Application: Sales Strategy, Marketing Strategy, NPD, Promotional Planning
Category management, which is (at the time of writing) strongest in the retail sector, suggests that a product range is sold with different groups of similar, competitor products. These product categories (like frozen foods or toothpastes) are easily recognized and understood by customers. Each category is run within the organization as a business unit with its own targets and strategies. The introduction of the approach seems to change the relationship between retailers and suppliers; making it more collaborative. It prompts exchange of information, sharing of data, and joint business building. For instance, the emphasis moves to the turnover of the category as whole, not just the sale of individual products. Suppliers are expected to suggest new products or promotions that benefit the turnover of the total category and be beneficial to the shoppers interested in that category.
The idea developed for several reasons. First, retailers wanted suppliers to add value to their business rather than just fight for shelf space with other brands in the shop. Up until then, competition between manufacturers would change share within a product group but yield no incremental gain for the retailer. Secondly, suppliers saw it as a way of countering the rise in power of “own brand” items. ...