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indigenous to the MRP world in a manner that makes sense to an MRO environment. The second (and no less important) challenge becomes avoiding a trap where the CM processes are perceived to be more important than their outcome – a scenario that can result in significant analytical delay, and even complete process paralysis. An excellent example of an MRO environment warranting adjustment to classical category management is nuclear power generation in the United States, where the adjusted approach to category management has been coined "MCM" – standing for MRO-based
Category Management or Modified Category Management. Not only does electricity generation epitomize an MRO-driven environment, the nuclear energy source adds numerous dimensions of supply and procurement complexity – including federal and state regulatory compliance, nuclear industry standards compliance, nuclear-unique system and component design, and a tightly-audited (and very small) supply base, amongst others. Due to the nature and quantity of discrete characteristics native to nuclear power generation, it can easily be argued that nuclear power generation, in and of itself, should be a distinct category of procurement within a category management project. The fundamental adjustment made between the classical category management approach and the nuclear MCM approach is a shift from procurement strategies focused on leveraged spending to procurement strategies embracing nuclear value drivers, technology innovation, risk management, and strategic sourcing.
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554:-based manufacturing industries, the predominant cost-saving methodology in category management (CM) involves the integration of market intelligence with leveraged spending (for a given category of product or service). In industries where asset operation and preservation bear more significance to the procurement process than do product manufacturing – such as in an
363:
The
Nielsen definition of a 'category', used as the basic definition across the industry, is that the products should meet a similar consumer need, or that the products should be inter-related or substitutable. The Nielsen definition also includes a provision that products placed together in the same
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that some suppliers paid "large sums of money in exchange for category captaincy or participation in a price review". She found some evidence of benefits which suppliers derive from these arrangements but also recorded a concern, to be investigated further, as to whether the purpose of the
Groceries
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It is commonplace for a particular supplier in a category to be nominated by the retailer as a category captain. The category captain will be expected to have the closest and most regular contact with the retailer and will also be expected to invest time, effort, and often financial assets into the
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One key reason for the introduction of category management was the retailers' desire for suppliers to add value to their (i.e. the retailer's) business rather than just the supplier's own. For example, in a category containing brands A and B, the situation could arise such that every time brand A
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environment – demonstrable benefit can still be achieved with category management but is best approached with some manner of adjustment to CM’s usual processes for analysis and strategy development. The first challenge becomes incorporating analytical processes and value drivers that are largely
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The 8-step process, whilst being very comprehensive and thorough has been criticized for being rather too unwieldy and time-consuming in today's fast-moving sales environment; in one survey only 9% of supplier companies stated they used the full 8-step process. The current industry trend is for
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The next step of
Category Management is to understand the mechanism of the customer's decision concerning purchases of a given category. The decision-making process is usually analyzed by observing customers directly in the store and by direct surveying. The result is recorded in the Customer
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The notion of responsibility category seeks to determine whether a business is fulfilling not only its economic responsibilities, but also its legal, ethical, and discretionary responsibilities. Category management lacks a single definition thus leading to some ambiguity even among industry
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strategic development of the category within the retailer. In return, the supplier will gain a more influential voice with the retailer. The category captain is often the supplier with the largest turnover in the category. Traditionally the job of category captain is given to a
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is broken down into discrete groups of similar or related products. These groups are known as product categories (examples of grocery categories might be: tinned fish, washing detergent, toothpastes). It is a systematic, disciplined approach to managing a product category as a
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The
Nielsen definition, published in 1992, was prescient for its time in that customizing product offerings on a store by store basis is logistically difficult and is now not considered a necessary part of category management; it is a concept now referred to as
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promoted its products, the sales of brand B would go down by the amount that brand A would increase, resulting in no net gain for the retailer. The introduction of category management imposed the condition that all actions undertaken—such as new
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A third reason was that the collaboration with the supplier meant that supplier's expertise about the market could be drawn upon, and also that a considerable amount of workload in developing the category could be delegated to the supplier.
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The focus of all supplier negotiations is the effect on turnover of the category as whole, not just the sales of individual products. Suppliers are expected, indeed in many cases mandated, to only suggest new product introductions, a new
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category should be logistically manageable in store (for example there may be issues in having room-temperature and chilled products together in the same category even though the initial two conditions are met).
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The industry standard model for category management in retail is the 8-step process, or 8-step cycle developed by the
Partnering Group. The eight steps are shown in the adjacent diagram; they are :
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Market research company
Nielsen has a similar process based on only 5 steps : reviewing the category, targeting consumers, planning merchandising, implementing strategy, evaluating results.
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A second reason was the realization that only a finite amount of profit could be milked from price negotiations and that there was more profit to be made in increasing the total level of sales.
