This is the second in a nine-part series exploring the components of true category management.
This step is perhaps the most important in the category management process; it's how you communicate your commitment to shoppers looking for your product—where you let them know you are committed to solving their problems and meeting their needs.
Categories are typically defined by retailers and syndicated data providers based on how they perceive it. Times have changed and consumers have a lot of choices when it comes to how they spend their hard earned money. These "tired old" category definitions may not resonate with all consumers.
For example, a new mother on her first shopping trip needs a lot of different items for her newborn. She is expected to know that she needs: diapers, wipe, baby food/formula, body wash, baby lotions, etc.—not an easy shopping strategy that may result in missing needed items.
Categories should be designed around the customers' needs or "need states." Need states focus on how consumers group, or organize, the items on their shopping list around their specific needs—a more shopper-friendly strategy that caters to meeting consumer needs.
For our example, this would entail a "baby and infant needs category" encompassing all the items a parent requires for their child. Think of it as a single destination within a store that is consumer-focused on a specific need or need state.
Another example is a "meal solutions category" combining prepared entrees with side dishes.
A customer shopping these categories will be more apt to spend more in fewer trips because this strategy offers real solutions that help shoppers get all of the items on their shopping list on a single trip—along with additional items they forgot to write down.
Sub-categories are the next level, including baby cleaning products, baby skin care products, etc. Segments can be added to capture the different product breakouts within the subcategories: shampoo, conditioner, detangler, etc.
Manufacturers and retailers use a "consumer decision tree" to help them properly categorize items. Similar to a flow chart, the consumer decision tree identifies the choices consumers make when they enter a category. First, they choose the baby and infant needs category. They then choose the baby cleaning sub-category. Next they choose baby shampoo, and then finally their favorite brand/size/scent.
Properly defining the category is critical. It confirms the commitment you make to addressing shoppers' needs and can differentiate you from your competition.