Category Management: A key to profitability, efficiency, cost savings and driving your sales

It is important to understand what skus are driving your product sales and profits and what products are driving the market sales. Maximize focus on the stars and eliminate the dogs. This is key to category management.

• Proper sku and flavour management improves product rotation, production and ingredient efficiences and economises storage space.
• Category management is also a great tool to help your customers (both enduser and distributor) maximize their sales with your products. Customers are often blindsighted by their own view/perception of what they believe they should sell, so it is important to back up your sku changes with facts based on the market, similar customers* and your own company information. Customers must understand the lost sales opportunity if they do not promote the top sellers. They need to have the correct assortment of products to appeal to all of their targeted market segments.
  
• Ensuring you have the right products, sizes and flavours will also help pave the way for new product innovation and launches. Do not ignore the need to bring out new news to inject renewed interest in your category. The key here is to grow the category with innovation and at the same time rationalize skus that are stagnating.

Category management is often not well received by many customers. Ensure you present your category management changes with a well prepared win win story. In other words provide proof that their sales will grow with these 3 key changes:

• Improved merchandising/marketing of the best selling or new skus.
• Suggest a replacement sku for any discontinued sku that will have a better sales success.
• Sales support/communication of why these changes will have a positive impact to all their key operators/shareholders. This last point is key to gaining organizational support.

*Use Direct Link or CREST for market/customer/distribution trends and information.

The Foodservice Customer: Who has the Purchasing Power: Part C: The Contract Feeder Segment

Contract Feeders have the critical mass with "specific" product lines to enforce distributor listings country wide. Both distributor and manufacturer must be aggressive with their trade spend programs to secure this business. Contract Feeders will prioritise:

1. Inside rebates given directly to procurement
2. Pricing to the unit level
3. Product quality and consistency
4. Product support
5. Marketing commitment
   

Product compliance into their units makes them an ideal partner with a secure volume for the manufacturer. They have had more challenge enforcing their preferred products into their buying group members and it is up to the manufacturer to often actively help convert competitive brands. The key to this conversion:

• Find members using competitive product through velocity reports (generated from the contract feeder)
• Active sales call conversion: features, benefits, costings, samples, distributor codes
• Incentives to member or account rep to convert
  
• Attend buying group meetings/trade shows to promote product compliance and extend product usage.

As Contract Feeders tend to hold a low personal brand profile in most of the locations they service, they will support and often market high profile national brands to enforce the fact that use "high quality" products and ingredients. They also prefer to work directly with the manufacturer for all of their key ingredients. To have exclusivity on a contract feeder buying guide is ideal for a manufacturer, but do not neglect to reinforce your product usage with marketing, merchandising and technical support to ensure you remain a top priority in each unit.

The No Fail Strategy to Launch/Promote your Product

Never assume automatic distribution of newly listed products.


Step A: Your Controlled Customers:

Gain commitment/support from your own controlled customers from their procurement, marketing and operation departments and present the distributor concrete reasons to list the product and next steps to grow their sales:

• Test/sample/promote the product
  
• Forecast
  
• Point of sale/support tools: recipes , features and benefits, costings, nutritionals, distributor codes
• Ask for suppression of competive products or forced distribution
• Ensure technical support if needed
  

Step B: Promoting your Products:

You will also want to expand your distribution to all other customers. This means taking the "right" initiatives that will give you the biggest impact. It's also important to think "out of the box". This involves 4 key factors:

• a) simple sales strategy/promotion
  
• b) creativity to make it impactful/memorable
  
• c) execution of your initiatives with excellence
• d) measurable results

An Important Key to a Successful Launch and Broader Distribution:

• Do not forget about your distributor sales reps. Make them an integral part of your promotion and launch strategy.
  

It is a benefit to talk to outside companies about your product promotions. Andrea Orozco from KIK Branding. Strategy. Design. is commited to covering all angles and giving the manufacturer measurable results. The more ideas/information you have, the better you can take the initiatives to ensure your success.

The end result is that your customers and distributors will see that you have taken the initiatives to ensure the success of your product. You will win their support and guarantee return on investment.