#Post -2 Category management process
About "how" of managing category
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There is a 8-steps cyclical approach recommended for category managers.
Nevertheless, let’s build on a new approach.
I will divide the entire process into an algorithm approach:
Strategy / category planning
Implementation
Performance measurement
Revisit your planning board
Below recommended process can be modified according to the stage you are at in your category building.
For example if you are launching a new category than you might have to build a shopper profile or develop a consumer decision tree. But in case, you already have a business line in place, you might not have to do the entire thing but you have to have an understanding of consumer behavior.
The general flow would be :
Stage-I : Strategy / Planning
Strategy is about making choices. Businesses needs to plan beforehand.
In this stage, category managers (ecommerce + retail) need to get to these basic questions right:
Who are my customers, what is the primary motivation to purchase products in scope, how frequently they buy, what do they buy, what channels do they use to buy products? —> Consumer research ( Tools : Consumer decision tree, consumer survey)
This step will help to understand how big the market is for the particular category. who are the main suppliers, manufacturers for the category? who are my competitors, who will be my collaborators? How can I differentiate in the market —> market study (Tool : Porter’s 5 forces, field study, competitor research)
These 2 combine will help you to think about 5Cs (customer, company, context, collaborators, competitors)
After this, you will have clarity on your category goal, category definitions, substitute products, financial metric (P&L management), overall KPIs etc.
What are you selling in the market? —> Product selection -> (Tool : Assortment planning / range planning)
How would you sell in the market? Promotion — > (Tools : Digital marketing, Traditional marketing (ATL, BTL), visual merchandising, discounts)
What channels would you be using? Online vs offline. Place (Tools : location planning, planogram)
At what price would you be selling in the market? Price (Tools : value based pricing, supply-demand dynamics)
Who are my suppliers / manufacturers? (Tools : Vendor management, contract management)
How much would you be ordering? (Tools : Demand forecasting, OTB plan)
In summary, we have covered 5C’s and 4P’s here. In upcoming blogs, we will discuss how this is relevant to e-commerce as well retail stores.
Once you have a good understanding of your product category, you will be defining target for the fiscal year along with the stakeholders. These target need to be monitored periodically (stage -3)
Stage-II : Execution / Implementation
This stage is operational where you will be making sure that your orders are in place, your inventory is on time.
Sourcing (Supplier Identification, contract management, supplier on-boarding, order management)
New Product development (This depend on the business you are in, if you are an ecommerce marketplace, this might not be applicable for you)
Inventory management
New product launches
Coordination with internal and external stakeholder
Managing relationship with partners (manufacturers)
Product recall or Markdown
Stage III: Performance measurement
In this stage we will monitor the KPIs that we have set in the stage I. We will look at transaction data, sales data, customers data and identify the lever of the category growth.
Stage IV: Go back to stage I
Based on the analysis, we have done, we will set the next year category plan so on and so forth.
It’s a cyclical process with multiple parallel activities. And, you are a small entrepreneur running your business line within the organization. Category management is a broad function. So it’s gonna take time for you to absorb all, stay tuned :) Request you to share meanwhile if you while this can be useful to someone in the space.