309:"The strategic management of product groups through trade partnerships which aims to maximize sales and profit by satisfying consumer and shopper needs" (Institute of Grocery Distribution)
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312:".. marketing strategy in which a full line of products (instead of the individual products or brands) is managed as a strategic business unit (SBU)." (Business Dictionary)
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or promotional activity if it is expected to have a beneficial effect on the turnover or profit of the total category and be beneficial to the shoppers of that category.
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In order to do the job effectively, the supplier may be granted access to a greater wealth of data-sharing, e.g. more access to an internal sales database such as
324:'s Store of the Community, implemented in North America, is one of the few examples of where product offerings are tailored right down to the specific store.
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306:"Category management is a process that involves managing product categories as business units and customizing them to satisfy customer needs." (Nielsen)
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supplier companies to use the standard process as a basis to develop their own more streamlined processes, tailored to their own particular products
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Please help improve this article by looking for better, more reliable sources. Unreliable citations may be challenged and removed.
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This article is about category management in a retail context. For category management in a purchasing context, see
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Each category is run as a "mini business" (business unit) in its own right, with its own set of turnover and/or
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However, this definition does not explain how the process often works in practical retailing situations, where
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Many governments have viewed increased collaboration between suppliers and retailers as a potential source of
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professionals as to its exact function. Three comparative mainstream definitions are as follows:
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concept in which the range of products purchased by a business organization or sold by a
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supplier, but in recent times the role has also gone to particularly switched-on
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Structuring Your
Marketing Framework For A Successful Omnichannel Campaign
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Nielsen
Category Management - Positioning Your Organisation to Win, p. 9
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in principle. They have also acted on milk price-fixing in
Britain.
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etc.—be beneficial to the retailer and the shopper in the store.
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The eighth step is one of review which takes us back to step 1.
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Define the category (i.e. what products are included/excluded).
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Define the role of the category within the retailer.
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235:. The phrase "category management" was coined by
811:9% of supplier companies admit to 8-step process
612:. The McGraw Hill Companies. pp. 226–228.
464:Governmental concerns about category management
460:Code was being circumvented by these payments.
379:The category management 8-step process (retail)
371:or marketing considerations take precedence.
8:
405:Set objectives and targets for the category.
57:Learn how and when to remove these messages
298:Definition of category management (retail)
538:Learn how and when to remove this message
189:Learn how and when to remove this message
171:Learn how and when to remove this message
118:Learn how and when to remove this message
455:found in her 2015-16 investigation into
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243:Category management in a retail context
793:The 8-step Category Management process
387:The category management 8-step process
79:contains content that is written like
669:Category Management in Book Retailing
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520:adding citations to reliable sources
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743:Rationale for Category Management
328:Rationale for category management
38:This article has multiple issues.
776:"What is it Category Management"
761:Nielsen Definition of a Category
647:. Nacsonline.com. Archived from
589:Supplier Relationship Management
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18:Category management (purchasing)
924:Retail processes and techniques
507:needs additional citations for
402:Assess the current performance.
46:or discuss these issues on the
707:Business Dictionary Definition
645:"Industry Resources: Glossary"
208:Bathroom fittings category in
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859:Investigation into Tesco plc
857:Groceries Code Adjudicator,
840:The role of Category Captain
488:Modified category management
861:, published 26 January 2016
480:has raised their issues on
408:Devise an overall Strategy.
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569:Fast-moving consumer goods
453:Groceries Code Adjudicator
337:, new products, re-vamped
278:The concept originated in
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872:"Competition Commission"
608:Pradham, Swapna (2007).
411:Devise specific tactics.
359:Definition of a category
610:Retailing Management 2E
233:strategic business unit
143:Some of this article's
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725:Store of the Community
478:Competition Commission
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294:, and book retailing.
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476:. For example the UK
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100:neutral point of view
516:improve this article
375:Decision Tree (CDT)
201:Concept in retailing
216:Category management
92:promotional content
919:Product management
845:2008-03-06 at the
816:2009-02-11 at the
798:2009-02-11 at the
748:2008-03-06 at the
730:2009-02-12 at the
712:2020-09-19 at the
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472:breaches, such as
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619:978-0-07-062020-9
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509:verification
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369:demographic
346:advertising
161:August 2010
148:may not be
108:August 2010
908:Categories
882:2021-06-26
655:2012-08-17
631:References
528:March 2012
442:suppliers.
335:promotions
253:strategies
224:purchasing
88:improve it
43:improve it
584:Planogram
574:Retailing
470:antitrust
457:Tesco plc
339:planogram
273:planogram
220:retailing
49:talk page
843:Archived
814:Archived
796:Archived
746:Archived
728:Archived
710:Archived
692:Archived
563:See also
322:Wal*Mart
292:pharmacy
261:supplier
257:retailer
228:retailer
150:reliable
446:Walmart
280:grocery
210:Walmart
616:
934:Sales
595:Notes
436:brand
218:is a
614:ISBN
550:For
259:and
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556:MRO
552:MRP
518:by
284:DIY
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