Category Management and Category Captaincy: How They Function

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CHAPTER I

CATEGORY MANAGEMENT AND CATEGORY

CAPTAINCY: HOW THEY FUNCTION

Category management emerged as a retail management philosophy

in the 1990s. Rather than the retailer negotiating the best deal with each

supplier and relying on consumers to sort between the brands, some

retailers began planning in advance for an entire category of products.

Some consumers like a well-known brand even if it costs more; other

consumers want a lower-price product; other consumers are moved more

by a product’s natural or higher quality ingredients, unusual designs or

formulations, or color. Retailers increasingly chose to differentiate

between products of the same type, based on the different consumer

response each product in a category generates. Some retailers also have

made a greater effort to stock their own brands (“house brands” or

“private labels”). With the advent of computerized databases and

scanned product bar codes, retailers have huge amounts of information

about consumer purchases available on a daily basis. All of these factors

have become a part of the concept called category management.

An important aspect of category management is reliance on one or

more suppliers to inform the retailer about what is happening in the

development and manufacture of a product category and to assist the

retailer in making decisions about that category. Those decisions include

which products to stock, how to display them, how to promote and

advertise them, and even how to price them to the consumer. The

supplier the retailer chooses for this assistance is sometimes referred to

as a category captain or an aisle captain.

None of these developments is really new; each is an extension of a

traditional retail practice. Suppliers have always bent the ears of

shopkeepers, and shopkeepers have often relied on suppliers’ advice and

comments. Shopkeepers have tried to understand what consumers want

and to stock the mix of products which will maximize profit. What is

new is that these practices have been made part of a formal management

philosophy called “category management,” this philosophy seems to be

increasing in popularity, a supplier is often given an influential role in

decision making, and some believe that that role may have negative

implications for competition.