Factors Affecting Category Management

Category management process is working well in some of the countries like USA, Brazil, Germany and UK. All the retailers are not adopting this process because of various factors. Some of these factors are listed here:

Top Management’s Willingness
Top management takes crucial decisions and category management is one of those strategic decisions where lot of issues like investment in people, technology and time frame of return on investment, etc. are involved. So, willingness of top management to go for such a process is veryimportant. This is first step forward to bring change in the way business is done.

Organizational Structure and Human Resource
To implement a new process organization structure needs to be aligned. The structure should support the new changes. Especially the willingness of sales people to implement category management at the store level carries paramount importance. They need training and motivation to bring the best out of them. So, incentive structure may require revamping. Again the top management‘s role is phenomenal.

In order to get the best out of category management process investment in technology, both in hardware and software is critical. Although investing in technology may not give the competitive advantage because competitor can buy and use the same software from the same vendor. But technology would enable the retailer to capture the desirable information about the consumer, which include a profile of the particular category’s shopper along with purchase dynamics like frequency of purchase, product movement and shelf space utilization. Even retailers and manufacturers can track the consumer purchase and usage pattern by using radio frequency
identification (RFID). Technology helps to take better decisions and prepare effective strategies and tactics. The retailers like Ebony, shoppers‘ stop and pantaloons have taken initiative to use technology for better measurement of performance and consumer satisfaction. Ebony uses retail prepackage for complete implementation of category management.

Relationship with the Supplier/Manufacturer
Relationship between the supplier and retailer is the deciding factor for the success or failure of category management. As the process is a collaborative one, manufacture plays important role in each and every step. There are issues like sharing of data and investment between the two parties. Retailers are hesitant to share the store level data with the manufacture because retailer invests to capture this data and they are very skeptical about the secrecy of shared data. Manufacture needs store level data to make effective category plan with the help of retailer. So, the conflict of sharing of data and resources is a real concern

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