Product Categories and Department in FMCG Retailing

Exhibit 32.6   Some FMCG departments and categories.

Categories are groups of products that meet similar needs. Departments are groups of categories that meet related needs. And the store is a collection of departments.

Exhibit 32.6 provides examples of some FMCG departments and categories.

Consumer needs can be defined broadly such as “hair care”, or more precisely such as “cleaning hair”. A broader need is met by a super category (e.g., hair care category), which essentially is a group of related categories (e.g., shampoo, conditioner, hair colour). Categories comprise of sub-categories or segments (e.g., anti-dandruff shampoos).

Marketers need to be careful that they do not define categories too narrowly. For example, a definition such as “yeast-based spreads”, where a single brand commands 90% share of category, is unlikely to capture the market dynamics. The category should be defined such that it reflects the needs of the consumers, not merely the form of the product. 

For retailers, their categories are central to their identity, and should be framed based on the needs and behaviours of their target shoppers. By and large, for established retailers, this task has already been performed, though, as markets evolve and innovative new products get launched, the category definitions may need to be tweaked and updated.

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