When it comes to category management, you may know the seven essential components, but do you know how to implement them? 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.
Category reviews serve as an appraisal of category performance. They provide the framework for retailers and manufacturers to work together in setting goals, expectations and strategic plans for future category growth.
Important because they assess the state of the category compared to the goals and objectives of the retailer and manufacturer, category reviews measure a category's growth for the retailer relative to their competitive market. The market can be used as the benchmark in assessing category performance, the goal then being to grow your category faster than the market to effectively take market share from your competition.
Said reviews should be held on a regular basis, typically annually. They should include an assessment of the segments, brands and item sales trends, as well as actionable insights that align with retailer objectives. Scorecards can be used to help obtain and measure category growth objectives and are the best way to benchmark category performance by specific objective.
These evaluations are great opportunities for retailers to take a leadership role in a manufacturers' category, and savvy retailers should take advantage of their vendors' expertise, leveraging it to help grow sustainable sales and compete more effectively against stores in any channel.
The basic components of a category review include:
- A topline overview outlining the health of the overall category by segment, brand and item
- A ranking report highlighting the growth of each item benchmarked against the market
- A promotion assessment—evaluation of promotional effectiveness
- A pricing assessment compared to local competitors
- A review of the schematic performance
- A scorecard to measure results against objectives
Some retailers have generic templates they expect manufacturers to complete. These can be a great conversation starter but typically lack real insight into what's driving sales in the category.
Here's where the manufacturer can be creative. Consumer/shopper insights can breathe new life into the typically boring category review. Seeking to better understanding category shoppers with strategic insights to meet their specific needs will grow sales more than adding an additional facing of a top-selling item.
The eight steps of the category management process will be covered in depth in future articles.