Posted by: Donna Tang in retail cloud, Customer-Centric, Category Strategy on Feb 20, 2009
The main idea of category management is a consistent orientation to the customer in product assortment and tender. The benefits of category management to retailers are intuitively obvious. Below are the steps for developing category strategies: Business Strategy Analysis The first step of the category management planning process entails a strategy analysis of the retail organization. Essential is an understanding of the company objectives, its niche in the marketplace, and its image in the eyes of consumers. From that, strategies can be derived for a successful penetration and loyalty. Particularly important for the strategy analysis is the identification of the retailer target group. Category Definition and Segmentation This step is the process where we take any category and break it down based on the consumer decision process. The deciding factor for success here is the most accurate possible reflection of how the target customer makes his purchase decisions in each of the categories. The Role of the Category This third step is the core of category management, as it is here that the desired high-level corporate and marketing goals, such as market image of a company, can be achieved. The determination of individual category roles offers the best approach to the differentiation from competitors. The development of category roles is also of special significance in that it determines the priority of categories in the retailer's entire organization and its resource allocation. With the assistance of adequate resource allocation, the retailer optimizes his return on investment. Category Assessment Category evaluation entails an analysis of the relevant data on the category with a view toward the market and the customer. The goal is, on the one hand, to gain a clear understanding of the current potential of the category (strengths and weaknesses) and, on the other, to identify the corresponding revenue and profit potential of the category. Category Strategies In this stage, strategies are developed. For example, a high-profile category may offer the retailer the opportunity to aggressively position herself against competitors. A seasonal or impulse category supports a strategy of building traffic. Finally, a supplementary category may support image building in that a broader assortment allows an easier and a more complete shopping experience.