The third step in eight toward mastering category management, category appraisal is similar to your yearly physical exam in that it provides a complete assessment of the category’s overall health.
Just like an airplane changes course continually as the wind blows, you frequently need to make several minor adjustments to achieve your targeted results while working toward a goal. Without continually assessing the plane’s flight status and tweaking accordingly, it would never reach its final destination. This is also true in retail and why this step is so important.
Retailers should assess their categories annually. Manufacturers should provide a complete category review each time they have a top-to-top meeting with a retailer, offering mini category reviews whenever they introduce a new item. This should always assess the category performance at the retailer, within the market and across different outlets.
Category assessment focuses on the five Ps: product, placement, pricing, promotion and people.
1. Product assessment
The product assessment includes an evaluation of the number of items they sell in each category and segment. Retail space is limited. Retailers typically require that a manufacturer recommend items to be discontinued with new item recommendations—discontinuing one item for each new item they gain distribution on. It is critical that retailers offer the "right" products that consumers want to buy.
The category schematic is used to help a retailer manage their item selection. It is key to the category's overall health and can be an effective way to market to consumers, making their shopping trip more convenient.
2. Placement assessment
Merchandising is crucial to any brand's survival. Customers won't purchase what they can't find. Poor merchandising sends the wrong message to shoppers. Retailers want to be viewed as having a good selection of the market's top selling items in addition to unique items that differentiate them from their competition.
3. Pricing assessment
Pricing compares the average, everyday price as well as the promoted price for each item against the competition. Price is a huge motivator for consumers. Retailers need to offer a fair price that will encourage consumers to shop often while also making a fair profit.
4. Promotional assessment
The promotional summary measures the overall results of promotions at the retailer. It compares the category to the market to determine the amount and effectiveness of each promotion along with the impact each had on the category. This step identifies which segments are over or under promoted and offers recommendations to help the retailer take a leadership role in the market.
5. People assessment
Consumer perception drives sales with any retailer. Retailers with a limited selection, poor merchandising, high prices and ineffective promotions are doomed to close their doors. All of these areas need to consider the customer first. Many retailers make the mistake of taking the shopper for granted or not valuing their needs. Consumers want stores that are friendly and easy to shop. Manufacturers should help retailers leverage their brand strategies to grow sustainable sales.