Category Management is a way of thinking.
Disruption is the new normal for the supermarket industry. Increasing sales of hard discounters, P/L (private label), small brands and online have changed the structure of the industry. The increasing power of shoppers and consumers and new shopper demands such as personalised offers will continue to change how the industry operates. Competition from new online marketplaces, such as Amazon, will also continue to disrupt the industry. Plus, new supply chains, such as direct to consumer (D2C), are changing the industry dynamics. Most recently Coronavirus (COVID-19) has disrupted the industry. So how do manufacturers and supermarkets compete in this ever-changing industry? This book explains that by using a category management mindset, i.e. category management is a way of thinking, manufacturers and supermarkets can maximise their long-term financial results.
Back in the 1990’s, after completing University, I joined the FMCG industry. Many people in the industry were talking about a category approach / category management. I read relevant books such as Category Management: Positioning your Organisation to Win, Nielsen, 1992. This book outlined a 5 – step process for category management. Others, such as TPG (the partnering group), suggested an 8 – step process. To assist the industry to adopt a category management approach this work focused on ‘how’. Intrigued I created my own category management model to explain ‘what’ category management is and ‘why’ the industry should utilise this approach. I have used this model for over 20 years in the FMCG industry. During this period the supermarket industry has changed dramatically and the need for a category management mindset has increased. Now (finally) this book explains this model and more importantly that category management is a way of thinking.
This book focuses on explaining the concept of category management to assist practitioners to develop a category management mindset. I must stress that a category management mindset is more important than the process or resources / data available to undertake category management. There are many people / organisations in the industry that have the category management resources, e.g. scan data, but still deliver only limited results. I strongly suggest that this is due to people having a ‘trading’ mindset whilst completing a process labelled category management. As explained in this book ‘trading’ can deliver short term benefits but is not a long-term solution to the challenges the industry now faces.
This book outlines the key building blocks for a category management mindset – shopper and consumer demands and an integrated supply chain. Then these building blocks are used to explain what category management is with a simple model. Importantly this model is broad enough so that it can be used by a variety of manufacturers and supermarkets, with different resources available. This model does not require businesses to employ more people or make major investments in data / insights etc to do category management. This model requires people to reconsider how they think / make business decisions. The focus is on understanding shoppers / consumers and then using these insights when making business decisions. To meet shopper demands manufacturers and supermarkets need to create and manage long-term collaborative mutually beneficial relationships.
My motivation for writing this book is to provide a simple model that helps explain the concept of category management for members of the FMCG / supermarket industry. The explanation of ‘why’ will highlight the potential benefits of adopting a category management mindset vs a trading mindset. Even in today’s disruptive world a category management mindset can generate the best long-term results.
I hope you enjoy this book.