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4- Category Management

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2 views

4- Category Management

Uploaded by

andiswa2005nkosi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CATEGORY

MANAGEMENT
RTMM201
CATEGORY
 Describes a group of merchandise items that are either
substitutable or c omplementary to eac h other.
 Customers would generally be pleased to find all the
options that they would be interested in loca ted close
together.
 A retailer’s merchandise assortment is often described in terms
of the number of c ategories that the retailer has on offer.
CATEGORY MANAGEMENT
 Category management is a strategic way of managing
products used by both suppliers and retailers.
 The Institute of Grocery Distribution (IGD) defines category
management as “the strategic management of product
groups through trade partnerships which aim to maximise sales
and profit by satisfying c onsumer and shopper needs” .
 It is a method of managing products according to customer
shopping behaviour.
CATEGORY MANAGEMENT

 Process of organizing categories as independent


business units, aimed at producing business results. The
ultimate focus here would be on delivering customer
value, by providing customers with what they want,
where they want it, and when they want it. Products are
grouped into categories according to how they are used,
consumer or purchased (dotActiv 2018)
GOAL OF CATEGORY MANAGEMENT
 To gain long term improvements in retail efficiency,
leading to increased sales, an improved shopping
environment and customer loyalty.
 Each category should be managed in a way that ensures
maximum customer appeal. In so doing profits are
improved.
 Category managers implement data-driven assortment
planning, competitive pricing, attractive promotions and
visually appealing planograms (Category managers decide
which products to sell, how much to charge, what discounts to offer,
and how to arrange items in stores or online).
CUSTOMER CENTRIC CATEGORY
MANAGEMENT
When the customer is the center of decisions, it impacts
on:
 Which products will be purchased
 How they will be grouped
 Where they will be displayed
 How they will be displayed
-The actual product (size, weight, use , quantity)
-Price
-Marketing message
-Location
CATEGORY CAPTAIN

• A category captain is often appointed to manage a particular


category. This concept is more common in the area of fast
moving consumer goods (FMCG). The category captain would
be responsible for the profitability and ultimate succ ess of that
c ategory. C ould c ome from either the retailer or the supplier.
CATEGORY MANAGEMENT 6 STEP
PROCESS – STEP 1
• Define your categories – Put yourself in your customers
shoes and imagine how they ‘see’ a particular category. Or
think of it in terms of the customer need that it should
satisfy. The purpose of this is to break products down into
manageable groups.
For example, allocating categories for cold drinks might
involve, price, occasion, packaging and product content.
SIX STEP PROCESS
STEP 2- CATEGORY ROLE
2. Category role – determine the role of the category you
have defined.
• The category role positions the category in relation to all the
other categories in the store.
• It prioritizes the category.
• It defines how the category will be used to achieve business
objectives.
• It helps to drive decisions on price, promotion, product
assortment and store location.
STEP 2- CATEGORY ROLE CONT.
• Destination when a retailer wants to be the primary category
provider for a particular category (approx. 90% market share).
Aim to deliver superior value. Customers will be more likely to
visit this retailer for this category.

• Preferred or routine – preferred category provider. Broad range,


with consistent service and competitive prices.
• Occasional or seasonal – a timely range offered at certain seasons
of the year. E.g. swimwear.
• Convenience category– offering products for one-stop shopping.
Can be priced higher as customers pay for the location.
STEP 3 – INSIGHT GENERATION
3. - Relies on customer research, sales data and in-depth analysis.
Retailers that have access to additional information have a great
advantage.
• Market assessment – U s i n g m a r k e t d a t a How are
products performing within the target market? Comparison
with competitors is important.
• Consumer assessment – Understand the purchasing
behavior of customers. Why are they behaving the way they
do?
• Category assessment – analyzing the sub-categories and
segments with respect to sales, profits, returns etc. How to
improve categories with respect to pricing, placement and
promotion.
STEP 4 – STRATEGIC AND TACTICAL
PLANNING
4.-Examine strategies to deliver on your category role:

• Category strategies –strategies are developed to deliver on


the category role. Strategies determine the focus of the
assortment, enhancing strengths, combating threats and
creating opportunities. Six basic drivers –building traffic and
transactions, generating profit, creating excitement and
enhancing image.
• Category tactics –working on product assortment, pricing,
promotion and merchandising.
PERFORMANCE INDICATORS
Traffic •Products that gain the attention of large numbers of customers.

Spend or transaction •Used to generate extra spend once the customer is in the store.
Builders Promotions can be used.

•Where price ceases to be a factor and the retailer can make a good profit.
Profit Builders Merchandising in high traffic areas to encourage the sale of high margin
products.

Edge C reators •Products that differentiate the store from its competition.

Loyalty Builders •Products that keep the customer returning


STEP 5 – INITIATIVE DEVELOPMENT
STEP 6 – PLAN LAUNCH
• 5. – Assess the cost of your plan against the potential
benefits.
Implementation follows. Easier said than done. You need to
have buy-in from all parties. Needs to be well planned.

• 6. – Plan Launch.
Roll out your plan according to a well planned schedule.
Planogram comes into play. Ensure that everything is
accurate.
Category review – Monitor, measure make changes,
maintain and move forward.
PLANOGRAM
 A visual aid that is used to represent the layout of a category
within the store.
 An efficient merchandising tool when it comes to layout and display.
PLANOGRAM CONT.
Planograms are helpful to retailers for the following reasons:
• They help make sure that every square meter of space is
used in the best possible way.
• They assist with giving the store an attractive look, which
appeals to the customer and keeps them satisfied.
• They improve inventory control and this helps to make sure
that out-of-stocks are less frequent.
• They assist with the replenishment or filling up of stock.
• They help position products in the best way.

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