Sourcing and Procurement

Staying ahead: Adapting category management plans to market trends

Category management is a powerful strategy to drive sales, bolster customer experience, and optimise product offerings. This includes a careful management of product categories that meet customer demand.

However, without adapting to market trends in real-time, category management may be of little use. This article explains the importance of category management in new-age businesses, effective strategies, and ways to adapt to market trends.

Importance of category management

Category management is the key to an efficient supply chain and procurement management. It gives a deeper spend visibility for businesses to identify cost reduction opportunities and negotiate better terms with suppliers.

Standardise procurement practices for better compliance and streamlined processes. It helps foster close relationships with suppliers that build resilience to withstand market fluctuations. You have a data-driven decision-making ability that aligns with the organisation’s overall objectives.

Strategies for effective category management

Category management is a holistic approach to identifying customer behaviour, competitive dynamics, and market trends. By adopting these strategies, retailers can foster an environment of growth and loyalty –

  1. Rely on data-driven insights
  2. This is the foundation of successful category management. It uses advanced analytics to study sales data, customer preferences, and trends. This helps retailers make better product assortment, pricing, and promotion strategies.

  3. Customising product assortment
  4. Customise the product assortment under each category based on purchasing history and demographics. This helps optimise the shelf space by stocking up the best sellers, niche products, and complementary items for a diversified portfolio.

  5. Nurture supplier partnerships
  6. Nurturing supplier relationships helps you understand innovations, trends, and market dynamics. Collaboration in category management facilitates partnerships that align the goals of both parties.

  7. Excellence over aesthetics
  8. Effective merchandising strives for excellence. It thoughtfully places products in eye-catching places and guides customers through a seamless shopping journey across product categories.

  9. Price optimisation
  10. Dynamic pricing reflects competitiveness and market demand for a product. The pricing should depend on product value, elasticity, and customer expectations for maximum profitability.

  11. Targeted promotions
  12. Targeted promotional campaigns create anticipation about a product or its category. Use social media and other digital channels and loyalty programs to drive traffic to your business.

  13. Technology integration
  14. Leverage new-age technologies such as a category management system, predictive analytics, artificial intelligence, and more to streamline the process. Technology enhances overall accuracy, efficiency, and demand forecasting.

  15. Customer-first approach
  16. Customers should be the focus of your category management strategy. You can gather feedback through surveys and analyse the preferences to evolve the shopping experience.

Ways to adapt category management to market trends

Category management, if used in a certain way, drives maximum results for retailers. It is important to understand these ways to reap maximum benefits –

Analyse data

Collect and analyse data from several sources and make this the foundation of category management. These sources could include point-of-sale systems, loyalty programs, customer surveys, industry reports, and market research. Use the research output to segment customers, benchmark competitors, measure the category performance, and analyse patterns.

Update strategy

Based on the output of the analysis, update the category management strategy to meet the business and customer objectives. Define the role, vision, and goals of each category to identify target segments, growth drivers, and value propositions.

Engage stakeholders

Engage customers, suppliers, distributors, and retailers to craft your category management strategy. Communicate your vision and goals and take feedback from the stakeholders. Work out a joint business plan, co-marketing, co-delivery, or co-innovation strategy with your partners for a win-win result.

Learn from innovation

Category management is not a one-time but a continuous process of experimenting and learning. Use the actions and outcomes to improve performance and customer satisfaction. Test multiple scenarios with KPIs like sales volume, profit margin, market share, and customer loyalty. Monitor the feedback of customers and learn and adapt from it.

Conduct reviews

Review the category management plan regularly and evolve it according to the changing market trends. Evaluate the performance of the category to identify your strengths, weaknesses, opportunities, and threats (S.W.O.T). Compare the results with market benchmarks and respond to emerging trends.

How can Infosys BPM help?

Infosys BPM’s Category Control Tower (CCT) is a genome-based category management solution that gives real-time actionable insights and alerts that help in decision-making and risk management. Get the benefits of a platform-agnostic solution that gives proactive alerts and real-time insights.

Read more about category management and execution at Infosys BPM.

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