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Category Management – how do manufacturers and retailers influence our choices in stores

You leave the store in which you bought sweets for your child – you walked in and they stood a few steps from the entrance. You bought the washing powder you use because you can only get it in this store. You bought meat and vegetables for dinner because you had products in your sight. You bought chips for beer because they were standing next to you. You came to the green stain with your favorite seasonings and picked up the pepper because you could see the black color of the slat in a central place on the shelf. Being at the checkout you hit a blue color and you took chewing gum. You did not have to look for these products for a long time and think about choosing, everything was visible.

This is how category management works.

Proper display of the product on the shelf and its promotion is a real challenge for both the manufacturer and the retailer. Currently both parties strive for attention of the buyers. And the competition on the Polish market is huge. At the moment, we have around 100,000 retail stores in Poland, and the density of retail outlets per capita is one of the highest in Europe. All the more so in the context of trade restrictions on Sunday, one can notice how much the network is struggling for the buyer by offering interesting marketing solutions or an increasingly broad product offer.

With such a saturated number of stores on the market and increasing requirements of the Polish consumer, it is very important to properly display products on the store and to encourage customers to buy this product instead of another. At this point, it is necessary to properly manage the category in the store. But what is category management in the FMCG industry? Always remember that category management is the process between the manufacturer and the retailer to manage strategic units to bring added value to the buyer, but also for each other. Currently, the buyer is in the center of both these groups. The analysis of various types of research – market, consumer, quality, etc. – is inseparably connected with the category management process.

Knowing this definition, we can go further and think about why category management is so important today? What Category Management brings and why does it have such a huge impact on our choices? I will explain this on a rather prosaic example.

How are we headed in the store?

Imagine that we are entering a supermarket. Do we pay attention to any product encountered after the first few meters? The answer is – no. This is because moving forward through the main aisle of the store takes us about 20 seconds before we know where we can look for the products we need. Often, we are also distracted at the first moment of entering the store, especially if we visit this place for the first time. Therefore, it is not surprising that usually at the entrance to the stores, we will pass the RTV and household appliances zone, potted plants or the press zone.

It is only after a few meters when we know what part of the store we want to visit, we will come across the first brand displays.

Moving further into the store on the main avenue, usually leading to a zone with meat, bread or vegetables, we pass a lot of POS materials. From various types of stands, stickers, hostesses – to interactive exhibitions. Each of these additional displays will shout “Buy me!” Each will aim to draw attention to the product, brand or slogan. This is because about 82% of purchasing decisions are made at the point of sale. Should any of the categories in the store be exposed to its limits? Absolutely not. Remember that too many exposures can even discourage the buyer from visiting this store once again. What is more, there are categories that need such big display and there are also products in which additional POS materials are unnecessary.

What categories will we meet?

The buyer comes to the store for a specific purpose – to buy the product he needs and the one he wants. The retailers and manufacturers know this very well. The first step to starting the category management process in the store is to determine its role. The assignment of a specific category role is influenced by various factors, including the retailer’s strategy, the essence of the category on the market, or even the format of the store in which it is located. We can distinguish four types of role categories:

  1. Seasonal category
  2. The convenience category
  3. Targeted category
  4. Routine category

I will briefly discuss two of the first roles. Products from the seasonal category are very often products present in the store at a specific time during the year. Mainly we are talking about all kinds of gift products, but not only. The visibility in the store is very important for products in this category. That is why we will meet seasonal exhibitions going down the main communication corridor, where the traffic is the largest.

The main need for Polish consumers is the ease and speed of shopping. That is why products from the convenience category are popular. The simplest example of products that fulfill this role are chewing gums or chocolate bars – set right at the cash register zone. We enter the store, approach the cash register, take the product we need and leave.

