I don’t think we should deviate from the fact-based decision making process that category management is today. I believe good decisions are made when emotion and personal opinion is not in the decision making. I do agree that there is a place for “art” in the process and that it is possible for Category Management to evolve…another ‘P’?

This is a complex question, and one that needs to recognize that retailers require category manager to be objective and fact based in analysis, while they expect sales professionals to propose opportunities that advance their Co’s business and are right for the retailers as well. As such, category managers must not be too focused on “selling” and maintain the trust of the retailers through fact based, unbiased analysis.

Of course, the retailer understands who signs the check of the category manager, so the delicate balance a category manager must maintain is a tough line to walk.

The future for catgory managers leads to true business leaders who can analyze, lead, strategize, financially assess, and recommend / articulate and sell WIN WIN solutions so in that regard they need to possess the strengths of true category management skills with the art of leadership and selling skills.

Today’s process is overlooking the real reason for category management: give the customer what they want to buy. We have let the vendors dictate share of shelf and they have driven the profitability out of many categories. Some vendors don’t recognize who our customers really are and are trying to change everyone into a cookie cutter, mass merchant operation.

Localization is coming of age. Retailers, such as Wal-Mart, HEB, Safeway and others, are creating the store of the community. Assortment, pricing, space management are all being customized for each store or clusters of stores.

In 1990, if you could have accurately predicted the changes created by the tidal wave called “category management,” what would you have done differently?

Some experts say the localization movement will create more dramatic change than category management.

What are the ramifications to your supply chain? What opportunities does this create for your brands? What building blocks need to be in place for our industry and who is going to do the work?

No. Category management is, and should be, a science. Minimizing the guesswork will create analytics which ensure accuracy in tracking, recording and future modeling. Any “art” allows for guesswork and errors in the modeling. The models are built upon prior purchasing history and inventory vs. velocity. The key for the accounts are to maximize sales while minimizing out-of-stocks and keeping the shelves “looking” full.

With some categories having hundreds of SKUs, this doesn’t allow room for “art,” nor should it. Great category management reflects good models, built upon good history. Anything else is “guesswork” which creates risk, and poor category management.

The subject of the evolving role and scope of category management comes up often when developing a monetization strategy for in-store media networks. As CPG companies continually press for more accountability of their advertising, merchandising and promotion funds, category managers have a unique and valued analytical perspective. By using their analytical data and merging a creative marketing perspective, retailers will be able to provide CPG manufacturers the fiscal accountability and consumer interaction they desire. By understanding the unique role of the store in today’s multichannel, consumer-controlled communication environment, retailers will benefit by merging the science of category management and the art of marketing and communication.

Category Management has become the most successful integrated process in the overall ECR (Efficient Consumer Response) umbrella. ECR has the other valuable components, such as EDI, ABC, Continuous Replenishment to name a few. CatManaIt has been able to drive WIN-WIN situations for both CPG and Retailers trough powerful data mining, balanced scorecards and feasible tactical plans. The first co-joint effort between suppliers and retailers to deliver superior customer service (right product, at the right time, in the right quantity, at the right price) while generating more profits by combining general business directions, fulfilling companies’ mission and following their strategic imperatives. CatMan has also increased the need for more consumer data (panel, syndicated data, ad-hoc surveys, psychological, life traits, etc). However, most of the processes have life cycle, and so does CatMan. Either it is time that CatMan starts reinventing itself by adding new components to its process, or it will become another tool that will generate a lot of good insights but no longer add competitive advantage. It’ll have to come up with creative ways… Read more »

As long as retailers keep thinking of Catman as a “science” to handle planograms, nothing else can be done. At least, in emergent markets, the science underneath Category Management has been left aside, replaced by “buyer or retailer’s Category manager” guts. Any science behind the analytics, reports, pivots or shopper insights remain only in the power point presentations, but all the decision making doesn’t keep all these in mind. For these markets, there’s still a long road before going to the next step. It’s just making the first steps of sharing information, delegating some of the category’s administration and taking into account that one person’s samples alone are not valid to extrapolate to decision trees or a whole shopping experience. Every year we can see lots of consultants and companies talking about category management, but not about the science or the philosophy about it; instead, about the planogram or the promotion in which it was implemented. We still have to understand that assortment and planograms are a consequence of a much deeper analysis and are… Read more »

