Find Out: ‘What Is Category Management?’ and ‘How to Bake a Better Pie’
Some say Category Management is dead, others say it’s very much alive. We agree with the latter. True Category Management lives and breathes each day. Click the links below, to find out how to bake a better Category pie:
- ‘Flaky’ Pastry Thinking
- If the ‘Choux’ Pastry Fits
- Filo Facts
- Shortcrust or Short-term
- Puff out your Chest Pastry
- [In] Hot Water Crust Pastry
Category Management is not something to only consider every six months. It should never be the last minute afterthought ahead of an important meeting. It is a continuous process. Rushing it will only waste time and money. It will only lead to false insights into the category and its shoppers.
Here at MBM, we have seen many companies experiment with Category Management. They might buy some data and produce some charts and tables for a presentation. However, it will often result in flaky interpretations. Insight shaped to a specific agenda. Typically, it is still the thinking ‘of old’. Production Push mentality still hasn’t moved to Consumer Pull. To put it another way, the consumer is not at the centre of the decision making.
The Category Management Model below explains how this has changed over time:
A ‘production push’ historically drove grocery sales. The supply chain decided what they wanted to make or grow. Now, by using data to drive strategy, this has changed. Decisions made by Category Managers are based on two key things:
- Meeting a consumer need
Because of this, consumer demand now drives sales. We like to call this ‘consumer pull’. Through data, consumers are telling us what they want to buy. It is the role of the supply chain to interpret and respond to this.
Historically, categories would contain lots of brands from different suppliers. The situation would arise that every time brand X promoted its products, the sales of brand Y would go down. One benefited at the expense of the other. They were competing with each other. There was, however, no net gain for the retailer.
The retailing concept of Category Management (Cat Man) or Category Planning originated in the late 1980’s. It followed the research of Brian F. Harris, a former professor at the University of Southern California. It changed in the way retailers and suppliers worked. Instead of competing with each other, it encouraged suppliers to work together with a focus on the consumer when making retail decisions.
For the first time, the retailer grouped the range of products offered for sale together. They were grouped into similar or related products, subgroups, based upon the consumer need that they met. The management of these ‘product categories’ treats them as a strategic business unit (SBU), and no longer as stand-alone products or brands. Now, the retailer monitors the profitability of the whole category and not just individual products. Now ‘Canned Soup’, for example, is one unit. This allows maximisation of mutual profits and better meets consumer needs.
Category Management should no longer occur in isolation once every six months. Working together is a key part of day-to-day product management. There should be a relationship of trust, and the sharing of data, insight, and ideas. Gone are the days of oppositional relationships between suppliers and retailers.
The 8 Step Cycle:
The industry standard process for Category Management is the 8-Step Cycle. It was originally developed by Brian F. Harris with the Partnering Group in 1997. Sometimes called the ‘Brian Harris Model’, it is a formal and structured category plan:
Free Download of Category Management Competency Frameworks
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Now we know the definition of what is Category Management, we need to appreciate the differences to its sister ‘Marketing’. This is often seen as an analytical difference, Category Management is about understanding data and facts to drive change and by contrast shopper marketing is more about understanding emotions or motivations to drive change.
True Category Management, whilst data led, is also about mind set and living in the shoppers, preparers and eaters shoes and then validating or identifying opportunities. These in turn then drive total category sales not just the suppliers own product mix. In this age of data we are both fortunate and unfortunate in the amount of information we have available. At no time in history have we had access to more ‘data’. Retailers have got wise to this giving suppliers ‘the reins’ on data and research acquisition, analysis and insight generation. Meaning their expertise about the market and available resources (people) could be leveraged. A symbiotic relationship is still required for no matter how good the analysis, observations or insights generated, there still needs to be a two way relationship to then allow anything to happen.
Imagine a pie, the pie is a category and is often supplied by multiple companies, varying sizes of slices make up the whole supply requirements. It is intrinsically the NAM’s – National Account Managers role to negotiate on the size of their slice and this will fluctuate over time as deals are won and lost in tenders, supply base rationalisations and changes in distribution shares. The overall pie stays roughly the same size in terms of sales value or volume.
The role of the Category Manager has a different agenda to the NAM, albeit still on the same payroll. The Category Manager has the potential to grow the whole pie. Thus giving exponential growth opportunities beyond the 5-10% +/- fluxes in slice size that are often see over a 3 year period for any given supplier. They truly know what is Category Management and how to leverage the opportunities within a category to achieve supplier excellence.
It’s a brave company that invests in its people to grow their competitor’s sales …or is it? That is the underlining issue with good Category Management and why some companies see it as a reason not to adopt its core principals. Yet looking beyond this will deliver not only sales and profit increases for all those involved, but often those immeasurable benefits.
Category Captaincy and such associated titles, where a supplier as a whole is recognised and rewarded for their efforts. At a basic level this is ‘first port of call’ for advice on category direction by the retailer, through to ‘preferred’ supplier of new launches and the intangible inner circle of trust where the ‘heads up’ is given on pending opportunities, tenders and requirements. Hopefully you have a clearer understanding of what is Category Management, how about considering your next step:
- Are you new to Category Management or want to understand what is Category Management & what great looks like? – Assess your category using our scorecard.
- Would you like to generate sustainable growth for your category through better Category Training and insight generation? – How about investing in a 1/2 day Masterclass?
- Are you already in Category Management and would like to improve your Category Manager Training and/or learn new Category Management Techniques? – See our Category Management Academy training programme
- If you want to share your thoughts or discuss improving your skills, then click contact us or comment below!
For further tips and information, you can take a look at our Ultimate Guide to Category Management and our Category Management YouTube Channel. Also, check out our award-winning blog to see more Category Management tips and articles.