Category management
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Category management is a development of the brand management approach to product development, and was developed to take account of the growing power of some retailers. Retail products are broken into like groupings called Categories. These groupings are then managed as business units and will go through business reviews on an ongoing basis to determine growth, profitability, trends and future opportunities.
A product manager may now focus almost as much on retailer needs as on consumer needs. In the category management approach the manager oversees products and activities across the whole category which is of interest to the retailer, aiming to optimize the retailer's profits as well as those of the producer.
[edit] Background
Category Management became a key factor in the development of retail sales in the 1980s, and enjoyed dramatic growth through the 1990s with the implementation nation-wide databases of computerized sales data. Category Management has continued to evolve and is now broken into Retail and Vendor/Manufacturer perspectives. Retailers look at how categories contribute to the whole store and Vendor/Manufacturers look at category contribution to brand.
[edit] Today
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Category Management is a science that requires art for execution of the strategy. In today’s world as much as we like the numbers and that everything works with a value, we also want our categories and stores to look good. It is through the combination of both science and art that we are able to meet the total needs of retail executable Category Management. Integration of both Merchandising and Category Management lead to higher rates of compliance and execution as well as faster 'speed to market' of new items. Driven by authors from the Harvard Business School (Kracklauer/Mills/Seifert), Collaborative CRM seems to be the new paradigma to succeed the leading Efficient Consumer Response and Category Management concept in the industry/trade relationship. Many organizations are searching for new ways to achieve and retain a competitive advantage via customer intimacy and CRM. In this context, new strategic frameworks and cooperation with everybody along the whole value chain are needed to allow managers to deal with the changes in shopping patterns of consumers. New management concepts such as Collaborative Forecasting and Replenishment, CRM, and Mass Customization are integrated into one holistic approach with a view to jointly develop customer bonding and loyalty.
