Rationale For Category Management
One key reason for the introduction of category management was the retailers' desire for suppliers to add value to their (i.e. the retailer's) business rather than just the supplier's own. For example, in a category containing brands A and B, the situation could arise such that every time brand A promoted its products, the sales of brand B would go down by the amount that brand A would increase, resulting in no net gain for the retailer. The introduction of category management imposed the condition that all actions undertaken, such as new promotions, new products, re-vamped planogram, introduction of point of sale advertising etc. were beneficial to the retailer and the shopper in the store.
A second reason was the realization that only a finite amount of profit could be milked from price negotiations and that there was more profit to be made in increasing the total level of sales.
A third reason was that the collaboration with the supplier meant that supplier's expertise about the market could be drawn upon, and also that a considerable amount of workload in developing the category could be delegated to the supplier.
Read more about this topic: Category Management
Famous quotes containing the words category and/or management:
“I see no reason for calling my work poetry except that there is no other category in which to put it.”
—Marianne Moore (18871972)
“The Management Area of Cherokee
National Forest, interested in fish,
Has mapped Tellico and Bald Rivers
And North River, with the tributaries
Brookshire Branch and Sugar Cove Creed:
A fishy map for facile fishery....”
—Allen Tate (18991979)