When it comes to category management, you may know the seven essential components, but do you know how to implement each one?
To provide you with a better understanding of how important the 7 musts of true category management are in helping you grow your business, over the next several weeks we will be taking a closer look at each one.
First up, analytics.
Analytics, both basic and advanced, are at the heart of category management. As a roadmap to achieving your goals, they encompass all aspects of trade management, business planning, assortment analysis and consumer awareness. When applied correctly, they provide invaluable business insights and actionable recommendations.
Think of analytics as the facts needed to support business-making decisions. It can provide answers to pressing business questions that will help you better support your retailer partners and grow your brand.
The challenge is: Where to begin?
A good place to start is to work backwards from the questions you are trying to answer. What information do you need to answer your questions? What insights do you want from the data? Do you want visual results?
At this point, try not to get lost in the minutia. "Analysis paralysis" occurs when you try to analyze too much data, resulting in a waste of time and frustration.
The next step is to become familiar with the popular reports and reporting tools available. Here are four:
1. Distribution reports
Distribution reports help identify specific item voids at retail by showing items your retailers have in their chain and at store level (depending on the database you are using). The reports rarely identify competitive items.
While distribution reports identify all the items in stock, it's important to remember that not every item you sell should be distributed at every store. You never want to swap sales between top-selling items and slow-moving items. Also, it's important to have representation of your top-selling items across all retailers in the market. This helps your retailers to stay competitive.
2. Category overview reports
Category overview reports show the health of the category and the top selling brands and items driving sales.
3. Assortment reports
Assortment reports identify the items in distribution in a category ranked by sales. The purpose is to identify items that are contributing to the category's growth, as well as highlight slow-moving items that could potentially be discontinued. Caution: This report doesn't highlight the importance some products have in supporting other items. For example, corkscrews may be a slow-moving item but if you're selling wine they're critical.
4. Ranking reports
These reports rank the sales of different items in a category and can include a variety of different measures that will help you understand which items are contributing to growth and which are declining in sales. It also shows how key items are performing in the market (compared to your competition); if you are getting your fair share of sales of a top-selling item compared to your competition; how your pricing compares; and how the item is contributing to the growth of the category across other retailers.
The more comfortable you become with reading and understanding reports, the more valuable they become. Soon, you’ll be able to predict trends and identify opportunities for future success.
The key takeaway is that analytics will help you understand "why what is happening happened," which will give you greater insights into how the decisions you make today will affect your future growth.
What are your favorite reports and why?