Understanding the Importance of Category Management
The primary purpose of category management is to help manufacturers and retailers reach their customers. The basic idea is finding out what a customer wants and providing it better than competitors. This is done by bundling the items into a group of similar products, called product categories. Emerging in the 1990s, this includes an eight-step process that can still have a significant impact on a business today. Here are some reasons why this process continues to be important for businesses.
Understand Buying Behavior
To effectively market your products, you need to understand who you’re selling to and what they are buying. This method of marketing products allows a manager to better understand what customers are buying and the market trends by focusing on a single product category. If a business understands what specific customers are purchasing products, they will be able to effectively market and stock those items so that they can satisfy customer experience and increase sales.
Inefficiency is the downfall of any business. When it comes to a retailer, inefficiency is taking more time to get a product to the market and charging a higher cost. This process was initially developed on a customer-focused supply chain, ensuring that products would get to market better, faster, and at a lower cost than before. Improving these inefficiencies results in happier customers as the products they desire are available, easy to find, and are a lower price than the competition.
One of the primary aspects of this process is the sharing of information between the supplier and the retailer. It is essential for both parties to know when inventory is needed and how much time it will take to replenish the inventory. The ability to remain in stock of all products without running out will keep customers satisfied as those products will be available when they want to purchase them. Without this communication, there will be a time when the retailer is out of stock, causing frustration for customers and sending them to the competition. It will also allow the retailer to avoid stocking too much of a particular item that may not sell as quickly as others.
Eliminate Unnecessary Costs
Various costs are involved with running a retail establishment. Too few items will result in unsatisfied customers while too many items will require a place to stock them. Understanding how many items are needed to serve all customers will allow you to limit the amount of room required to store those items. Storing fewer items enable businesses to reduce the cost associated with holding those items, such as warehouse space.
Know Which Products to Display
A retailer only has so much room to display items and wants to show those items that are desirable to the largest number of people. This management process allows retailers to understand what products are desired by the largest number of people so that they can efficiently use their space. This will help to create more sales as the most desired items be more readily available for consumers.
The purpose of category management is to understand the buying habits of consumers so that they can market and stock the most popular items. This will allow the retailer to increase sales while limiting expenses. Contact TradeBeyond to experience the best sourcing app available.