Redefining Category Management

The future of category management is entirely shopper-led. Read on to see how we got here, and what's next.

In the late 1980s, a professor at the University of Southern California named Brian Harris introduced the concept of category management, doubling-down on his idea in 1996 by offering a formalized category strategy model, which he coined the Brian Harris Model.  This model outlined 8 steps in a continued cycle of category strategy development.

Harris’ model was, at the time, revolutionary because for the first time, suppliers and retailers were encouraged to work together with an end focus on the consumer (or shopper) when making retail business decisions.  His model also offered the initial product category groupings as “strategic business units” (SBU), rather than stand alone products and brands.

According to Harris, Category Management is meant to: Force a consumer-first focus; Provide a model for collaboration; Promote information sharing to aid in decision making; Provide better logic when making tactical decisions.

Today, the Category Management Association defines category management as “trading partners collaborating to decide the point of optimization in pricing, promotion, shelving, and assortment to maximize profitability and shopper satisfaction.”  While the time-tested principles put forth by Harris hold true in many respects, strategies and goals must adapt to meet the changing demands of our technology-driven, omni-channel world. Today, we must work towards serving the power of consumer choice and shopper action.

Category Management is about driving sales, sure, but it is also meant to build a broad perspective and retail strategy that holds the shopper at its core.  Today’s category analysts are called upon to do more than analyze sales data and build pricing strategies to increase overall profitability of the category.  Today’s category managers are called upon to be stewards of the category, bringing a robust understanding of the retail landscape, consumer demands and trends, competitive activity, and shopper behavior.  This requirement gives new dimension to the phrase “act like an owner”.

According to McKinsey “category managers today need to be much more than buyers familiar with the industry; they should be proven leaders who are both analytically and commercially savvy, and who take a customer-centered view of what products or services will address customer pain points and create competitive advantages.  They should build category strategies, including assortment and pricing perspectives, based on customers’ needs and willingness to pay rather than on what sales and suppliers are pushing.”

Successful Category Leadership Holds the Shopper at the Core

The most skilled and accomplished category leaders are ones who approach their work with both a well-informed perspective and an insatiable curiosity. Forward-thinking organizations are increasingly allowing their category teams to think outside of the box and become true category experts, with a deep understanding and empathy for the wants and needs of their consumers.

The most thriving category managers possess a comprehensive understanding of not just their specific category, but also the wider business and retail landscape. Leaders who possess a full view of the big picture are ideally positioned to inspire change and foster productive discussions. When category managers seek to shape retail strategy, they must be prepared to make recommendations on a variety of topics, including assortment changes, revised shelf arrangements, pricing recommendations, and in-store promotional materials. Successful category teams that possess an innovative "Category Captain" mindset come to the table prepared with a wealth of insights and evidence-based perspectives that inform and inspire great decisions, all with the shopper in mind.

Winning Category Strategies are Rooted in Shopper Behavior

What does the shopper want?  How can we motivate the shopper to take action? Why aren’t the shoppers doing what we thought they would do?  Category managers today are left to make decisions with an incomplete data set when they rely solely on traditional data sources like sales volume and unit price.  We know what was purchased, when, and by whom.  What’s missing are two of the most important questions: how and why.

This blindspot is erased only when the category manager has an evidence-based understanding of the in-store path to purchase, and the impact of all of the in-store stimuli that the shopper faces along the way.  Such visibility allows category leaders to ask questions like: How do shoppers navigate the store?  How do they shop at the shelf?  How do they make their decisions at the point of purchase? Does my category get the right exposure in store?  Why are shoppers walking away without making a purchase?

Innovative technologies, like VideoMining’s AI-powered behavioral insights platform, measure billions of micro-moments that occur during the in-store experience of real shoppers making real choices in real stores.  Leading category strategists routinely conduct Category Deep Dives and Collaborative JBP Test and Learns with this technology, giving their teams access to essential information to build informed and winning category strategies. 

Time to build an evidence-based category strategy?  We’re ready when you are!