Introduce the main features of category management
A management process dealing with product categories, treated as strategic business units, that aims to improve outcomes by focusing on the value transferred to the consumer.
Why use category management?
Centralised management model
All management activities, with the exception of sales, are carried out by a single subject, who analyses sales statistics together with the store managers, selects the suppliers, decides on promotional and pricing policies, sales objectives and merchandising plans for each store, where management power is limited to the implementation of plans devised by central management.
Centralised purchasing model
In this model, managers of the points of sale enjoy greater decision-making autonomy: they provide central management with information on the quantity and type of products to purchase. Central management only places the orders and manages the logistics.
Decentralised management model
The buyer is only responsible for selecting the most suitable supplier and negotiating the terms and conditions of purchase. The store managers are responsible for the quantities to purchase and all aspects of logistics.
Conditions regulating the relationship between manufacturers and distributors change depending on whether the product is a manufacturing brand or a private or general brand. When brand loyalty is lower than store loyalty the supplier has to offset their reduced market strength by offering special benefits:
Changes to the structure of the supply chain have led to important changes in the systems for evaluating suppliers. It is now possible to measure and classify the supplier’s productive output as well as their company resources and competences through standardised supplier-rating procedures.
The categories take on a role depending on: