How can I increase sales and profitability of my category? - Part I
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Today we are going to talk about the Financial aspect of the job :
A category manager owns the category P&L. What I mean is that you are responsible for your category performance - its profit or loss; P&L statement will tell how your category has performed in a certain timeframe.
Category P&L statement tells you:
How much sales happened in a particular time period? Typically 30 days
COGS (Shipping cost, procurement cost, packaging cost, barcoding cost etc.)
Cost due to markdown / Discount
Cost occurred because of transfer of products from one warehouse / store to another warehouse / store
marketing expenses
Gross Profit = Sales - COGS
The line items in your statement will depend upon accounting principles that your business follows. If you are sharing resources among multiple product lines, that has to be reported accordingly. You should also be looking at profitability from brands within your category as this will give you the idea of long-term strategic partnership with the brands you work with.
Now we know how P&L statement would looks like, let’s start with a problem today ( revenue growth strategy framework) .
Case study Problem :- Your company is a category leader in furniture space. and use a mix of channels - physical stores and e-commerce to sell your products to the consumer. For this recently launched category- “Work from home” in your scope as a category manager, you would only be selling through the ecommerce store. Assuming that your COGS stays same, how would you improve the sales / revenue of the category?
Calculate the overall market for WFH category
How will you measure P&L / growth within each brand / suppliers you onboard?
Overall revenue strategy for the category
We would discuss this problem in the next post, till then take a pencil and paper and draw your approach, think of innovative ideas (in campaigns, communication, product innovation) that you can come up with and leave a message for me.
For ideas, you can refer my previous article: https://thinkingcategory.substack.com/p/a-japanese-concept-to-delight-your
I particular found this as a marketing genius stroke. Scent by glade
Glade has partnered with ecommerce companies and delivered scented air filled vessel as a packaging material. When consumer popped up the vessel, they can experience the scent at their home. (Problem - People were not visiting physical locations anymore and were purchasing online mostly. And the challenge with fragrance products are that the smell has to be experienced and product demonstrations are needed to improve the sale. So Glade sent the fragrance home :) A win-win situation for both ecommerce store as well as brands.
Check the YouTube video. I am sure you would love the idea.
In the next post, we will discuss the approach to the problem that we discussed. Till then, thank you for all those subscription. Look forward to interact more with all of you.