What is Category Management and What is it for?

Category management is a concept coined and used since the late 80’s by Walmart.

Category management looks to define and administer categories of products that can generate value for suppliers, supermarket owners and most importantly, add value where the needs and requirements of consumers are met.

Category Management is the creation of administrable groups of products, which consumers perceive as interrelated and / or substitutable when it comes to satisfying a certain need.

Within the context of supermarkets and self-service stores, there are leading brands in the market that manage the different categories to measure turnover or speed, profitability and strategy.

Leading brands in the market such as Nestlé, Coca-Cola, Danone, Hershey, among others, manage the spaces in the area of supermarkets, allowing the placement of the correct product, in the correct position, with the optimal display, through the administration of items, margins, sales prices, turnover, store, channel, region, etc., oriented to the profitability of the point of sale.

This is seen more often as some categories are saturated. The administration at this point is vital for the survival and welfare of the product.

The standard model of the grocery industry in the United States suggests eight steps for a correct Category Management:

  1. Define the category (which products or sku’s make up the category)
  2. Define the role played by the category within the supermarket or point of sale (market share, spaces, competition, etc.)
  3. Evaluate the current status of the category or group of products.
  4. Setting goals.
  5. Design of the general strategy.
  6. Design an action plan.
  7. Implementation.
  8. Point of revision and adjustment of objectives, redefine if necessary and start again at number 1.

The category management focused on the analysis of sales information with the following advantages:

  1. Administer the category as a mini-business inside a supermarket (is the product profitable or not profitable, basically, how much and compared to what.)
  2. Sort marketing plans.
  3. Increase sales through an optimal and functional assortment.
  4. Manage inventory, price and promotion (do I have an optimal inventory with the price and promotion that makes sense for my consumers?)

In conclusion, through the correct implementation of Category Management, we can better manage our supermarket, brand, margins, displays, etc.

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