Category management

The concept of category management or category management referred to in marketing the structuring of a business establishment in stationary retail according to the principle of departments. These are created by using market research analysis of manufacturers and trade.

• 2.1 Category
• 2.2 Category Manager
• 2.3 Category Management process
• 2.4 Category - Captain
• 2.5 Support by ECR

Definition

Historical development

The concept of category management came in the early 1990s to the United States. The emergence of this concept is linked to the previous development of scanner technology. In 1995, practicing according to the study " ECR Tracking Survey 1995 ," the consulting firm Kurt Salomon Associates in the U.S., some 37% and in Europe about 19 % of the companies Category Management.

Definition

The term category management of a collaboration between industry and trade are summarized in theory and practice approaches, whose essential feature is the control of merchandise categories as strategic business units ( SBU). Some authors see this as " an instrument of commerce strategic and operational assortment and inventory management (...) to plan and control that provides the Category Manager with the utmost responsibility for all purchasing and sales-related activities for a category and an intense, ( strategically and operationally oriented ) product group- related cooperation between manufacturers and retailers implied. "

The real novelty of this approach is the assignment of products to product groups to belong together from a consumer perspective groups of products. This leads to a restructuring of the company, away from the dichotomy of purchase and sale and toward an operation of the business by product group as strategic business units.

For the implementation of category management in the company is a nine-step planning process. For its implementation, the company mainly offer four strategies ( product mix, sales promotion, new product development and pricing ).

The Category Management approach aims to differentiate a company in its products by the decision taken by an individual consumer choice of the range of the offer of other commercial enterprises and so to promote their own sales and profits.

The approach can be found in the consumer goods industry in combination with the ECR concept its most common use.

Elements

Category

Groups of goods according to The assortment pyramid a compilation of articles dar. According to the approach of the Customer Need Management Categories are defined as follows: " products of which the customer believes that they belong together are grouped together as a group. " Since the Category Management a customer orientation is to be pursued, in particular lends itself to the principle of demand orientation to the formation of range units (departments, Categories ).

Another criterion of the formation of a category is the " autonomous unit ". Strategic Business Units are parts of the company, which operate independently of other fields of enterprise in an enterprising external market segment. However, there are some problems in the formation of merchandise categories as strategic business units in the trade:

• Depending on the assortment breadth and depth of the aggregation levels are different heights.
• In addition, it should be noted that the shopping oriented goods structure deviates from the given section of the structure and needs-based goods bundling usually. This represents a fundamental problem, because according to the category management inputs, sales and target group accountability should be summarized in the function of the Category Manager. For example, it was found that toys is often purchased in connection with animal feed; Not surprisingly, just families but often have pets.
• Ultimately, the group represents a part of the range of a trading operation with which this profiled in the competition. All were group-specific measures can therefore not be considered in isolation and analyzed by the place of purchase in its entirety.

Category Manager

Ideally, a category managers should bear the responsibility department. The most sources can be in the dark about what is to be in operation ( manufacturer or trade ) the Category Manager settled. As a trading company will not outsource the operation formative assortment policy, the Category Manager can be based only on the retail side. Cooperation with the individual manufacturers should take place in multi-functional category teams or Customer Business Development Groups, with whose members are partly housed in the trading company. Although some sources emphasize the fusion of purchase and sales tasks as areas of the Category Manager, see other authors the task of inventory management and purchasing not as typical ranges of the Category Manager.

As tasks of the Category Manager can be summarized:

• Goods group optimization to increase the " department profits " including purchasing and pricing policies;
• Space Management ( engl. space management) / DPR;
• Inventory management;
• Promotions: Promotions planning - implementation and control;
• Market basket analysis.

Category Management process

The Category Management process can be divided into five phases:

• Analysis of the group: the strengths and weaknesses with respect to range, prices, advertising, placement in the various retail outlets as well as measuring the " market share " based on a retail panel. The goods group revenue shares of individual articles are here compared with the average revenue shares in the respective group.
• Analysis of the potential customers: The following questions are the focus: " What customers buy frequently, which less frequently, which do not? How high is the share of total expenditure for the Category, to achieve the trading partner? What give customers and non-customers of the Category from among competitors? What they buy from competitors at what price? How often do customers buy when a trading partner, how often in the competition? " The competition-related data can be determined by household panel of market research institutes.
• Planning the strategy: Mainly two tools are here the category managers on issues of range expansion, price and placement changes are available:

• Use of the strategy in the test and control facilities; which is a known strategy of trade in the other.
• Evaluation of the results: Comparison of simulation with the practical results. Here, the market share changes in the individual items of a category are measured as positive or negative deviation of the mean calculated on the basis of retail panel data. - However, it remains unclear how the relative size of a category, understood as alternative purchase options, is weighted, because the change in sales of a product is dependent not only on item-specific promotions and related effects on the number of alternative products. - To illustrate: if the ketchup A 20 % "market share" or turnover of ketchup grades achieved in the retail outlet B, and if this is so is above or below the industry average, the average share of sales of that variety in each category other shopping sites, is not least dependent on the number of ketchup varieties in the shopping center B. Does this example, five ketchup varieties, while seven alternatives are offered in the industry average, it must be weighted the "market share". - Domains can be found in the CM literature no evidence.

Category Captain

For Category captain is usually appointed as the manufacturers with which, or with one of the largest market shares of a class of a commercial enterprise. He has the task of advising on the department control. The category captain has also taking into account competitive products in the assortment planning. This is highly questionable in light of the performance requirements for a sales or trade marketing manager, as these are, however, not be reimbursed for the success of those represented in the success of competing products. Say, a lack of independence and subjective decisions in favor of their own products could have a negative impact on the strategic recommendations.

Trading companies determine concretely a company as Category Captain to have a firm consultant who assists them in the selection decisions for the corresponding category. Since this category captain has very far-reaching information and market analysis on its category ( this is, after all its core competency while the category only a small part of the business from a retail company is ) it may, the trading company as well advised in making decisions. The retail company would have no Category Captain eg Create market and competitive analysis within the category itself or only buy what was not economical because of the expense and the prices of studies. The conflicting goals ( nature of the Category Captain tries to put its own products as well as possible ) is balanced by the expertise of the Category Manager that builds up over time in the trading business for the most part.

Support by ECR

The category management is viewed as an organizational requirement of a new form of cooperation between manufacturer and trading company, which stages an economic cross- improving value through effective customer orientation; aims Efficient Consumer Response ( ECR). A further development of category management is at the moment - from authors at the Harvard Business School ( Kracklauer / Mills / Seifert ) - discussed under the title "Collaborative CRM". Collaborative CRM opens up new avenues for trade and industry to work together to operate along the value chain, customer acquisition, customer retention and customer development. This is also based on the realization that merchant VA Have data on the " shoppers ", while the industry to customers as users of the products has better data.