Many people both in and out of the industry may not realize the critical and valuable role that category management plays in the successful consumer products organization. At its core, category management is an understanding of how products are shopped in store by consumers and how retailers perceive the product category. This requires a clear definition of the category and understanding of the role the category plays in the store, while recognizing opportunities for growth, such as innovation, operational efficiency, and assortment optimization. Whether your CP organization is just beginning its journey in category management or has clearly defined and successful processes in place, this article highlights the importance of category management and how to continue optimizing and growing your category management team.  

Understanding the Importance of Category Management  

For a CP company, category management involves a wide variety of key tasks, such as understanding consumer preferences, building planograms, and managing retailers’ inventory levels to ensure the right products are available in the correct quantities to drive optimal and profitable product assortments. Category management can foster sustainable growth through sophisticated and coordinated analysis of the category, allowing organizations to recognize opportunities around category roles, pack structure, space planning, and innovation.  

By leveraging the insights developed during category analysis, organizations will be able to develop powerful stories that resonate both internally and externally, fostering growth and development in their relationship with their retail customers. CP organizations will realize substantial benefits – such as improved product positioning, enhanced retailer relationships, increased profitability, and better product assortment – by viewing retail customers as collaborative partners and understanding that mutual success is best achieved through alignment of strategies and a focus on what is best for the category as a whole. 

Regardless of the size of your CP organization, category management will foster adaptability in an increasingly competitive environment and should be implemented as a key component of your growth plans. The journey to a developed and efficient category management strategy may vary depending on the organization’s goals and strategies.  

Three Stages of Category Management Maturity 

As CP organizations continue in their category management journey, we have identified three distinct and significant stages they progress through. 

1. INTENTION:  

The intention stage marks when organizations recognize the strategic importance and benefits of adopting category management and start down the path toward a mindset shift from selling a product to servicing the category as a whole. For example, for an innovative dairy brand with a new type of yogurt on the market, their internal sales looked strong, but they had not yet invested in category level data, so they didn’t really understand how they were performing compared to competition or the role they were playing in the category. Once they met with their buyer, they were surprised to find that their sales were at the bottom of the category and now had to find a reason to stay on the shelf.  

2. DEVELOPMENT:  

At the development stage of the process, the mindset shift may primarily be adopted by sales and marketing, but now it’s time to expand this shift across the organization. By this point, a key focus should be establishing open communication and ways of sharing insights from the category management team to beyond just sales and marketing and to the rest of the organization. Category management teams are able to see firsthand what may be working (or not working) on the shelf and can provide valuable insights to teams, like supply chain and operations, which can greatly benefit the organization when leveraged appropriately.  For example, a customer team within the category management team recognizes that a certain assortment of snacks is performing better in some regional clusters over others. By sharing these insights with the supply chain team, they are able to optimize inventory distribution to better align with the revised assortment plans based on region.  

3. OPTIMIZATION:  

More mature organizations likely have built category management capabilities and resources. Now is the time to evaluate the structure, processes, technology, and tools that can drive efficiency across the organization.  For example, if your organization has people moving quickly in and out of roles, they may not have the opportunity to develop an in-depth understanding of specific tools and processes. The development of a Center of Excellence (COE) could mitigate this issue by establishing a core set of highly skilled resources to be leveraged and better support both customers and internal teams.  

Moving Forward with Category Management 

Wherever you are in your journey level as a CP organization, you should be thinking about the role category management holds and how it should play into your decision-making and relationships with your retail partners. To ensure you have the right structure, people, processes, and tools to support category management across your organization, contact our team at Clarkston Consulting.