Category management process

Before the start of the joint category management project, potential partners meet for strategic coordination. Both sides prepare separately by setting out their organizational framework, goals and expectations in a strategy paper. This serves as the basis for a kick-off meeting at which the most important parameters for cooperation in the category management project are defined. The aim is to

identify, evaluate and ideally resolve potential conflicts at an early stage. Even if the coordination involves considerable effort for retailers and manufacturers, it helps to avoid future conflicts and delays and accelerate the project.

As part of the strategic coordination, all strategic, legal and organizational issues for the category management project were clarified so that operational implementation can now begin. In the next step of the 8-step process, the focus is on the category definition from the perspective of shoppers and consumers. The aim is to understand the needs and expectations of the category as well as the purchasing decision process. Another goal is to agree on the relevant articles and the structure of the category. This is based on category insights from quantitative and qualitative shopper and consumer research.

The third step in the 8-step category management process involves the assignment of the category role by the retailer. The role describes the strategic relevance of the category for the retail company, defines the priority of the categories in the portfolio and consequently determines the optimal allocation of resources. Category roles are based directly on shoppers' purchasing behavior - for a consistent focus on their needs. A clear category definition sets the medium-term framework for all category-related goals and is one of the most important strategic decisions in the category management process.

In the category assessment, sales growth potential is identified and prioritized. The process is divided into three phases:

1. Creation of a database
2. Calculation of growth potential and identification of key areas for analysis
3. Detailed analysis of the category building blocks

A fundamental understanding of the key shopper figures relevant to category management is the basis for all analyses within the scope of category evaluation.

In the fifth step of the process, the strategic direction of the category management process is determined and quantitative targets for the category are set.

The basis for this is the category strategy matrix, an analysis tool that was used to determine strategic fields of action in the fourth step and is now specified. The target definition is the basis for measuring category success and is looked at again in the eighth step, the category review.

Category tactics comprise four marketing instruments that are relevant to category management: Assortment, placement, promotion and communication. In this step, specific optimization measures are derived that contribute to the strategic objective. Starting with the "Assortment" tactic, those items are first identified that represent the optimal assortment for the retailer in question in the category. It is then transferred to an optimal shelf placement. Adjustments can be made several times until the ideal placement is found. In addition, sales promotion measures such as promotion and communication can be used to support the category objectives. Pricing is also an important aspect that retailers should consider.

In the penultimate step of the process, category implementation, the previously developed category plan is gradually implemented at the point of sale (PoS). This involves implementing changes to the product range and placement on the sales floor as well as activating promotions and communication measures. In other words, the measures developed in the category management process become visible to shoppers at the point of sale for the first time.

This step is often referred to as the "moment of truth": Only after implementation across the board can it be assessed whether the concepts have been well received by shoppers and whether the objectives have been achieved. In short: whether the category management cooperation was successful.

The final step of the 8-step category management process, the category review, is about evaluation: Have the category goals jointly defined as part of the cooperation been achieved? This is done by regularly comparing the current situation with the defined key figures from the strategic objective or using the target scorecard.