In this, the current performance of the category is evaluated with respect to turnover profits, and return on assets in the category. It involves an assessment of the consumers, the market, the retailer and the suppliers, Category assessment uses a variety of analytical tools designed to determine the category’s strengths, weaknesses, opportunities and threats. The process of category assessment can help a retailer identify the opportunities in the category.
Different categories will require different levels of analysis. Destination role categories warrant greater understanding an analysis than do convenience role categories. The aim of consumer assessment should be to understand the purpose or the reasons behind consumer shopping behavior the factors influencing them, like price, packaging and promotion and the process that they undergo while buying.
The basic purpose of the assessment of categories is to identify where the biggest turnover profit and return on asset improvement opportunities exist in a category, which is there is a gap between the chosen category role and the current performance level of the category.
One of the methods commonly employed to do an analysis of the gaps is termed as the Quadrant analysis. With the help of a quadrant analysis, one can determine the product / services that are winners, sleepers, questionable and opportunities.
The categories are classified into sleepers, winners, questionable and opportunities. The classification is based upon the BCG matrix which is illustrated in figure. The two axes are market growth of the category and market share of the category (below or above fair share).
Analyzing Product categories:
1) identify key products within category
2) de-list slow movers and marginal products
3) Give quick movers more shelf space.
4) Optimize margin mix and DPP
1) limit product mix to core assortment and de-list marginal products
2) look for price raises
3) minimize shelf space at category level
4) Transfer logistical and operational work to the third parties.
1) continue current policies
2) be alert to adoption of new products
3) minimize operational problems like out of stocks
4) optimize margin mix and DPP
1) Harmonize product mix with market trends
2) Improve price image via low prices for key products
3) Maximizes shelf space at category level
4) Give promotional support to key items.
Category assessment is a cooperative process; the conclusions flowing for the data need to be reached jointly. Different categories will require different levels of analysis. Destination role categories warrant greater understanding and analysis than do convenience role categories.
The critical elements of a productive category assessment include:
1) a clear assignment of responsibilities between the retailer and the suppliers
2) A standard assessment process.
3) Information and technology tools to perform assessment productively and objectively
4) Willingness, when appropriate, to share the necessary information and data between trading partners.
Category assessment can be a very time consuming process and the first stage of assessment should be the consumer, followed by the assessment of the market, the retailer and the suppliers.
The aim of consumer assessment should be to understand:
1) Why consumers buy particular category?
2) What is it that influences them the most?
3) The occasion when the category is purchased.
4) The process of buying
5) The relationship of categories in the buying process.
6) The location where the purchase is made.
Key factors which influence the assessment of the market are:
1) The pricing of the products as compared to the competition
2) The sales and consumption trends of the category, sub-categories, segments, brands etc in the marketplace.
3) The retailer’s market share for the category, sub categories, brands etc.
4) The gaps in the market opportunity gaps.
5) The comparison of the retailer’s assortment to key competitors.
Key factors which influence the assessment of the retailer are:
1) The retailer’s sales trends
2) The trends in profit and the operating expenses
3) The trends in product acquisition costs
4) The operating expenses for the category
5) The level of service
6) The productivity of the current category assortment.
Key factors which influence the assessment of the supplier are:
1) The sales and market share trends among suppliers in the category
2) The efficiency of the supplier’s information and physical flow.
3) The supplier’s brand development at the rent outlet.