Many outstanding comments above about the allocation of art vs. science in category management. I was present at the CM conference with Eric Togneri and witnessed much debate about this. The quality of the dialog was excellent – high minded and grounded in case study. Clearly analytic capabilities are advancing rapidly. We have better and faster data flows and more insightful segmentation schemes. But CM plans still underperform versus expectation because the plans don’t get implemented reliably in the store. Central CM analysis and planning have had the side effect of cutting the local merchant out of the loop and tasking store managers with an impossible agenda of activities. Stores of the community are nothing of the sort, in my view – they are merely more complex agglomerations of segmented category plans. The more intricate we make the plans, the longer the odds become that the stores will be able to execute against them. And we really don’t have any clue yet about how they roll up at the level of store performance, do we?… Read more »

Category Management is Art and Science. We have corrupted the process by full and unfettered control by Manufacturer Partners. The surrender of leadership is the problem, not Category Management. When a Category Partner is enlisted to participate in the Retailer’s process, he (she) really needs to switch hats. At that point he works for the retailer. What is good for the retailer is good for the manufacturer. If a product is not productive in the space that it is in, or doesn’t contribute to honest differentiation, it doesn’t need to be there. The motive for most Category Partners is to control competition more than to be the honest broker. Most “Analysts” working with retailer partners really lack the field experience. Usually they are College grads with a penchant for numbers. A blend of “Purple Fingers” and “Stacking Cans” experience is necessary to the process. Following Uncle Vilfredo Paretos principals too closely can gut category selection and true differentiation. Bring Integrity, Experience, and Knowledge of the Category (CM is NOT generic) into the process and it… Read more »

We need more artists. Analytics help fix mistakes, identify opportunity gaps and communicate quantifiable solutions, but retail had better be part art and not all science. People aren’t 100% predictable or programmable (yet) or all future mates would be found on Match.com. A key point has been missed so far. It is the Buyer (up to the president of the chain) who is responsible for the retailer’s merchandise mix. The buyer has to be up on the market, competition, trends and what the category manager recommends. It’s their store. The exact same information analyzed by 3 different CPG category managers can produce “surprisingly” different conclusions. Sometimes you don’t have all the numbers, just your numbers, which means you are looking backwards. You can’t plan a business or a category only looking in the rear view mirror. And, numbers won’t always tell you that the reason those dresses didn’t sell in Puerto Rico is because purple is a funeral color. I am a firm believer, as David stated, in walking your stores and the competitions on… Read more »

Category Management is dead. Now that I have gotten your attention, I’ll explain myself. Category Management is only one aspect of the selling process. The other is the CRM aspect which looks at lifestyles and specific customer motivation to produce a sale. For this reason, I think retailers have to get away from the myopic view of Category Management and use a “Demand Management” approach that combines both the CM and CRM aspects of the selling process. Under the Demand Management approach, CM becomes the strategic tool by which you manage and measure overall performance. This is how you establish margins and plan your general assortment strategy. CRM becomes the tactical tool, as you use frequent shopper data to motivate specific customer behavior and satisfy customer requests. Thus the CM tools set the objectives for the category while the CRM tools implement the rules. This can mean drawing customers to new categories or motivating them to try higher gross (private label) products in existing categories. It can mean building that special bond with your $200… Read more »

Does category management need new life? Absolutely! It needs a good “shot in the arm” if retailers are to continue to experience incremental gain. Now, let’s understand several significant limitations of category management, from a structural and process standpoint, as defined today. My comments assume retailers have no choice but to become more sales and shopper driven to effectively compete and grow their businesses. These limitations are as follows: First, the organizational structure of retailers has been compartmentalized into departments such as Grocery, HBC, GM, Meat and Produce for decades. This traditional structure, by itself, is the primary contributor to misalignment of merchandising strategies and tactics across the store and it is a huge barrier to optimizing complementary category merchandising across departments. Second, The sameness of the category planning process, available scan data and panel data across retailers has created an environment conducive to improving performance by closing opportunity gaps and achieving parity. This sameness, however, limits a retailer’s ability to move beyond parity. It is extremely difficult to uncover hidden growth opportunities that can… Read more »

Academics have offered some potential enhancements to the CM process to avoid some logical errors. Many of these “solutions” are too complex to implement. However, there is a need for CM to become more methodologically rigorous and more practical while avoiding many of the problems that have been identified. Some of this problems include the use of biased measures (e.g., average sales per facing vs. marginal sales per facing), the need for analyses to reallocate category space, the need to consider effects on complements and substitutes and on market baskets, the need to adjust data for out-of-stock problems so the final results reduce OOS, and the need to link the recommendations from CM to the strategy for the category, department, and store.

