Description
Category management is a retailing and purchasing concept in which the range of products purchased by a business organization or sold by a retailer is broken down into discrete groups of similar or related products
Category Management
Category Management
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The distributors/ supplier process of managing categories as strategic business units producing enhanced business results by focusing on delivering consumer value. Category is a basic unit of analysis for making merchandising decisions. Category management is an assortment of items that the customer sees as reasonable substitutes for each other.
Importance of Category Management
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It’s the new science in the category management. To measure the product offering in terms of sales, cost, and return as per Sq ft. To reduce the cost control, inventory level and replenish stock efficiently led to the concept of efficient consumer response. ECR. Right decision making based on complex analysis of consumer data and market level syndicated data. Replaces the brand bias that stem from a suppliers interest in maximising market share with objective view based on consumer desire.
Philosophy of Category management
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Firstly It is philosophy for strategically managing a suppliers business that recognises categories as strategic business units for the purposes of planning & achieving sales and profit goals. The process through which lifestyle store & suppliers jointly develop strategic category plan These plan usually set on annual basis set clearly defined strategies & financial performance measures at the category level. It dictates the integration of responsibility for buying & merchandising decision .The integration allows category managers to effectively allocate the asset of product inventory space & customer traffic.
Emergence of Category Management
?
Consumer changes Category management concept focus on a better understanding of consumer needs as the basis for life style & suppliers. Category management helps to identify lack of connection by emphasising that consumer defined needs and their solutions should be at the heart of decision on how product and categories are marketed. Eg A customer buying Pizza may look for Frozen pizzas, pizza bases& sauces or ready to eat & ready to cook , However consumer is only interested in opting for pizza , Rarely does a consumer define his needs so specifically. It need to determined whether it is advisable to ve different people looking into the buying of three different pizza offering / should one person look at consumer need for consuming pizza & then look at the consumer needs for consuming a pizza & look at various options to satisfy them.
Competitive Pressure
?
The emergence of new formats & category killers & the breaking down of global boundaries requires lifestyle stores to become more competitive In specialty store a category identifies opportunity and exploit it, by offering superior consumer value in that category.
Economic & efficiency consideration.
?
Factors like slow growth of domestic economy, A decline in the birth rate and inflation critically affect the cost incurred by the companies. The increasing pressure on the margin and profitability makes it necessary for the retailer and their suppliers to focus on controlling of costs. The advantages of size can now possible in areas such as centralised purchasing & direct marketing.
Advances in information technology
?
Information technology now makes it possible for the lifestyle shops & suppliers to share the information and change collective business practices in away that were unimaginable in the past. These advances ve affected the capabilities of and suppliers to obtain organise, and acsess, analyse & act upon the data required for effective category managerment. CM provides business process lead to effective deployment of new skill & information sources, without neglecting to provide for the security consideration of protecting properties data.
Components of Category management
?
?
?
There are 6 component of CM Two are the core components The 4 are necessary to enable the process.
Performance Measurement
Strategy
Business Process
Organisational capabilities Information Technology
Trading Partner Relationship
Strategy is linked to overall mission & Goal, Business process is a result of these strategies
The Category management Business Process
?
Steps in CM
CATEGORY DEFINITION CATEGORY ROLE CATEGORY ASSESSMENT
Category Review CATEGORY SCORECARD CATEGORY STRATEGY
CATEGORY TACTICS
PLAN IMPLEMENTATION
Category Definition
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?
?
?
?
A distinct manageable group of products /services that consumers perceive to be interrelated and /or substitutable in meeting a consumer need. Category definition is based on how the customer buys and not on how the lifestyle store buys Before the deals gets finalised both lifestyle store & suppliers should ve a common understanding of the word category. The category definition should include all pdts that are either highly substitutable or closely replaced. It defines how consumer typically make purchasing decision within the category.
Category Role
?
?
It determines the priority and the importance of various categories in the overall business. .This essentially serves as the basis for resources allocation. Typically the assignment of the role is done after taking into account the consumer distributor suppliers and the market place. If a category is composed of largely of premium brands then most of the brand in the category are should be quite profitable on the other hand the category is comprised mostly of value and own label brands, then the opportunity to obtain higher profit margin will be lower for both the lifestyle store and suppliers. While determining the category role the life style should also take into consideration the role that will be played by the category in the store.
Consumer based Category Role
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Destination category (first choice for specific
pdt).
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?
?
Preferred Category/Routine (50 – 60%) ve a preferred role Occasional Category (Marriage /new year/B`days) Convenience Category (Accessories)
Category Assessment
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?
