Skip to main content

Putting the Consumer Into Category Management

Category management is a time-tested driver of sales and profits, but the time has come to implement a more consumer-centric approach that identifies and targets underserved consumer groups and drives incremental profits for retailers and their supplier partners, according to. Steve Kent, Senior Vice President of Client Services for Spectra Marketing Systems Inc.

Recent research by ACNielsen indicates that traditional category management tools, though still important, are being used less often. One reason may be the limitations of the "classic" eight-step product-centric process, which enables retailers to better manage sales, but falls short in its ability to target and track the actions of specific consumer segments, according to Kent. “The result is that we still don't understand why some categories and some stores consistently under perform.”

This knowledge gap is ending. A plethora of new data has unveiled the diversity of consumer preferences. And a new consumer-centric category management process developed by Spectra Marketing, a sister company of ACNielsen, is dramatically enhancing the return on investment for new category strategies.

”The new process is far more efficient than the original category management process because it's designed to eliminate rework,” said Kent. “Users also have the ability to truly tailor marketing and merchandising to individual consumer segments and replace the traditional ‘one-size-fits-all’ approach.”

What sets the Spectra approach apart is Consumer Demand-Based Clustering, Kent added. Utilizing Spectra's proprietary consumer segmentation approach, Demand Clustering identifies and locates unique consumer segments and then groups stores based on a category's or brand's future sales potential among those consumer segments. It then identifies and weights the demographic attributes - income, education and lifestyles - that most drive purchasing behavior for each.

”Simply put, rather than just finding out how well a product or brand is performing, this process reveals how well they should perform in particular stores,” Kent said. “Then, retailers and manufacturers can develop a marketing plan for a cluster of stores with similar consumer demand landscapes rather than an ineffective chainwide plan or cost-prohibitive individual plans for individual stores.

Whether this strategy results in a reallocation of space in different categories or revamping media strategies to reach specific consumer groups, a consumer-centric approach delivers a better value proposition to consumers and a stronger bottom line for retailers and manufacturers, according to Kent.
“It is a process that leads to a new familiarity with local consumers, and the discovery of the overlooked and underserved who would very much like to buy more!, he said.

For more information about Spectra's Consumer-Centric Category Management process, contact [email protected].

This ad will auto-close in 10 seconds