"If you control your factory, you control your quality; if you control your distribution, you control your image."—Bernard Arnault, Louis Vuitton MH.
To fully appreciate the manufacturer’s role and priorities in category management requires a basic understanding of trade marketing.
Manufacturers rely heavily on their trade partners — a brand must first gain and hold distribution before consumers can buy it. To secure their trade partners support in procuring, distributing, promoting and merchandising, manufacturers need to market their products to them. This form of business-to-business marketing where manufacturers seek to grow their business with their retailers, wholesalers and distributors by building value added relationships is of growing importance especially for products where brand choice decisions are increasingly made at point-of-purchase. Trade marketers are devoting considerable time and resource to partner retailers in developing their brands and categories in their stores. This is an ongoing process with long term commitment that yields business gains for both parties.
Trade marketing requires considerable business acumen as manufacturers and retailers strive to achieve the delicate balance between their shared goals and their distinct individual goals. On one hand these partners work together to enhance marketplace equity, and improve the overall performance and profitability of the category.
On the other hand they are engaged in competition for the profit that can be generated from the sale of goods. They rely on different, sometimes conflicting, profit models. Manufacturers seek economies of scale and a return on investment, whereas retailers are interested in economies of scope and return on inventory.
That they share complementary resources and capabilities strengthens their bond and increases the likelihood that both achieve their respective goals. There is the need to ensure that the engagement does not hover solely on negotiating discounts and trading terms, and that attention is devoted to the development of brand loyalty, store loyalty and marketplace equity. To sustain and strengthen the relationship, it is important the partners continuously align and strengthen their mutual self-interests.
The process of category management has become a crucial component of the trade marketing process. It serves to bring manufacturers closer to their business partners in a constructive process that encourages sharing of plans and strategies, synchronizing activities and resources, as they jointly work towards building marketplace equity.
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The Plannogrammer is an experiential learning facility for category managers, trade marketers, and retailers in consumer markets. Ideally suited for hybrid learning programmes, Plannogrammer imparts hands-on training in the planning and evaluation of promotions and merchandising.
It supports a collection of simulation and analysis platforms such as Promotions and Space Planner for optimizing space and promotions, Plannogram for populating shelves and merchandising, a Due To Analysis dashboard that decomposes brand sales into the factors driving sales, and a Promotion Evaluator to evaluate the volume, value and profit impact of promotion plans.