Category evaluated with respect to turnover profits and return on asset in the category . The aim of consumer assessment should be to understand the purpose or the reason behind consumer shopping behavior ,the factor influencing them like price, packaging & promotion and the process that they undergo while buying. The purpose of the assessment of categories is to identify where the biggest turnover profit and return on asset improvement opportunities exist in the category that there is there a gap between the chosen category role and the current performance level of the category
Analysing product categories
Sleepers -identify key pdts -Quick movers with more shelve space. -Remove slow movers & marginal pdt ? Questionable -limit pdt mix -Look for price raises -Transfer to third parties ? Winner Continue current policies Optimise margin mix Minimum operational problem like out of stock. ? Opportunities -Maximise shelf space at category level -Give promotional support
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Category performance Measures
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Sales increase in sales the growth last year the sales Sqft. Gross margin Net margin Profit Gross profit in rupees Market share. Market share within the said market. Inventory Turn over Turn over of stock achieved Consumer Transaction Bill penetration of category in terms of number of invoice Changes in the assortment.
Category Strategies
The purpose of this step in the category business is the supplier and Marketer should develop strategies that capitalise on the category opportunities through creative & efficient use of the resources There are seven most typical category marketing strategies. 1.Traffic Building Suitable for PDT which ve high amount of price awareness & household penetration & require frequent purchase. 2.Transaction Building Increase the size of the average transaction in the category or total store transaction Ex pdt attractive to large families
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Seven most typical category marketing
?
?
? ?
?
3 Turf Building Strategy of aggressively positioning certain parts of the category to protect it from the competitors These pdt are highly price sensitive and are also frequently promoted by the competition. 4 Profit generating Focus on the category to generate profit. 5 Cash generating Cash pdts fast turning. Excitement Creating To communicate the sense of urgency or opportunity to customer. 6 Imaging enhancing A category which help the marketer to communicate its desired image to the consumer in one or more image areas like
Price, Service, Quality, variety
There are seven most typical category marketing
7 Category Tactics Tactics works towards the determination of optimal pricing , promotion assortment & shelf management that are necessary to achieve the agreed role score card and strategies. Category tactics are developed in the areas of assortment , pricing promotion & presentation of merchandise in the store. The supplier plays a vital role by amount of value addition by assisting marketer develop strategies depending on the role of a category. Eg PDT may play a destination role for a marketer and a convenience role for another. Eg Heath & beauty care category might develop strategy 1 Super market choosing a convenience role. 2.Life style Hyper For the preferred Role\ 3.A drug store choosing a destination role
There are seven most typical category marketing
?
?
?
?
Category plan implementation & Review. Accurate implementation is the key to the success of category management. Review the progress and actual achievement of target set for the category. The need of category plan to be evaluated,
Does Category Management Works ?
doc_449234043.ppt
Category management is a retailing and purchasing concept in which the range of products purchased by a business organization or sold by a retailer is broken down into discrete groups of similar or related products
Category Management
Category Management
?
?
?
The distributors/ supplier process of managing categories as strategic business units producing enhanced business results by focusing on delivering consumer value. Category is a basic unit of analysis for making merchandising decisions. Category management is an assortment of items that the customer sees as reasonable substitutes for each other.
Importance of Category Management
? ?
?
?
?
It’s the new science in the category management. To measure the product offering in terms of sales, cost, and return as per Sq ft. To reduce the cost control, inventory level and replenish stock efficiently led to the concept of efficient consumer response. ECR. Right decision making based on complex analysis of consumer data and market level syndicated data. Replaces the brand bias that stem from a suppliers interest in maximising market share with objective view based on consumer desire.
Philosophy of Category management
?
?
?
Firstly It is philosophy for strategically managing a suppliers business that recognises categories as strategic business units for the purposes of planning & achieving sales and profit goals. The process through which lifestyle store & suppliers jointly develop strategic category plan These plan usually set on annual basis set clearly defined strategies & financial performance measures at the category level. It dictates the integration of responsibility for buying & merchandising decision .The integration allows category managers to effectively allocate the asset of product inventory space & customer traffic.
Emergence of Category Management
?
Consumer changes Category management concept focus on a better understanding of consumer needs as the basis for life style & suppliers. Category management helps to identify lack of connection by emphasising that consumer defined needs and their solutions should be at the heart of decision on how product and categories are marketed. Eg A customer buying Pizza may look for Frozen pizzas, pizza bases& sauces or ready to eat & ready to cook , However consumer is only interested in opting for pizza , Rarely does a consumer define his needs so specifically. It need to determined whether it is advisable to ve different people looking into the buying of three different pizza offering / should one person look at consumer need for consuming pizza & then look at the consumer needs for consuming a pizza & look at various options to satisfy them.
Competitive Pressure
?
The emergence of new formats & category killers & the breaking down of global boundaries requires lifestyle stores to become more competitive In specialty store a category identifies opportunity and exploit it, by offering superior consumer value in that category.
Economic & efficiency consideration.
?
Factors like slow growth of domestic economy, A decline in the birth rate and inflation critically affect the cost incurred by the companies. The increasing pressure on the margin and profitability makes it necessary for the retailer and their suppliers to focus on controlling of costs. The advantages of size can now possible in areas such as centralised purchasing & direct marketing.
Advances in information technology
?