In the emerging trend of “Retailer as Marketer,” the category manager role has yet to emerge in many retailers. Many of the commentators have hinted at the key to why category management is so data-driven today, but no one has yet come right out and said it. They are called category MANAGERS — not category MARKETERS– and there’s a reason for that. Category management in its practiced form is a huge step forward from the days of buyer intuition, for purposes of optimizing range and shelving. That is the primary focus of category management in most retail organizations today and, reasonably enough, therefore, the focus of most CPG manufacturer category management recommendations. This is also one of the primary reasons that CPGs routinely request to have someone from “marketing” or at least someone senior to the category manager in the room when they have a major consumer insights study to present. The true “marketing” still takes place largely at the top or in a group separate from the Merchandisers. But the change has begun and… Read more »

Good category management has always been about blending the hard sciences with the soft sciences.

Too much reliance on one side or the other, and the category manager isn’t worth a flip.

Not unlike weather forecasting with huge computing power, historicals and teradata at one’s disposal, you can compute to several decimals of accuracy, but a forecast is still just a forecast.

What category management needs to add on to its current processes and skills is the art of unlocking shopper insights and leveraging these into shopper marketing ideas.

Understanding ‘how shoppers shop’ the category and then influencing them to purchase by ‘seeing the store through the eyes of the shopper.’ It’s not either/or but AND.

Number crunching category data AND a qualitative feel for the shopper, operational efficiency AND strategic ability.

The store is a marketing medium like any other and powerful ‘engagement’ of shoppers is the key to differentiation and sales. In worshiping the ‘ritual'(systems and processes), one often forgets the ‘god’ (the shopper). Category Management needs to become more shopper-centric. After all, it was Sam Walton, the founder of Wal Mart, who said, “Find for your consumer something more important that your product and you’ll strike gold.”

I think that category management needs to evolve, but that doesn’t mean it becomes “art.” Category management has a rigor and a structure to it that we rarely find in marketing research, where everyone seems to have their own variation on how to do concept testing or brand tracking. Category management has principles that are consistent from retailer to retailer and category captain to category captain; these elements of consistency represent professional standards and are to be preserved. On the other hand, practices and standards can and should evolve. Category Management needs to do a better job of injecting the consumer into the process, and in particular, focus on demand situations rather than just product segments. This process can be just as rigorous, but the information needs are different as the analyses and templates must evolve. Think of how Whole Foods would arrive at the assortment and space plans they have by following a consumer-centric form of category management and you get the idea of how we work with our clients.

I believe that effective Category Management depends on the intersection of art and science. To Mark Lilien’s point, if the process could be 100% automated, it would be. Furthermore, if it were, you certainly wouldn’t see retailers bringing manufacturers into the equation to add insights. In such a world, each retailer would simply run the models and place orders Just-In-Time (JIT).

In the real-world though, manufacturers and retailers do collaborate because many retailers realize that there may insights that a manufacturer can bring to the table. While companies (my own included) do offer automation solutions, there is no substitute for some good, creative, human thought.

A much more realistic goal is to automate 80% of the tedious work of building data driven presentations, and spend the time you just saved putting real insights into the presentation or review.

I want to agree with Ryan Mathews – I don’t think we’re doing much category management as it was envisioned in the beginning. I think we are crunching a lot of data for retailers (so that they don’t have to) and not focusing on the big picture – how to make categories more profitable and work to further the retailer’s strategy (the above mentioned localization and forcing cookie-cutter solutions applies here). Let me also recommend to those interested ESOMAR’s retailing seminar in Valencia in February. We’ll be delivering a paper on this very topic and there are usually some good presentations at these events.

