Category Management – Turn Your Data into Dollars

What and why is it important? It is a methodology used to segment and prioritize products, pricing, merchandising, space, inventory, and suppliers to align with customer needs.

Consider this: If I stock the same number of items on a shelf-regardless of brand or price—or maintain equal quantities in a warehouse for every product, is that efficient or profit-driving? Of course not. Not every item can be treated equally. So how do we determine the right space, quantity and price?

The answer: using data to make informed decisions. In the 90s & 2000s, businesses relied heavily on trial & error which often proved costly.

Today, we have a wealth of information at our fingertips to help understand both product and customer behavior. Identifying the most relevant data and uncovering the insights it provides is key.

A starting point: Understanding who your customer is and what they’re looking for. In a market saturated with health-conscious consumers, it wouldn’t make sense to invest heavily in potato chips. Instead, the focus should shift to promoting healthier alternatives resonating with your audience.

Cat Man must work in unison with multiple areas of the business to succeed vs standing alone. Product selection depends on reliable suppliers and solid supply chains. Pricing and placement should aim to build customer loyalty and brand recognition. Inventory needs to be stocked accordingly for high service levels, while marketing efforts foster an emotional connection.

Industry reports and supplier insights can be used as barometers for emerging trends—or to detect when trends are in decline. Tools like Geographic Information Systems offer powerful insights into market and consumer demographics. POS and inventory systems such as MRP's can help evaluate current and future product performance.

Combining varied data sources tells a more complete story. Relying solely on POS data is like reading only one chapter of a book. Many companies do this, but while POS provides useful insights, it doesn’t give the full picture.

Case in Point: Prime Energy Drink

Social media plays a significant role in shaping customer perception. 

2021: Prime Energy Drink launched with minimal volume

2022: Highly Demand generating $250 million in revenue (Bloomberg). 

2023: Brand peaked at $1.2 billion in revenue (Bloomberg).

2024: Revenue declined by almost 50% (internet searches declined by 58%)

(MarketingWeek.com)

Businesses that leveraged external data sources recognized this trend early, secured inventory, and became go-to destinations. Companies relying only on POS data were late to respond, scrambling to secure stock and compete with early movers. Although some caught up briefly, the trend sharply declined in 2024. The result? Retailers late to take advantage were left overstocked, and forced to develop clearance strategies and absorb losses.

Success requires collaboration across business units and data integration.