Improved Category Management: VDDW Corporate Performance Management Initiatives for Results

RESULTS: Initiatives > Product Category Management



	Initiatives: Overview Pricing Supply Chain Routing Planning & Budgeting Return On Advertising NOP–driven Negotiating NOP–driven Commission & Incentives Sku Rationalization Customer Profitability Market Segmentation Partner and Product Benchmarking Improved Category Management Staffing efficiencies Process Costing

Each sku in the company’s portfolio has a role to play. Some products are traffic-builders. Some are Price of Entry. Some are Differentiators. Some may be Loss-Leaders, and some Cash Cows. There may be other roles too. Product Category Management involves knowing which products play which roles, and managing them accordingly.
In what ways does a product’s role influence the way it should be managed? Some examples: Product role informs advertising strategy, pricing & discount strategy, sales approach, shelf positioning, sourcing decisions, and planned service levels, to start with. For example, a Traffic Builder might be a candidate for frequent advertising and discount sales, while a Cash Cow gets prominent shelf placement, and something that is Price of Entry is routed for rapid replenishment. There are really numerous roles a product can play, and numerous category management decisions that hinge on the product’s role – and these vary from industry to industry and business to business.
Managing these roles requires good information, to support at least the following two types of analysis:
1. At the outset, determination of what role(s) a product should play
2. On an ongoing basis, management of the product’s performance in line with its role
And the nature of the information required to perform such analyses includes good bottom-line profitability and handling expense metrics. One simply can’t determine whether or not a product is a Cash Cow or Loss Leader without understanding its economics deeply, nor track and measure performance against target for the role, without the underlying profitability info.
The VDDW approach delivers NOP and process costing for all products in the portfolio so that fact-based decisions can be made as to which products are best suited to which roles, and which products do or do not live up to the performance expectations of their role.