Category Management Foundations First; Collaboration Second

Collaboration is one of the buzzwords of 2014.  If your organization has “collaboration” as one of its key focus areas this year, you should ensure your category management foundations are right first.  In this blog, I’ve put together eight “essentials” required for more strategic category management.  These category management essentials will help create a platform from which collaboration will be much more achievable between retailers and suppliers.

1.  Know the Retailer’s Strategies:

The Retailer Strategy is an umbrella that drives all the different components of the Category Management process.  Without a well-articulated strategy, or without sharing retailer strategy with suppliers, category management success is much more difficult.  Here are a few of the questions to be addressed in a retailer’s strategies:

  1. What are the retailer’s goals and priorities, both short-term and long-term?
  2. What are the retailer’s principles around the tactics?
  3. Who are the retailer’s target shoppers?  Competitors?
  4. What are the retailer’s plans for Private Label brands?
  5. What are the retailer’s requirements in product supply?

These strategies create the rules & principles which guide decisions made internally as well as externally, to ensure a consistent approach to the business.  As a retailer, ensure you articulate and share your retailer strategies both internally and externally.  As a supplier, ensure that you understand and consider these strategies in all business plans.

2.  Know Your Data Sources:

Data is a required component in category management, and everyone who uses the data needs to understand how it’s derived, and the watchouts and strengths of each source.  For example, retailer POS data is the “queen” of data sources, but does not provide a benchmark of how the retailer is performing versus total market.  Consumer panel data is derived by a panel, has great measures that focus on consumer purchase behavior, but is limited when it comes to using the volumetric measures.  Train your team on available data sources, and provide easy access to it with easy to access and well-built reports.

3.  Segment Your Data Based on the Consumer Decision Tree:

By segmentation, I mean adding in fields to your actual item level database – whether it is supplier shipment data, retailer POS data, or 3rd party data – anywhere that you have access to item level information.  Then you have the opportunity to view your data in different ways, based on how the consumer looks at the category.  Without this information, you are limited in your category analysis based on the fields that may or may not be available to you.  I’ve seen many retailers where their data is only segmented to business unit, department and category level, and then the only field below the category level is supplier and item level information.  This limits the insights that a category manager can derive from their data.

4.  Know How to Drill Through Data:

This is a skill that takes some training and finessing, but one that will take you from “good” to “great” when analyzing data.  First, you need a great set of dynamic reports that allow you to quickly drilldown.  Always start at a category and market level, then drilling down through segments and geographies.  Look at different time periods – 52 weeks, 24 weeks, 12 weeks – to see short- and long-term trends.

5.  Understand and Use the Tactics To Drive Action:

This ties in to #4.  The tactics (price, promotion, shelving, assortment) influence volume and share within a category.  They need to be monitored, in order to understand how they impact volume growth or decline within a brand or category. Reports should tie in overall volume results with measures that indicate changes in the tactics (e.g. # of promotions, displays, shelf space vs year ago; price changes, etc.).  Once again, training is required to truly understand how to analyze the category tactics.

It’s important to consider that, for suppliers, the 4 P’s from a marketing perspective are different than the retailer’s perspective.  A supplier’s marketing team is primarily focused on the consumer, which is where only 30-50% of purchase decisions are made.  They need the support of retailers (through their 4 P’s) once consumers are in the store, to meet the needs of the retailer’s shoppers.  See Diagram 1 for more details.

Category Management Tactics

6.  Align All Functions In Your Organization:

Within some supplier organizations, there is a belief that sales and marketing should not be engaged in, or understand, category management.  In this scenario, category management resources are the only ones who “do” category management work.  Sales should be selling and marketing should be marketing.  Suppliers who seek a collaborative approach with their retailers need to engage their organization in the fundamentals of category management before they can be successful in true collaboration.  Proper and ongoing category management training should be available across functions for retailers and suppliers.

7.  No PowerPoint Decks!

Presentations need to have a proper flow, with a focus the customer’s conditions, needs, limitations and opportunities.  If you only present what is relevant to them, based on what is important to them, they will stay engaged. Many good ideas and solutions get lost in poorly built presentations that don’t focus on the customer’s priorities, but only on the idea and too much information.  Train your team on how to build proper presentations, and ban “decks”.

8.  Have a Plan and Desired Outcomes for Your Analysis Projects.

We’ve all been assigned projects in our professional careers – whether they are project requests from our manager, a peer, or a client – and through a meeting, a phone call, or an e-mail.  Translating the request to a project incorrectly can result in output that doesn’t meet the expectations.  This can easily be avoided by SLOWING DOWN, and creating a plan before “diving in” to complete the work.  Refer to the diagram below for an easy process to follow.

Category Management Analysis Process


These essentials touch on many different components of category management.  Without considering these elements within your role, your team, and ultimately your organization, your collaborative efforts may be more limited.

Category Management Knowledge Group provides category management courses and programs that will teach you, your team and your organization how to move ahead in some of these category management foundations.

Click here to access our one-hour webinar recording that covers each of these category management “essentials” in much more detail.


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