumer’s perspective is the deciding factor
Defining Sub-categories
9
Some questions need be answered while defining
sub-categories-
What is the consumer need?
What provides a similar solution to the need?
What does the consumer see as substitutes?
What does the consumer see as inter-related?
Is the information measurable?
What is the group of products that comprise of the
category?
Category Structure
10
Step 2: Defining The Category Role
11
Destination Categories
Preferred/ Routine Category
Occasional/ Seasonal Category
Convenience Category
Step 3: Category Assessment
12
Evaluation with respect to the turnover
Profits
ROA & the consumers
The market
The retailer
The supplier
Analysing Product Categories
13
Analysing Product Categories Source: Indian Food Retailing Industry Insight, pg 8, October
2004
Step 4: Category Performance Measures
14
Sales
Profits
Market Share
Inventory Turnover
Changes in Assortment
Consumer Transactions
Step 5: Category Strategies
15
Traffic Building
Transaction Building
Turf Defending
Profit Generating
Cash Generating
Excitement Creating
Image Enhancing
Step 6: Category Tactics
16
Assortments
Pricing
Promotions
Merchandise Presentation
Step7: Category Plan Implementation
17
The Plan Approval Process
Assigning Responsibilities
Scheduling
Step 8: Category Review
18
Progress
Achievement
How often a business plan need be evaluated
The Role Of The Category Captain
19
The category captain is a supplier who forms an
alliance with the retailer to enable the latter to
develop consumer insight, satisfy consumers and
improve performance and profit across the entire
category.
The Category Management Process In The
Indian Context
20
Drawbacks Of Category Management
21
Full-scale adoption requires considerable amount
of reorganisation
Skills shortages
Difficulty in accepting suppliers as allies
Reluctance to change inappropriate organisational
structures
Lack of clear strategic plans
Lack of variety offered to customers
Threat to smaller suppliers
