They should maintain an understanding of what the attributes of their core products are, where they can best position products to drive growth, and what products may be interchangeable. They should build category strategies, including assortment and pricing perspectives, based on customers’ needs and willingness to pay rather than on what sales and suppliers are pushing. Their primary goal is to develop a growth-centered product portfolio while expanding margins.Ĭategory managers today should build strategies based not on what sales and suppliers are pushing but on customers’ needs and willingness to pay.Ĭategory managers today need to be much more than buyers familiar with the industry they should be proven leaders who are both analytically and commercially savvy and who take a customer-centered view of what products or services will address customer pain points and create competitive advantages. The best category owners maintain a P&L mindset, including a comprehensive understanding of product offerings, pricing and channels, and cost drivers such as payable terms, marketing funds, channel fees, and supply chain performance incentives (Exhibit 2). To win, distributors first need to reimagine the role of category managers. Reimagining the role of the category manager The three pillars of category management excellenceīased on our experience working with distributors across industries, category management excellence stands on three main pillars: reimagining the role of the category manager, resetting category strategy, and linking strategy to core value levers. While most distributors struggle to manage rising complexity, a few industry leaders are applying lessons learned in retail and other industries to transform their approaches to category management, to gain share, and to bolster profits. Most category managers still rely on just a handful of levers, such as basic contract terms and price-increase avoidance, to work toward a narrow set of outcomes. Many distributors simply don’t have the capabilities or tools they need to uncover the most valuable category and assortment insights. A talent gap and rising expectations for category managers.But with a deeper understanding of end-to-end product categories, a distributor can make targeted changes in assortments and prices and identify more favorable product substitutes to grow market share and maintain, or even expand, margins. High inflation, coupled with labor shortages and rising freight costs, is putting intense new pressures on distributors. An unprecedented inflationary environment driving uncertainty.Many lack deep insight-driven category strategies that could help them weather the storms of product shortages, supplier price increases, and disruptive competition. Those without strong supplier relationships and flexible supply chains have struggled to keep up during the pandemic. Most distributors find it difficult to manage the growing volume of products, increasing price complexity, and multifaceted supplier terms. The ever-expanding depth and breadth of product assortments.Understanding the role of brand, as well as the right product positioning and placement across customer portfolios, is critical to knowing where and how to win within and across categories. Customers will keep expecting more, including more seamless omnichannel experiences, greater product and price transparency, customized recommendations, more value-added offerings, and faster deliveries. The growing complexity of customer requirements.But elevating category management in distribution is becoming far more important for four main reasons: The depth, breadth, and availability of products will continue to be differentiators and top buying factors for most customers across the industry. Distribution companies have historically played a major role across value chains, offering thousands, if not millions, of products to customers through elaborate catalogs.
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