Platform for growth

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Nick Pearson.

Category management was first conceptualised in the early 1990s and, while many definitions exist, it is fundamentally about managing categories based on the needs of consumers.

A major hurdle to overcome when retailers and manufacturers or their distributors contemplate a category management initiative is reaching a common understanding of the approach. Retailers are focused on categories and product groups and how managing these can help them achieve a competitive edge in the market and deliver an optimum return on shelf space allocated.

Whether this is best achieved with the products of manufacturer A, B or C is not a major concern for most retailers. Manufacturers and distributors, by contrast, traditionally take a more "internalised" view being primarily concerned with the performance of their own brands. Many promising category management projects ultimately fail as a result of this dichotomy.

It does not have to be this way. It is possible to create a win-win-win approach, which meets the needs of retailer, manufacturer and consumer. This approach revolves around the Category Growth Platform (CGP).

The objective of a CGP is to create an alignment between retailer and manufacturer on how a category can best be developed to exploit latent consumer wants and needs. A critical ingredient in the process is the use of consumer insights. The result is a category roadmap which outlines the direction category development will take and dictates that all category activities, be they consumer promotions, new product introductions or in-store POS, are aligned with the agreed category strategy.

The initial impetus for developing a CGP should come from a manufacturer and be based on an analysis of the projected and potential category dynamics. While the current status of the category is helpful in understanding its evolution to date, it is the future direction of the category that is key to the creation of a robust CGP.

In category management the retailer appoints a ‘category captain' to lead the initiative and a similar approach is required for the CGP. Perhaps the most important quality for a retailer to look for in a CGP partner is the ability to innovate, both in product and activity terms.

One example of how a CGP initiative can deliver growth can be observed in the pest control (insecticides) category. Traditionally this is seen as a seasonal category, highly competitive and price sensitive, with relatively low consumer involvement. One leading manufacturer used consumer insights to identify an opportunity to significantly grow the category by focusing in two areas; extending the length of the pest control season and up-weighting the average transaction.

Indeed, most consumers only use pest control products during the main season when flies, wasps and mosquitoes are around in droves. Encouraging consumers to take a preventative approach before the season began and a maintenance approach in the low season was identified as a way of increasing usage while delivering the consumer benefit of dealing with the problem before it took hold. The new approach was communicated to consumers using attractive in-store point-of-sale material. As a result, the pest control category moved from being a seasonal one to being cyclical.

The classic way to increase the value of a category is to keep introducing better, more effective products and to charge consumers a premium for the improved offering. The pest control market in most countries is highly price sensitive with consumers perceiving little differentiation between basic products. In the pest control CGP, the approach took two forms; firstly the development of super-premium products such as liquid for treating external infestation and an aerosol containing a powerful disinfectant, a sort of 2-in-1 solution. Secondly, the creation of a DIY alternative to professional service companies allowing consumers to perform their own outdoor treatment programme much more cost effectively. These new initiatives drove the average unit price of the category higher.

The CGP is a focused, value adding tool when used correctly, improving the overall category performance for retailers, allowing manufacturers to grow category market share and providing consumers with new, improved solutions to their wants and needs.

Nick Pearson is managing director of Pearson Consulting. Email: This email address is being protected from spam bots, you need Javascript enabled to view it .

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