I will discuss the next two roles in more detail. For the buyer, products from the target category very often characterize a given store. It is for these products that the buyer visits a particular store. He knows he’ll get what he needs. He also knows that he will receive the product at a good price and good quality. What’s more, knowing that he will get a product of a given brand, he can count on a multitude of variants. Products from this group are usually not placed in the main avenue in the store. Usually, they are located in a block from the main place of movement of customers, or at the end of the store. The main examples of target categories include meat, vegetables or bread. Often, such products are, for example, fabric softener or washing powders – the buyer knows where the product is in the store, has a good quality, and most importantly a lower price than the same product in another network. Another example of the target category may be one of the groups of products with the highest loyalty among buyers – baby milk. We want to provide our children with a product of the best quality, price does not play a key role here. In addition, if it has been recommended to us by a doctor, there is a 100% chance that we will visit a store with this product, even if it was not necessarily on the way.

In this case, we deal with very effective and impressive use of the regular shelf. Why? We learn that the product is number 1 and recommended by pediatricians. We can find out that there are also different variants depending on the age of the baby – but it’s all marketing communication. What will attract the attention of the person managing the category? Why milk is in this place, so exposed. The blue block builds the visibility of the product, moreover, the play of lights caused by the LED strips makes the brand stand out. In addition, on the left and right side are so-called shelf-stoppers whose task is to separate the brand from its competitors. It attracts the attention of every young parent – and this is the goal of the category manager.

By far the largest group of products in every store are products belonging to the Routine Category. You can include here about 60% of the products in the store. The range of routine categories is very diverse. From completely basic, such as juices, or toilet paper, through the seasonings for which an important place of sale in the store (outside the regular shelf) are additional locations. Ending on alcoholic beverages and especially strong spirits, for which communication in the store is often the main place of advertising.

Companies from the alcoholic industry treat the store as their own medium through which they can convey their message. One of the examples are avenues that allow us to enter the world of brands. The great advantage of such exposure is to build the visibility of the product throughout the avenue. Not only by the entrance to it but also by the exposure on the floor. What’s more, right at the entrance to the alley with strong spirits and wines, on the right side we have an additional stand with products. Definitely, thanks to such exposure in the mind of the buyer, you may desire to purchase products of exactly this brand. Category Manager knew what he was doing by setting it this way.

Another example that is close to my professional experience in category management is seasonings. A very specific and complicated category, on the basis of which you can describe many mechanisms used in everyday work by the specialists in the category management.

The first thing that strikes our eye is the color positioning of brands. We are visualizers and we combine individual colors with brands. Therefore, it is worth creating so-called vertical color patches that will attract the buyer to a given brand. When products are mixed up with variants, brands and colors, it is definitely harder to find something suitable on the shelf.

The issue of setting the product on the shelf is also extremely important. When approaching the shelf with products we are experiencing so-called eye fixation. We stand motionless, without moving our head, but our eyes scan the products chaotically in search of the right choice, narrowing the field of view. What’s more, standing in front of the shelf, most often we reach for a product that is within our sight, but not perfectly on its line. The “warmest” shelves are those where you can reach for the product standing, without looking away at an angle of more than 30 °. Therefore, it is extremely important that the best-selling products are set in the right place for the buyer.

Is that all? 

These are just the basics, but they refer to almost all categories encountered on store shelves. Sometime, our choice will be limited to the first of the issues described, i.e. color coding – we choose either a red Coca-Cola or a blue Pepsi. More often, the issue of choosing a given product is much more complex and requires determining the right decision tree of the buyer, including the attributes that make up its final choice. There are categories like seasonings, where we will spend about two and a half minutes at the shelf looking for a product when on average we need a minute to think about other products. There are also those where we put the product into the basket mechanically.

It all adds up to an amazing whole. The process that takes place during every visit to the store. It shows how often the setting of individual categories in the store affects purchasing decisions. Because the choice of the buyer is stimulated not only by additional exhibitions but also (and perhaps above all) a clearly visible and logically arranged regular shelf.

Bartłomiej Skorupa

Category Manager at McCormick & Company