Category Management unlocks communication and growth for both suppliers and retailers.
In recent years, the trading backdrop has been nothing short of chaotic: price rises, pandemics, wars, and inflation have triggered significant shifts in consumer and shopper behaviour.
Retailers are under increased cost management pressure, and many are persevering in recouping COVID costs. Retailer and supplier relationships are experiencing ongoing strain, with more tension predicted to come. Without a category-driven mindset, the discussion focuses solely on the share of the profit pool.
Richard Coker, Head of Advisory for Total Negotiation Group (TNG), explained: "Simply put, in such a dynamic environment, we see that the clients who are winning are the ones whose commercial teams are talking category."
"It's clear that clients need to get internal clarity on their own channel and retailer strategies first to help steer profitable commercial decisions. Prioritising a shopper-centric approach and emphasising the category should be the primary focus."
"Additionally, sharing insights with retail partners to drive winning mutual strategies and strong category-based plans will remain key in unlocking growth for shoppers, retailers and suppliers," added Coker.
Client case study: Protecting profit but still winning with customers
A TNG client came to us seeking additional support after realising they were not achieving the desired impact with one of their key retailers. The client's business lacked a clear category strategy, and internal discussions and resources were misaligned between sales and marketing. It was evident that customer conversations predominantly revolved around their internal brand objectives, with a strong emphasis on short-term performance. Due to the absence of a category-driven mindset, the discussions inadvertently always gravitated towards the allocation of the profit pool.
Using available client data-based insights (which further emphasised the need for increased investment in consumer research), TNG assisted in creating and clarifying the client's category strategy. This involved mapping the shopper's path to purchase, identifying consumer need states and occasions, and prioritising solutions based on category growth drivers.
Through an assessment of their current customer and channel dynamics, TNG helped to create an improved channel strategy for the client that aimed to protect profit but still win with their customers.
The client's strategic initiatives were then integrated and aligned with specific customer strategies to support customer category activations and contribute to the development of joint business plans (JBP's).
The client's feedback highlighted the effectiveness of this approach; they agreed that it should be the standard benchmark for all supplier conversations of this nature.
Coker said: "With the pace of change and the need to balance short-term performance, sales teams have less time to 'sharpen the saw' and shift away from discussing their own objectives and initiatives. We see this as a capability gap today for suppliers that are not winning."
"Now is the opportune moment to invest in team capability and help them win the commercial conversation.”
“One thing is for certain: if you don't do it, your competition will," he concluded.
Total Negotiation Group specialises in helping businesses understand and navigate the complexities of category and channel-based strategies to help unlock more enriching discussions and build more strategic relationships with customers.
To position your business for success in the face of evolving market dynamics, contact the team at Total Negotiation Group.