Category management is entering an exciting phase of its evolution that could affect the way retailers and manufacturers work together. What's involved is redefining the role of the manufacturer as category captain.
First, some background music. Category management for years has been considered a sophisticated and rather vague business technique. But everybody agreed that those who practiced category management were advanced and savvy folks who knew something the rest of the business world didn't. Much of that is still true today, except that category management is more understood. It has emerged as a key component of the Efficient Consumer Response initiative. The accent now is on the consumer; that is, analyzing and managing categories the way that consumers look at and shop categories. Retailers practicing category management are cutting-edge retailers. They will survive the merge and purge that will take place in the retail marketplace in the next five years. Category management presents an excellent opportunity for manufacturers to work with retailers. Manufacturers want to be what's called the category captain for all the major retailers around the country. In this capacity, trading partners work closely together to build the category toward mutual sales and profit goals. What the retailer especially wants is consumer data and knowledge and insight into the category. Typically, the No. 1 brand in any category, especially if it's a dominant No. 1, is in the best position to provide this information and be the category captain. After all, why wouldn't a retailer in search of a partner turn to the leading brand marketer? There are instances, however, when Avis does try harder than Hertz. The benefits of such hard work are obvious. A look at this issue's Page 1 story on Schick by Managing Editor James Tenser is a good example. There's a new category management emerging nowadays. It's being called category co-captains, and there are two types: two national brands acting as co-captains for a retail account, and a national brand and private label working as separate but parallel co-captains.
The first variety is not really new. When two national brands work as co-captains, they don't compete in the same segments of a category. One example is M&M/Mars and Wrigley as co-captains giving their insights in noncompeting segments of the candy business. The second variety of category management is brand new. It involves a national brand as one co-captain and a private label as the other. One example is Pope & Talbot, a Portland, Ore.-based maker of paper products, working separately but parallel to Kimberly-Clarke and Procter & Gamble. The retail accounts are Kmart, Tops Markets, Target Stores and Dominick's. Retailers probably think this is a good idea because they get more information and their store brand program has a voice. It's bad news, of course, for national brands, especially if this new brand of category management catches on. But if store brand programs get stronger and become a more important part of a retail marketing strategy, more private-label co-captains will follow.
