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Category development is an art as much as a science. Before explaining this, let me talk about the Category Development Index (CDI). This is the measurement of how well a category measures against its competition. There is a formula for this. It is quite simple. It is the category at retailer divided by the category in market multiplied by 100.
If the CDI is less than 100, the brand is considered underdeveloped and if it is over 100, it is overdeveloped. There is the attendant pressure to achieve a CDI of 100 and focus on developing the underdeveloped category and stepping back on the overdeveloped category.
Before you decide that hitting the perfect 100 score on a CDI should be your goal, bear in mind that there are other factors that come into play. You are looking at one category. Chances are good that you have more than one category in your retail market. If you shift your focus to ‘normalising’ the CDI in one specific category, what about the other categories in your store?
If you could manage to be even across all indices, would that make your retailing experience perfect. Not necessarily. It would mean that your store is aiming at the average market consumer. In addition, it means that you are aiming at the average brand in that category.
It is a complicated interplay between the average consumer, which in reality, may not even exist, and the average brand which may not remain static for long. Success can come from focusing on a niche rather than hitting a perfect 100 in the CDI for any brand or segment.
Your management strategies might be better served by studying new product development and planning more sales per annum, rather than category management analysis. Category strategy & development are, as I mentioned above, both art and science. There are huge opportunities to be derived from the insights that category analysis can offer. However, to fully identify the trends, measure the influence, and develop an action plan, you need the proper training in interpreting the factors involved in assessing a category’s position in the overall marketplace.
What is the retailer trying to accomplish in this category? What is the retailer’s strategy? Based on a specific target consumer and goals for the category, retailers need to focus on what the plan is, or should be, for each brand and each category.
In a category, a private label brand and a premium brand hold different positions. Should the retailer treat both the same, attempting to achieve a CDI of 100 or should the retailer look at the premium brand and focus on the best way to feature it and come up with a different strategy for the private label brand. The price point and the market for each is different. One may need more shelf space and the other may need more display.
I’m Phillip Adcock, a leading authority on shopper marketing. If you need advice on strategising your category development, contact me on: 07960 109 876 or Email: email@example.com