Significant management decisions are often fact-driven, but many decisions are based on human judgement. Category management, when done well, definitely requires human judgement. If it could be accomplished 100% using automation, that would have been done already.

At the core of category management is analysis, the goal of which is knowledge and competitive advantage. But how does one obtain knowledge? It is clearly not from looking at spreadsheets, data models, and pivot tables. One can only gain information and, perhaps, insight from analysis. Perhaps that’s why analysis and art seem so different.

Knowledge only comes when a category manager understands the result of actions taken as a result of insight. Here is the chain: data transforms to information, from which insight is gained. Then action is taken, and the results are measured. Knowledge is attained after analysis of the results of insight-driven action. This often involves marketing. Finally, competitive advantage builds as more and more knowledge is gained. If you will, the “art” of category management is learning from the actions you take based on analytical insights.

Interesting discussion and one that is likely played out in one form or another around many companies’ water coolers (especially around budget setting time). My two cents of it is that Category Management is a terrific improvement over the PURE gut or intuition approach it was designed to supplement. What I think is missing though is the element of being a merchant (not merchandising as we define it oftentimes). Whether the business card is a retailer’s or a manufacturer’s; the need to recognize the importance of making a sale to a real live consumer/shopper and not to a spreadsheet is what I sense has been lost. The feel for the business, the understanding of the shopper (and not so that we can place him or her in a box or a field in our analysis, but so that we know what they see and feel and experience), the store floor exposure, etc. is where I think the business has slipped. If you will pardon the military analogy – the best generals lead the troops from… Read more »

Fact based decisions will always be at the root of category management, however, as category management blends more and more with brand management, we cannot omit the importance of the gut instinct in understanding how the consumer will respond to a particular promotion, package change, etc. If everything were strictly fact based, then there would be only one retailer and one brand in each category.

I hate to be the naysayer here. O.K., I really don’t hate it, but I’m forced to say most “category managers” aren’t really managing a category within the context of an entire store — they’re arranging inventory according to an arbitrary product code decision. Category management will never reach anywhere near its full potential until it moves past the selection, acquisition, shelf-positioning, shelf replenishment model for a series of SKUs to a model which addresses the entire retail context, keyed off an analysis of specific target shoppers.

I am not sure how you insert “art” into category management. There are too many companies that are themselves being managed by the big CPG companies’ marketing plans to choose and allocate space. There seems to be more flexibility in the regional companies to focus on not being “cookie cutter” and are looking for part of their offering to be more “risk taking” with smaller, local and unique lines that may not show up in IRI and that add to the shopping experience.

The larger national companies are not looking for that new and different line of products when P&G or Kraft is coming out with another version of a line extension with national media coverage. It has become a catch 22 for category managers.

I am a great proponent of the category management process but am also a greater proponent of creativity and idea generation. So many times we hear about fact-based decisions driving the ideal category management solutions but at the end of the day, isn’t merchandising all about the blend of art and science? I’ll recall a major West Coast retailer telling me back in the days of DPP that if he limited his decisions to the facts, he’d have very large sections in the stores with very few skus!!! I think if we are going to have retailers that are differentiated, creativity must come into play or the supermarket will end up like the high end department store and all look alike!!!

Category managers analyze change, they don’t necessarily create it. Thus, I look not to the present state of category management but to its future potential. The big opportunity/challenge for “category managers of tomorrow” is to envision how consumers’ minds think and emote before buying … and do it in the context of all the related things in their lives as well as in the store, which relies on frames not just facts. I may be wrong but “Think about it.”

I view category management as the basic level of analysis and shelf productivity work needed for retailing. The biggest opportunity is identifying shopper insights to move category management from the rear view mirror to the big potential still out there when we better meet the needs of shoppers.

How do we emotionally connect with Mom at shelf? What first moment of truth opportunities exist through improved signage, shelf layouts and destination work? Category management begins the process and insures the basics are met. Putting shopper insights in to action is the big opportunity. Doing so will take Category management to a more strategic level.

Oh yes, CM does need a dose of art, but I’m not very confident that the current group of category managers can make this leap. I think that there are 2 different sorts of people needed for 2 specific tasks. As Sandler pointed out, people who are task oriented (current CM trait) are not usually people oriented. I think for CM to move forward a whole new breed of manager must be incorporated into the mix – and someone who has not lived their life that close to the numbers.

