CATEGORY MANAGEMENT–COMMON LANGUAGE BETWEEN RETAILERS AND MANUFACTURERS
In the world of retailers and manufacturers, the conflicts regarding the renewal of annual cooperation agreements are seemingly inescapable. While the next year’s negotiation has been activated, manufacturers and retailers must to cooperate closely to achieve the mutual goal Besides product cost, payment terms, listing fees, and product launching schedules, what other factors must be considered when manufacturers and retailers decide to work together? How can these contracts be renewed in an amicable manner that meets the needs of both manufacturer and retailer?
Category management has the potential to inspire new ideas. By understanding the core values and processes of category management, both manufacturers and retailers are able to use common language to reach a solution. Instead of spending time arguing, time and energy can be used more efficiently to address rising issues. In any category management project, neither manufacturers’ revenue, nor retailers’ customer flow should be the only focus. The project must focus instead on the ultimate intent of the business: fulfilling shoppers’ needs, increasing shoppers’ satisfaction, and retaining target shoppers. By completing our TA’s shopping mission, the whole category can grow, not only individual brands. Optimization is reached when both manufacturers and retailers focus on target shoppers and work together to enhance shoppers’ satisfaction to ultimately increase category performance.
What are the major steps of a category management project?
There are many ways to establish a shopper-centric category management project. To ensure success, let’s get back to the eight fundamental steps of category management: Category definition, Category role, Category assessment, Category scorecard, Category strategy, Category tactics, Category implementation and Category review.
Category definition: Define a distinct, measurable and manageable grouping of products that the retailer and manufacturer will optimize by increasing their understanding of and meeting the needs of shoppers.
Category role: Outline the role that each category plays in the retail according to the type of store and target shopper.
Category assessment: Assess the potential of the category from various data sources like shopper studies, retail indexes, and sales data.
Category scorecard: Quantify a mutual KPI target determined by the assessment result, and specify the project length and due date.
Category strategy: Provide strategic direction to execute tactics, and ensure consistency among roles, objectives and tactics.
Category tactics: Discuss and confirm all details of in-store BTL.
Category implementation and review: Make sure the whole project runs smoothly toward the mutual goal.
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