Information technology now makes it possible for the lifestyle shops & suppliers to share the information and change collective business practices in away that were unimaginable in the past. These advances ve affected the capabilities of and suppliers to obtain organise, and acsess, analyse & act upon the data required for effective category managerment. CM provides business process lead to effective deployment of new skill & information sources, without neglecting to provide for the security consideration of protecting properties data.
Components of Category management
?
?
?
There are 6 component of CM Two are the core components The 4 are necessary to enable the process.
Performance Measurement
Strategy
Business Process
Organisational capabilities Information Technology
Trading Partner Relationship
Strategy is linked to overall mission & Goal, Business process is a result of these strategies
The Category management Business Process
?
Steps in CM
CATEGORY DEFINITION CATEGORY ROLE CATEGORY ASSESSMENT
Category Review CATEGORY SCORECARD CATEGORY STRATEGY
CATEGORY TACTICS
PLAN IMPLEMENTATION
Category Definition
?
?
?
?
?
A distinct manageable group of products /services that consumers perceive to be interrelated and /or substitutable in meeting a consumer need. Category definition is based on how the customer buys and not on how the lifestyle store buys Before the deals gets finalised both lifestyle store & suppliers should ve a common understanding of the word category. The category definition should include all pdts that are either highly substitutable or closely replaced. It defines how consumer typically make purchasing decision within the category.
Category Role
?
?
It determines the priority and the importance of various categories in the overall business. .This essentially serves as the basis for resources allocation. Typically the assignment of the role is done after taking into account the consumer distributor suppliers and the market place. If a category is composed of largely of premium brands then most of the brand in the category are should be quite profitable on the other hand the category is comprised mostly of value and own label brands, then the opportunity to obtain higher profit margin will be lower for both the lifestyle store and suppliers. While determining the category role the life style should also take into consideration the role that will be played by the category in the store.
Consumer based Category Role
?
Destination category (first choice for specific
pdt).
?
?
?
Preferred Category/Routine (50 – 60%) ve a preferred role Occasional Category (Marriage /new year/B`days) Convenience Category (Accessories)
Category Assessment
? ?
?
Category evaluated with respect to turnover profits and return on asset in the category . The aim of consumer assessment should be to understand the purpose or the reason behind consumer shopping behavior ,the factor influencing them like price, packaging & promotion and the process that they undergo while buying. The purpose of the assessment of categories is to identify where the biggest turnover profit and return on asset improvement opportunities exist in the category that there is there a gap between the chosen category role and the current performance level of the category
Analysing product categories
Sleepers -identify key pdts -Quick movers with more shelve space. -Remove slow movers & marginal pdt ? Questionable -limit pdt mix -Look for price raises -Transfer to third parties ? Winner Continue current policies Optimise margin mix Minimum operational problem like out of stock. ? Opportunities -Maximise shelf space at category level -Give promotional support
?
Category performance Measures
?
? ? ? ? ?
?
Sales increase in sales the growth last year the sales Sqft. Gross margin Net margin Profit Gross profit in rupees Market share. Market share within the said market. Inventory Turn over Turn over of stock achieved Consumer Transaction Bill penetration of category in terms of number of invoice Changes in the assortment.
Category Strategies
The purpose of this step in the category business is the supplier and Marketer should develop strategies that capitalise on the category opportunities through creative & efficient use of the resources There are seven most typical category marketing strategies. 1.Traffic Building Suitable for PDT which ve high amount of price awareness & household penetration & require frequent purchase. 2.Transaction Building Increase the size of the average transaction in the category or total store transaction Ex pdt attractive to large families
?
Seven most typical category marketing
?
?
? ?
?
3 Turf Building Strategy of aggressively positioning certain parts of the category to protect it from the competitors These pdt are highly price sensitive and are also frequently promoted by the competition. 4 Profit generating Focus on the category to generate profit. 5 Cash generating Cash pdts fast turning. Excitement Creating To communicate the sense of urgency or opportunity to customer. 6 Imaging enhancing A category which help the marketer to communicate its desired image to the consumer in one or more image areas like
Price, Service, Quality, variety
There are seven most typical category marketing
7 Category Tactics Tactics works towards the determination of optimal pricing , promotion assortment & shelf management that are necessary to achieve the agreed role score card and strategies. Category tactics are developed in the areas of assortment , pricing promotion & presentation of merchandise in the store. The supplier plays a vital role by amount of value addition by assisting marketer develop strategies depending on the role of a category. Eg PDT may play a destination role for a marketer and a convenience role for another. Eg Heath & beauty care category might develop strategy 1 Super market choosing a convenience role. 2.Life style Hyper For the preferred Role\ 3.A drug store choosing a destination role
There are seven most typical category marketing
?
?
?
?
Category plan implementation & Review. Accurate implementation is the key to the success of category management. Review the progress and actual achievement of target set for the category. The need of category plan to be evaluated,
Does Category Management Works ?
doc_449234043.ppt