When it comes to category management, you may know the seven essential components, but do you know how to implement each one?

To provide you with a better understanding of how important the 7 musts of true category management are in helping you grow your business, over the next several weeks we will be taking a closer look at each one.

Database Management

Database management, also known as business intelligence, encompasses several different data sources such as internal and external data sources, syndicated data, retailer point-of-sale data (POS), consumer data and marketing data. Talented category managers can help you bring together all the different data sources in a useful way. This will maximize efficiencies within the organization while building a strong sales story to help you win at shelf.

Data management can be extremely confusing but it doesn't need to be. What are your needs and objectives?  What questions do you want answered? This will help us determine where to start.

Data management includes making all of the different data sources work well for you. Similar to a chef at a gourmet restaurant, knowing how to combine spices with the different ingredients is what sets you apart from the greasy spoon.

Types of data available to manufacturers

Internal data includes your shipment data (that tracks the movement of your products to distributors and retailers), your promotional data (trade spending including all the costs associated with a promotion) and inventory data (your inventory of products ready to be shipped).

External data includes syndicated data, consumer data and retailer POS and distributor/wholesaler data.  

Companies that purchase sales data directly from retailers provide syndicated data. Syndicated data allows you to compare your items with competitors and to monitor your sales at the category, brand and item level in a retailer, market, region and country. This data is usually very expensive and confusing to use and understand, largely because the data is very robust.  

Some data providers offer a suite of reports and tools to simplify the data. The reports and tools are only as good as the person who interprets them. In the right hands, the data and tools can give a company a sustainable competitive advantage. Sometimes, it's wise to consult with an expert who can help you maximize your results.

Consumer data includes any consumer-related data including buying habits, customer usage, loyalty, trends and insights. 

Wholesaler/distributor and POS data is typically free and only includes your items. It is especially useful in analyzing promotions and managing item sell through. This data should be used to augment and support other data sources.

After collecting this data, the best way to view it is whatever works for you and your team. Some companies offer basic canned reports that are great for a quick reference/review of your sales. Custom reports offer a specialized in-depth look at your business. They are the single best tools to help manage your business and grow your brand.  

Daniel Lohman is the owner of Category Management Solutions (CMS) which provides innovative strategic solutions for natural and organic CPG companies interested in gaining a significant competitive advantage.