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by Laurus Nobilis
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Sales Force

CATEGORY MANAGEMENT

6 Steps of Range Assortment (E)

Retail Category Management

 


What is the role of Category management in contemporary market? What is the relation of range and space management and product availability? Learn about space allocation and layout setting tactics.

 

Posted: Sep 2011


 

 

 

 

 

 

 

 

The range assortment process is divided into 6 process step: market coverage, deletion validation, retention validation, addition validation, assortment finalization and assortment quantification.

Retail Category Management

The Role of Market Coverage is to target of market share in percentage that is needed to cover customers range (e.g. the products of company's portfolio should cover 80% or 90% of total market sales). This is chosen for the category or segment before starting the process of examining individual SKUs for the ultimate assortment. For example, to cover 90% of the market how many and which SKU’s would the company need.

The company should assess this via understanding the importance of the category to the customer. Retail Category ManagementOther factors for determination of market coverage targets are the company strategy, production capacity, local legislation, consumer and assessment of key competitors in order to see what level of market coverage they have.

Deletion Validation is the assessment of SKU value versus investment. SKUs in the range falling inside the agreed share coverage target are evaluated based on market, retail, and consumer measures to judge propriety of deletion. If SKU does not add value it should be deleted.

Category management is a retail and supply management concept where the range of products is grouped into specific groups of products of similar characteristics. Category management concept was developed at the end of 80s of 20th century in the developed retail markets. Category management is among the most advanced business tools for business results improvement.



Retention Validation is the assessment of SKUs if customer's portfolio is falling outside the share coverage target are passed through screens of market, retail, and consumer measures to judge propriety of retention. If there is a product that is not performing well in the market, but has unique value to the customer you should not delete it from the range.

Addition Validation assess if the SKUs not carried by the customer but if all key competitors have that SKU, it could be seen as competitive disadvantage as they are missing out on a specific consumers. Therefore this product could be added to encourage these consumers to shop in the customer's outlet.

Assortment Finalization is the last step, where the results of the previous steps are combined to in order to create at a new assortment.  This is summarized showing the number of lines added, the number of lines removed the previous range and the new range. It is important to ensure the new range is balanced and full and that company has the right product mix for each segment.

 
Continue Reading:

Category Management
Range and Space Management
Stock out Effects
6 Steps of Range Assortment
Space Allocation and Layout Setting
Space Allocation Case Study

 

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