Necessity of Category Management

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Introduction

Category management refers to the process of managing different product groups as business units so as to boost sales and satisfy client needs. (IGD, 2009) The paper shall look at how this can be achieved effectively through efficient infrastructure, new product development, assortment and promotion.

Category management applied in the grocery sector by efficient infrastructure

In order for category management to work in the grocery sector, it is essential for these companies to establish efficient infrastructure to carry out the process. Ways in which this can be achieved include; direct communication with marketing and sales personnel. Here, category managers may be able to understand exactly what their clients require. (Sparks & Fernie, 2009) Besides this, communication with senior managers may be necessary in order to access some of the infrastructural capabilities that a company may possess with regard to its overall business strategy. Other infrastructural aspects that need to be considered include human resource infrastructures such as training employees on category management and development of the management team. This also means that the grocery store must possess newsletters and status reports to support implementation of category management. Also infrastructure may also come in the form of information technology where a grocery company can use various soft wares to establish the most penetrated and high frequency product categories in the industry or among other competing firms. (SAS, 2008

Category management applied in the grocery sector by efficient new product development

In order to carry efficient product introduction, it is essential for category managers to dwell on the needs of the consumer. (Thomassen, 2007) In other words, utmost care ought to be given to the kind of products that manufacturers are bringing into the market. Care should be taken to ensure that new data is always available to capture changing supply chain dynamics. In other words, the grocery sector should carry out new product development after incorporating consumer demand and value addition to that product.

An example of how this can be done is through the Kraft Foods Company. This company realised that consumer required chilled dough to cook their own baked or deep fried products. Consequently, they worked with their manufacturers to develop a new partly prepared product that came in different flavours while at the same time meeting client needs. (Gustafsson, 2007)

Category management applied in the grocery sector by efficient assortment

Efficient assortments can be carried out in the grocery sector when services and products are grouped in such a manner that they meet client needs. Usually, the major aim of such a move is to ensure that shelf space is used very effectively, that the consumer is appeased and that excessive stocks are eliminated. Cash register data needs to be analysed and then used as a template for making product assortments. An example of how this can occur is when a certain grocery store realizes that within the ‘ready to eat frozen foods section’ consumers are only interested in purchasing salty commodities rather than the sweetened ones. Such retail owners would then place the salty ones at more convenient locations in the store compared to others since this is a hot selling item. (Competition Commission Groceries Investigation, 2008)

Category management applied in the grocery sector by efficient promotion

Grocery owners need to look for ways in which they can carry out effective promotional strategies. Categories of grocery products can be advertised as one group through advertising, trade promotion or consumer promotion. In consumer advertising, grocery stores can create a new category and then display it in the internet, grocery magazines or newspapers. Alternatively, such stores may consider advertising the new product on radio or television. Usually, most grocery companies tend to rely on the internet and grocery/ company magazines for this. This is mostly because the latter two media have the ability to absorb large product displays. If a category consists of about forty items, grocery managers may have a difficult time trying to give details about all these products through television (that restrict timing). Consequently, the best approach would be through the use of the internet. An example of how this can be done is through a three or four page display of all the chilled drinks within a certain supermarket.

Efficient product promotion can be achieved through consumer promotion in which gifts or coupons are offered by purchasing several groceries within a certain category. (Lincoln et al 2008) For instance, a retail store may decide to offer its clients a small toothbrush for purchasing more than three tubes of toothpaste. Alternatively, they could opt to give consumer coupons every time a consumer purchases many products form a certain category like the ‘baked goods’ section. Lastly, category managers in grocery businesses may participate in trade promotions. Here, special discounts or offers could be offered after the same supplier has offered different groceries that fall within the same category.

Conclusion

Category management is no longer a luxury in the grocery sector; it is a must have. Most companies can realize the benefits that emanate from such a strategy if they place the consumer at the centre of their decisions.

References

Lincoln, K., Lars, T. & Aconis, A. 2008. Retailization. New York: Routledge.

Sparks, L. & Fernie, J. 2009. Logistics and retail management. London: McGraw-Hill publishers

Gustafsson, K. 2007. Fresh Food packaging and retailing logistics. London: McMillan.

Thomassen, K. 2007. Succeeding at retail. New York: Wiley and Sons Publishers.

IGD. 2009. Definition of Category Management, Web.

Competition Commission Groceries Investigation. 2008. Category management update. Web.

SAS. 2008. Solutions for the grocery industry. Web.

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