At its core, the category management process is maintenance of the relationship between consumers, suppliers, and retailers. The 8-step process helps business owners maximize profitability by understanding data. It is an approach to inventory management in which businesses segment their spend into focused areas, then strategize, implement, and revise their organization. This is a true asset for retailers looking to increase sales, especially when a planogram can bring the whole process to life.
Building Blocks of Category Management
A thorough understanding of the 4 P’s is integral to successful category management. Sometimes called the “marketing mix,” the 4 P’s are Product (assortment), Price, Placement (shelf), and Promotions. These guiding principles help companies pinpoint several consumer data points. These include: What consumers might buy from them; how their products respond and reflect customer needs; how the products are perceived by the public; and how the products are unique from other companies’ products. Read more about the 4 P’s under Step 6 of the category management process.
The 8-Step Category Management Process
- Define Categories: Group products together that serve similar purposes. Consumers should easily make connections between products within a category.
- Assess Roles: Figure out how the category will work within the store and the larger portfolio. Common category roles include “destination,” “core,” “convenience,” and “seasonal.”
- Assess Performance: Conduct periodic reviews of each category’s performance, assess retailer sales data, and analyze big competitors.
- Set Objectives & Targets: Set goals for margin, sales, and volume. Track this in a Category Scorecard.
- Devise Strategies: Tailor strategies for each category to help improve performance. Specific strategies may include Transaction Building Strategy, Excitement Building Strategy, or Image Enhancing Strategy.
- Set Tactics (4 P’s): Product (assortment) – Retail buyers must include a proper number of SKUs that reflect the mission of the retailer. The proper amount is dependent on what the category’s role is for the store, and what it can communicate about diversity, necessity, or quality; Price – Price manipulation can be used as a strategy to interest shoppers; Placement (shelf) – The shelf should be easily shopped and sensibly arranged. This can relate to product sizing, or placing complementary items close to each other. A planogram can be especially helpful when targeting placement; Promotions – A promotional calendar increases margin dollars by category. This calendar should reflect the nature of the products and natural timelines for their purchase (i.e. promoting sunglasses in the summer).
- Implement: Put the plan from Steps 1-6 into action. A planogram is crucial at this stage. The designs produced with planogram software are often called the embodiment of Category Planning and Management.
- Review: An involved category management process benefits from frequent review and edits. The consumer environment is constantly in flux, and a retailer’s category planning should reflect those changing values.
A Planogram Can Help Increase Benefits of Category Management
Using a planogram in tandem with the category management process can be effective for putting the category management steps into practice. Planograms themselves can bring strategies and tactics to life. Additionally, planogram insights and reports can provide necessary data for a clearer path towards category management.
Scorpion planogram software’s gap analysis finds actionable gaps in assortment. This, in turn, can help increase profitability. The hotspot analysis highlights top performing products and products performing at the bottom of the data set. These planogram tools help maximize the 8 steps of category management. Make Steps 6 and 7 of category management, Implement and Review, easier with Scorpion planogram.