World-Class Category Management
All companies, whether retailer and manufacturer, are focused internally. Few go to the trouble of measuring themselves against others. One often hears a company assert their superiority in one functional area or the other only to find out that they have never benchmarked themselves against their peers. That certainly is the case in category management, where everyone claims to do a superior job but no one makes a concerted effort to ascertain their capabilities vs. the competition.
At the Category Management Association (CMA), we suggest a simple way to begin the process of self-assessment. Begin by looking at the “ideal outputs” of a superior category-management department. Does your current category-management group produce any of these ideal outputs listed below?
Internal Summary Documents
- Voice of the shopper by retail format. A compilation of shopper facts and insights assembled around a common taxonomy of who, what, why, where, when and how.
- Category-management platform. The brand or retailer’s strategies and recommended tactics assembled around the seven-step category-management process. This ensures alignment within the organization.
- Annual learning summary. A compilation of the most important trends, developments and information learned from the past year.
- Internal key account analysis and recommendation. A summary of the brand’s business situation in a key account or, in the case of a retailer, its situation in the category relative to the competition or to an internal scorecard. This covers trends in volume, share, assortment, pricing, category space allocation and promotion. The report should propose appropriate improvement objectives.
- Category insight summary. A summary of the primary insights upon which the company is basing its in-store and shopper efforts.
Key Analytical documents
- Line reviews. A document presented annually or semi-annually by manufacturers to their retailer counterparts or by retail management to their internal management that identifies trends important to the category and suggests appropriate responses to these trends.
- New-item opportunities and evaluation. Presentations that address how a manufacturer’s new items will better serve shoppers’ and retailers’ needs in a superior manner, thereby increasing category volume or profit. From a retailer’s perspective, this document addresses how new items accepted during the past year have fared or what new items are emerging in the category.
- Tactical success models. Key findings regarding successful approaches in the four primary category management tactics: assortment, pricing, shelf merchandising and promotion.
- Category/brand retail profit efficiency presentations. These documents calculate the company’s retail profitability using either GMROI (gross margin return on investment) or ABC (activity-based costing) profitability.
- Retail display optimization summary. A report that details findings about the most productive locations and types of in-store display by retail format.
- In store in stock analysis and recommendation. A report that summarizes brand and category in stock position in the context of the category competition. The report compares the effect of various plan-o-gram options and recommends an improvement plan.
- Retail loyalty-card analysis and program optimization. A report that summarizes major retailer trends in their loyalty-card programs in the category. It identifies implications for the category and recommends actions to improve the company’s position.