It’s all about evolution. This process is grounded in analytics and a fundamental approach that should lead to the right answers…assuming the inputs are right. That being said, a vanilla approach leads to vanilla execution and little in the way of differentiation for either a retailer or a manufacturer. It never ceases to amaze me that 15 years later we have added a ton of capability to the process but we are still struggling with execution against fundamentals. All of this being said, we need to stay grounded in the ability to get to fact based decisions quickly and accurately but stretch our ability to be creative in our solutions in-store. Otherwise, let’s just automate the whole thing and move on.

From a manufacturer perspective, there are too many decisions being made by the customer based on how much money they are receiving up front. Slotting has to go away before all the right decisions are made for the category and the consumer. As long as manufacturers continue to dangle large sums of money for new items and shelf placement, then category management will continue to be just a glorified term. It’s not just the manufacturer’s problem though. Retailers must reject items if the only benefit is up front “slotting.” Until this issue goes away, category management will never be 100%!

For category management within the retailer community to take the next major step and be in line with their shopper base (through the underused and unappreciated consumer engagement gold mine) the creative and advertising skills of these key personnel must be embraced. CPG entities already have this in place and are exercising the creative and advertising aspects of marketing their brands and corporations to shoppers. But, it is the retail community that must plan for and initiate the sale! And NOT solely react to the numbers… sold units, shelf space allocation; share of supermarkets’ department contribution to sales, gross profit margin; and traffic generation. Most, if not all, consumer packaged goods and food companies have been utilizing category management to bridge their marketing/brand management groups with the retailers’ category teams. And, in some cases this communication and marketing link has been through the CPG’s sales organization. Don’t know who is underestimating the CPG companies’ efforts in category management but it is time for the next major step – creative and advertising events and programs –… Read more »

YES! Category Management is a combination of art and science…similarly, it is a combination of strategy and tactics. Analytics is certainly extremely important, but there are other things to consider: shopper dynamics, aisle management, aesthetics, presentation, etc. In addition to the typical analytics, I think most need to move more towards advanced analyses such as Store Group Analyses, Controlled Store Tests, ANCOVA, attribute modeling, etc.

Category management has moved forward to aisle management and most recently solution management. I believe these forms are all extremely important, however, I think the industry needs to move more towards Shopper Management. Category Managers need to understand shoppers – why they buy, where they buy, how they buy, what they buy, etc., and manage the category to accommodate the shopper.

Let’s see, since the mid-80s introduction of CatMan: 1. Grocery retailer profitability is lower than ever. 2. Grocery retailer share of the overall market is lower than ever and CatMan is not an instrument of share growth. 3. And with the exception of a few stellar operators who market themselves effectively, stores in that channel look like a sea of sameness, and thereby give less-than-full assortment operators like Wal-Mart a big leg up. I doubt if category management effectiveness is the primary driver of the success of the so-called best practitioners in US Grocery. But I have no doubt that effective branding is. In any case, the greater portion of the CatMan premise is flawed as retailers rely on invariably subjective suppliers to provide them with objective observations and insight. How can so-called “fact-based” selling exist much less thrive in that environment? Framing the core issues as fact based misses the point. It is and always has been a value-driven world, and every operator has its own calculus of how it weighs benefits and costs… Read more »

Lots of great commentary! The role of CM is primarily defined by where you work, whether it be for a manufacturer, warehouse, broker, or retailer. In an ideal world, we would all be looking out for the consumer and their desires. Manufacturers often want to push dogs, warehouses are addicted to their slotting, and retailers end up confused with conflicting information. There’s also the bigger picture of how you want to compete. What does your store or chain want to be known for? Price, organic, variety, deli, ethnic, gourmet? Too often, retailers are trying to be too many things at once, confusing the consumer. Wal-Mart and the clubs have the corner on price. I feel the best way to compete is in variety and specialization. Costco won’t be carrying capers any time soon and if they did, I wouldn’t want to buy them in a gallon jar. Private label also seems to be a lost opportunity in some cases. Mostly they end up being “Me too” items focused on price rather than being unique. If… Read more »