Key category management principles
Category management is the process of managing an assortment of products as product categories. It's about managing categories, analyzing, and grouping them in the way the buyer defines them for himself. It is a process of grouping related products into logical groups.
Often the buyer "groups" the goods in his mind differently than the marketer, manufacturer, or purchaser.
The buyer often thinks not of brands, but of categories. Milk, bread, and snacks are no longer specific products, but a commodity category.
How do I manage a category?
- define categories in the assortment of goods;
- choose categories from certain types of goods;
- define tasks in the process of category management;
- monitor and analyze category sales;
Use product data to intelligently manage categories when building planograms.
So what data do you need?
Product code, barcode, description, brand, and supplier information to identify products on the planogram. This will help you to profitably sell the best products in the category.
It is also necessary to provide and attach the correct images and dimensions to the products in order to effectively place the products on the planogram.
Data on sales, units, and gross profit are important. Sales data affects how you create and use categories in planograms.
The creation of categories is also influenced by how consumers buy specific products and whether they can find what they need.
If you do not use this data to build a planogram, it is difficult to determine the location of a specific product category and create planograms that increase sales. Shoppers who can't find what they're looking for in a store won't want to keep shopping.
Use the merchandising principles established for your stores.
Each store has its own set of merchandising principles. Only you know what works in your network and what the needs of your customers are.
Key Category Management Principles for Assortment Planning
1. Category classifications must be current and consistent with the hierarchy.
Product classification is a direct reflection of the display hierarchy as well as how the customer selects a category.
The wrong categorization can lead to inappropriate sales in the wrong categories. This will distort the data that you will use to build planograms.
Classifications help assortment plan makers identify similar items in the ranking process. Checking the progress and updating the classification are the first steps in the assortment planning process. Classifications ensure that all products have a proper place in this hierarchy system. It illustrates a consumer decision tree that influences how planograms should be classified and constructed.
When categorizing products, you must ensure that you have completed all levels of the hierarchy, from department to category, subcategory, segment, and brand.
The assortment analyst will use the hierarchy levels to ensure that the ranking at all levels is completed correctly. And the category manager will take care of the correct placement of products in his category in accordance with different levels of the hierarchy.
2. It is necessary to define the brand and profile of the store
Brand profiling is related to the retail selling price of a brand for your products in a category. For example, more expensive brands will be premium; brands in the middle price range will be in the middle range, while cheaper products will be in the lower price range.
Defining a brand profile helps you select the right range of products for the right cluster or stores. For example, if the main customers of your stores are high-income people, then the store might be a premium store and, based on average spending, mix 50% of the premium and 50% of mid-range brands.
By defining a store profile, you can ensure that you are selling the right range of products in the right target market. This will help you offer your customers the right products at the right price.
Store profiles also help identify clusters based on what they might be considered at the store level (economy, mid-range, premium).
You need to make sure that the departments in the store are correct and consistent. Here you need to think about what path the buyers will take on the trading floor. So that they not only easily find the right product, but also encourage them to make additional purchases.
You can add categories that fit together. For example, try placing dairy products next to cereals as they are often bought together. Also, encourage shoppers to shop on either side of the aisle by placing related categories side by side.
Applying the right category management principles will ensure an optimal management experience and ultimately lead to a successful retail environment.
Create categories that are understandable to your customers and how they shop in your store.
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