Every other day I come across resumés and LinkedIn profiles boasting about category management (CM). At times it feels unreal. Like a fad; just as every other person is a social media expert and has a strategy ready for your brand. At the risk of being labelled judgmental or arrogant or a spoilsport, I have to share this news. There are no real category managers in our industry today, just as there are no real social media experts in the social media business. Yet, everyone is a category manager in the FMCG industry, just like everyone with access to a laptop and a Facebook account is a social media guru.

CM is a buzzword that has been used and abused in the last few years as it started emerging in the European modern trade retail environment. When I was in Pakistan half a decade ago, the abused term was ‘category captains’, who were nothing more than in-store promoters. The company I worked for then used to call promoters ‘category captains’ and it made us feel ahead of our times. Most of the multinational FMCG companies like to have a category manager or two on their payroll and these are usually people who have acquired sales or marketing knowledge from previous assignments and depending on whichever orientation they come from, either the sales or marketing objectives end up winning the internal battle – and what gets lost in the process are the category objectives.

CM in its simplest term is about segmenting a category based on different shopper needs and then running the category as a separate business unit with its own P&L. Generally, the category captain (CC) is one of the manufacturers competing in that category and a retailer awards the role of CC to that person. The CC has the responsibility to deliver category KPIs for the retailer, essentially delivering the KPIs for its own brand. There are the typical eight steps in the CM process, details of which are available on the web.

“In Pakistan, CM and shopper marketing are in their infancy,” was the response of a senior executive from one of the largest modern trade retailers in Pakistan when asked about the evolution of CM.

“Lack of customised shopper promotions as well as exclusive modern trade promotions are evidence of this. Well managed modern trade outlets have a very sharp CM structure in place. The missing link is the response from manufacturers, who put their objectives before the retailer’s. How you sell is simply a function of how you buy. Without a robust CM regime, it is difficult to offer a proposition that works with shoppers.”

The point about manufactures putting their objectives before the retailers’ is a valid one. However, this gap can be bridged by putting the category objectives first. In reality, both retailer and manufacturer are serving the category, hence the shopper. This is a common missing link across markets and industries when it comes to CM.

In Pakistan, where modern trade does not even constitute 10% of the market, CM is far more challenging and, I am sure, more fun. Unlike developed markets, retailers in traditional trade environments are the advocate and trusted advisor of the shopper.

Compared to a market like France where half of the business comes from Carrefour alone, in Pakistan, every kiryana store owner is a little Carrefour, which is why developing a CM mindset can be a very exciting project, and what to watch out for is going to be the same as in a market where modern trade is evolved.

1. The objectives of the retailer and the manufacturer should converge to become the category objectives

Be it Naheed Supermarket in Karachi or Azad Mega Mart in Mirpur in Azad Kashmir, the retailer’s objective is always to maximise profits from each square metre space used by the merchandise. Manufacturers sometimes have a product in the category which is low in volume and off-take, but is high in profitability for the retailer. For example, in the Middle East, liquid detergents have higher front margins for the retailer compared to powdered detergents. However, when it comes to off-take, liquid detergents only account for 10% of the category. A common trap to avoid is to put too much focus on manufacturer profit, without looking at the overall sales in the category because this can put the retailer off the entire concept, especially in a market like Pakistan where CM is at a nascent stage. The best way forward is to gradually shift towards the highly profitable segments of the category and increase their overall sales to reach a target before reducing the size of a segment which is low on profitability but high on absolute revenue generation.

2. Balancing the Category Development Index

A CC working for a retailer will always have to deal with underdeveloped segments and underdeveloped brands (e.g. breakfast cereals in kiryana stores) as well as overdeveloped segments and overdeveloped brands (e.g. single serve sachets of Bonus TriStar or Tang in kiryana stores). The objectives of the manufacturer will vary in each situation while those of the retailer will remain the same. There are also situations where a retailer has an underdeveloped category and expects the CC to grow that category, which means shifting shoppers who are buying that category in another outlet to this retailer, and at this point as a manufacturer, the CC will have to take into account the cost of doing business with the retailer and whether it makes sense to shift shoppers of the category away from another retailer. This is what is called CDI (Category Development Index) for the retailer and the brand. There is a predisposition to oversimplify the interpretation of CDI without scratching below the surface and thinking about what the numbers really mean. As with most measures, CDI should be treated with more thoughtful interpretations, by tying in retailer strategies to the numbers.

3. Category management is not about making pretty planograms

FMCG manufacturers invest billions of dollars every year in an attempt to win, what P&G defined in 2004, as FMOT (first moment of truth) in retail. These dollars are spent primarily in-store, with promoters, POS designs, promotions and shelf rentals. A planogram determines how these investments come together at the shelf when shoppers come face to face with the product and make the purchase decision. While there is no denying the importance of a perfect planogram, CM is not about making planograms for retailers. In fact the real job for the CM begins after the planogram is in place especially within CM and shopper centric merchandising models. Both retailers and suppliers need to take advantage of all of the knowledge and capabilities related to space management to ultimately enhance their business KPIs and arrive at a win-win solution.

4. CM is category specific

Why is a player like Fernando Torres successful at Liverpool but a failure at Chelsea, or why did Mesut Ozil fail to create the same magic at Arsenal as he did in Madrid. Because, what works for one club, system or category does not necessarily work for another. If a CM project for Dalda cooking oil has been successful in delivering results, it does not mean it will automatically work for Capri, because shopper needs, consumer segments and category dynamics vary for each category.

Given that modern trade is not yet that evolved in Pakistan, it is the responsibility of FMCG manufacturers to take CM to a higher level rather than treat it as mere channel management, or just a job title.

Sami Qahar is a Dubai-based Pakistani looking for excuses to write… Aurora gives him a few. sami.qahar@gmail.com