The 8 Category Manager Skills You Need To Drive A Retail Pricing Project
Have you ever gone to a supermarket or department store and wondered why the store layout and items are arranged and positioned like they are OR why displays and promotions change so frequently? What is the secret behind assortment, product placement and frequent shopper purchasing? And, what are the critical Category Manager Skills a business really needs to drive more foot traffic in-store and online?
Category manager skills are central to driving foot traffic through our stores (both online and brick & mortar). They also help businesses drive frequent shopper purchases by developing appealing layouts and offer configurations that appeal directly to their target market. Underlying capabilities such as consumer insights, price data analysis and interpretation skills are all very important category manager skills to formulate more sophisticated pricing and category management strategies and tactics.
But equally important are category manager skills like consumer psychology, brand analysis and value-based price-setting; Skills which enable category manager to:
- Understand what their customers are willing to pay now
- Anticipate what their customers would pay with a nudge or useful suggestion
- Offering customers the right level of discount to encourage spending without underselling the offer
So, in this article, we’re going to explore how category managers skills and pricing teams work together to increase shopper frequency and create viral foot traffic through stores. We will provide a brief overview of the category management discipline. Followed by a presentation of the 8 most critical category manager skills required to pursue more complex category and pricing projects.
We will argue that next-generation category management and pricing is now much more data-driven and customer-focused than ever before and will continue to get more analytical as competition heats up and retail business become much more data-driven.
The main contention regarding Category Manager Skills is that:
Retail businesses (online and brick and mortar) lacking essential category manager skills and pricing skills will lose margin on a daily basis via undisciplined pricing setting, excess discounting, misplaced promotions and store layouts.
What is Category Management?
Category Management is an ongoing process of product/brand categorisation i.e., classifying products and brand categories into separate or strategic business units to bring value to their customers. Its purpose is to give consumers what they want, where and when they want it. In short, it segregates the items into categories based on usage, needs-based analyses and how often it sells i.e., frequency/volume.
What is a category manager?
There are six category manager skills components: Two of which are essential for it to succeed. These are strategy and business process.
The other components are:
- Performance measurement
- Information technology
- Organisational capabilities
- Co-operative trading partner
While, a typical retail category manager responsibilities include: point-of-purchase plans, tactical daily price setting / discounting, category strategies and tactics; category managers also work with suppliers and buyers to get ensure the right business is stocking the right stuff for their customers. Category managers also work closely with pricing teams to ensure the data price and category architecture and any promotional effectiveness tools are aligned to the market. This work is crucial for bundled price trials and price optimisation projects.
To ensure category managers provide businesses with the right recommendations (category or promotional strategies to market), they need analytical, pricing and data skills. Some essential category manager’s skills include:
- Market data analysis – the ability to analyse best sellers in the business versus the competitor and design the category architecture accordingly
- Consumer data analysis – the ability to analyse changing consumer preferences, product sales patterns and purchase behaviours in the market to promote the right price bundle and offers
- Category strategy – the ability to use data and customer insights to define strategic and tactical plans to improve overall category performance and daily price setting practices
The 8 Critical Category Manager Skills You’ll Need To Master
Category managers are essential to commercial departments to drive profitability; They work closely with pricing, supply, customer insights, finance teams to ensure all category management activities are aligned to their customers; as well as internal buying, pricing and supply activities – making it a very broad and varied role.
Here’s a list of the 8 most important category manager key skills you need to achieve success and survive in a fast-paced retail environment.
Category manager develops consumer decision trees to determine what consumers and customers want and value. They also pay attention to the factors that led to that decision, such as brand, quality, packaging or the flavour.
Category managers work out the role of different categories to meet internal and external needs. Traditionally this was done with an internal business perspective i.e., Is it a best seller for us – the business etc? Now, however, category managers are arranging their categories based on their importance of categories to the customer, and how they value and buy different brands and products online versus in-store.
Category managers review categories to work out if all key elements are aligned to the market; i.e., pricing, promotion, placement, and product assortment assessment.
Category managers use dashboards to analyse key financials and BAU performance reporting to ensure products, ranges and assortments are reaching key objectives. Leading category management teams are also working with pricing teams to set up custom analytics dashboards to track consumer preferences. Including identifying unique customer value drivers for each product and category.
5. Category strategy
Category managers work out go-to-market strategies for each category to increase profitable revenue growth as well as market share.
They also develop tactics, data checks and protocols to achieve category strategies (above) and reduce unnecessary discounting that result in margin loss.
Category managers work with all commercial teams to ensure all price tests, promotions and offers are timely and effective and suggest suitable products and categories samples and trial.
8.Review & Performance reporting
They also track price trials and wider roll-out to ensure the business has reached its objectives, and the products and stores are generating value for their customers.
- New data / analytical category manager skills are growing in demand across many retail industries; and many generalist category manager skills are being replaced as market competition heats up.
- Poor categorisation
- Gut feel assumptions about store layout
- Misunderstanding what customers really want to buy
- Not being able to anticipate what people would like to buy
- Setting prices based on judgement calls and gut feel
Are no longer enough to attract and drive traffic through your stores.
- Since a large proportion of your companies’ profitability depends on individual category managers skills and ability; it is important to ensure you hire the absolute best category managers for your commercial department. They must be able to demonstrate their ability to raise the performance of a particular product to outsmart the competition.
- A sophisticated approach to category management, daily price setting and in-store layout are vital to maximising profits; and drive foot traffic through your stores – especially in light of emerging online retailers like Amazon.
Pricing teams can help category managers improve daily price setting, and stop daily margin erosion created by under or overcharging. They can also help you to structure better offers, price bundles and deals; – and ensure you don’t lose hard-earned margin on unprofitable promos that your customers don’t really expect or want.
Or, feel free to call me on (2) 91994523
Alternatively, subscribe to Taylor Wells pricing channel now and get an update as soon as a new video is released.