category management

Category• Category is an

assortment of items which the consumer may perceive as substitute for each other.

Category Management• Category

Management is the process by which a retail business is managed with the objective of maximizing the sales and profits of a category.

Category Management• At the core of the

Category Management concept is a focus on a better understanding of consumer needs as the basis of the retailers’ and suppliers’ strategies, goals and work processes.

Components of Category Management

• Components of Category Management are divided into two broad categories:

• 1. Core Components.• 2. Enabling Factors.

Core Components of Category Management

• 1. The Strategy.

• 2. The Business process.

Enabling factors of Category Management

• Performance Measurement.

• Information Technology.

• Organizational Capacities.

• Co-operative Trading Partner Relationships.

Category Management Business Process

• 1. Category Definition:A Category definition must be based on how the customer buys, and not on how the retailer buys.

Category Management Business Process

• 2. Defining the Category Role:

The category role determines the priority and the importance of the various categories in the overall business. This aids in resource allocation.

Category Management Business Process

• 2. Defining the Category Role:

Four Categories have been Identified:

Category Management Business Process

• a. Destination Category: This is the main product offering of the retail store.

Category Management Business Process

• B. Routine or Preferred Category: These are the products that a customer buys from the retailer as a matter of routine or habit.

Category Management Business Process

• C. Occasional or Seasonal Category: This includes products which are not purchased very often or are purchased when available or needed.

Category Management Business Process

• D. Convenience Category: These are the products that a customer finds convenient to buy at a neighborhood retailer.

Category Management Business Process

• 3. Convenience Assessment: The current performance of the category is evaluated with respect to the turnover, profits and return on assets in the category.

Category Management Business Process

• Return on Assets = Net Profit / Net Sales * Net Sales / Total Assets.

• Return on Assets = Net Profit / Total Assets.

Category Management Business Process

• 4. Category Performance Measures: The development of category performance measures involves the setting of measurable targets in terms of sales, margins and Gross Margin Return on Investment (GMROI).

Category Management Business Process

• 5. Category Review: Review aids in the taking of decisions at the right point of time.

Category Management• The Category

Management approach involves having a category manager to oversee every aspect of the merchandise management.

Benefits of a Category Manager

• 1. The onus of responsibility for managing one category will lie in the hands of the category manager.

Benefits of a Category Manager

• 2. The success or failure of a category will ultimately be the responsibility of the category manager.

Benefits of a Category Manager• 3. Stores assortment

of merchandise will be represented with ideal combinations of sizes, which will earn the most profit from the allocated space.