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Category Management: The way ahead

By Fairy Dharawat | Vjmedia Works | November 21, 2013

Category Management is a strategy used by the retailer or by the leader brand in the segment to help increase the size of the category or product in retail. Point of Purchase explores the concept of modern category management and its increasing relevance by speaking to retailers, brands and shopper marketing agencies. Read on…

Modern retailing has been redefined in our country as brands and retailers have rightly shifted their focus towards creating shopping as an experience oriented activity. As the Indian market evolves, so does the customer and there is a rising need for a seamless customer experience. But with the Indian market showing signs of improvement, the concept of category management is yet to be used in its complete capacity which is traditionally associated with profitability for brands, retailers and amplifying shopper experience.

Category Management proves to be beneficial for brands and retailers as the concept enables in creating a better way to differentiate customer experience and in promoting the category while increasing its size. Lalit Agarwal, CMD, V Mart adds along similar lines, "The concept of managing categories as strategic business units, plays a key role in retail success. The importance of activities within category management such as pricing, assortment management, promotion planning and merchandizing cannot be over-emphasized. Category management is about satisfying customer requirements. For a retailer this is one of the most important things. In case of achieving excellence in both design and delivery - this is especially true in the case of category management.”


Indeed category Management helps in creating a better connect between different and existing process to deliver and increase the specific category profits. Nilesh Gupta, CEO, Vijay Sales informs, "In the consumer durable segment, category management plays an even important role as the margins in the segment is less.” He further adds, "In digital category the biggest factor is options, and one handling the category needs to be very much firmly grounded and well versed in changing trends as once the new model comes, it affects existing ten other models in brands.”




Need for greater awareness

Even though it is strongly relevant in the retail market, the application of Category management has not been utilized. Rahul Saighal, President Geometry Global (a new division of Ogilvy action), while agreeing with this adds on, "Fundamentally brands want to increase their market share, retailer wants to increase their size of category and this is a point where both retailer and brand are not being able to get out of the same place.”





Bharat Vermani, Director, Saatchi & SaatchiX, Saatchi believes the lack of awareness is the prime reason for not utilizing the concept to its full potential, and retailers need to share data with the brands. As he says, "Retailers are not very open to trying category management as a concept and there is general lack of awareness and ignorance. The retailer needs to understand that category management cannot strive in a nutshell - they need to share information with brands to rightly utilize it. Indian grown retailers are not very open to sharing data and trends. Category management is all about sharing information followed by translating it in various forms. The clients also struggle in category if relevant data is not shared. Category management is about co-creation and alliance which brings advantage to both the retailer and the brand. If we move away from the Modern Trade Channel, we observe a convenience-led category management in the Chemist channel.”

Managing it right at the retail environment!

Sahil Gilani, Director, Gits, says "It is all about segmenting your products and how consumers view them. Many times store people do over segmenting which is not very favourable. Segmenting can probably be done by brand or by product type - that is the struggle you need to keep up with, as some stores, segment through product category while some do it by  brand category, (which is mostly carried out,) which also works well. Some keep dessert separately, breakfast mix separately, ready to eat separately. Retailers know more about category management as they know what works well.”

the key. Space Allocation, Return on Investment, Demographics, Customer Behaviour and Seasonal Trends aligning with system requires consideration while following category management.  The major challenge is in executing the concept practically which is due to lack of training of manpower and control over systems.” is execution Lalit Agarwal from V Mart further adds, When it comes to category management,

Sahil Gilani, further informs in this regard, "Brands do not have much of a control when it comes to placing products as planograming is based on sale or insights the store gets. An established high selling product will get eye level space, and lower selling product will get a lower level and this is not an optimum way to segment it, the newer products should probably receive more visibility.”

Overcoming  Challenges

There are many challenges in implementing the concept but now most importantly the brands are already taking initiative and coming together with retailers to apply modern category management solutions at retail. It is a joint effort to implement and as Rahul Saighal adds, "The biggest challenge involved is for a brand and retailer  to speak the same language and develop category management accurately in the interest of the shopper and truly in the interest of growing the category.”

"I hope that the current situation of category management in India changes as it can be profitable and we will be more than happy to be involved with the retailers to get segmenting it right and share our insights with them as well. And they should also implement those insights for moving forward and realize and implement them as nobody knows the customer well. It's a joint effort, and it depends on chain to chain, thus retailers should start practicing category management,” signs off Sahil Gilani in a positive note.

Category Management has proven its advantages through noted spike in sales after implementation (check out case studies) with customized solutions. Combined efforts from brands and retailers, can help bring awareness for category management which currently is not utilized to its full capacity but demonstrates a promising future for the Indian retail industry
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