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How can you develop a category plan for a category with low margins?

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A category plan is a strategic document that outlines the objectives, strategies, and tactics for a specific product category in a retail environment. It helps you align your goals with the needs and preferences of your customers, as well as the expectations and capabilities of your suppliers. A category plan can help you optimize your assortment, pricing, promotion, placement, and merchandising decisions to maximize sales, profit, and customer satisfaction.

However, developing a category plan for a category with low margins can be challenging. Low-margin categories are typically characterized by high competition, low differentiation, high price sensitivity, and low customer loyalty. They often require high volumes and efficiencies to generate profit, but also face the risk of commoditization and erosion of value. How can you overcome these challenges and create a successful category plan for a low-margin category?

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1 Understand your category

The first step is to understand your category in depth. You need to analyze the market size, growth, trends, and opportunities for your category, as well as the competitive landscape, customer segments, and shopper behavior. You also need to assess your current performance, strengths, weaknesses, opportunities, and threats in relation to your category. You can use tools such as SWOT analysis, category scorecard, and shopper insights to gather and synthesize this information.

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Sagar More

Top LinkedIn Voice | Digital Transformation Leader | DevOps, AIOps & SRE Architect | Cloud & Edge Innovator | Lean-Agile Strategist | Angel Investor | Visionary Author, Speaker & Influencer
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To craft a category plan for a low-margin category, delve deep into its dynamics, including consumer behavior, competitive landscape, and market trends. By understanding nuances and potential niches, you can identify opportunities for differentiation and cost optimization, laying a foundation for sustainable growth despite narrow margins.

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Michael Pintar

Experienced business development and project manager, sales leader, and problem-solver to companies looking to grow and succeed in their markets.
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1. **Market Analysis**: Understand competitors, consumer trends. 2. **Financial Analysis**: Assess sales, costs, set goals. 3. **Supplier Management**: Negotiate terms, optimize sourcing. 4. **Product Assortment**: Focus on high-demand items, private-label. 5. **Pricing Strategy**: Use dynamic pricing, bundling. 6. **Promotional Planning**: Targeted campaigns, cost-effective channels. 7. **Cost Management**: Optimize supply chain, reduce waste. 8. **Customer Experience**: Personalized service, feedback-driven improvements. 9. **Risk Management**: Identify risks, develop contingency plans. 10. **Performance Monitoring**: Track KPIs, adjust strategies.

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Derry Sakti

Entrepreneur & Business Leader | Solving Daily Business Challenges | Empowering SMEs for Growth
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I think you need to also be clear on what the low margin category means. It can be just a low margin category with condition (volume driven, or relationship driven, or other condition driven). Having this clarity in advance will help you to avoid assumption and plan better.

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Marcos Monterroso Godinho

CEO at Tikedo Spain | Global Executive | Managing Director | Board Member | International Expansion | Change & Transformation | Leadership | Industry | Retail | FMCG | Packaging
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Desarrollar un plan de categorías para productos de márgenes bajos implica análisis detallado, segmentación de mercado y diversificación de productos. Se prioriza la optimización de precios y promociones, gestión de inventario eficiente y reducción de costos operativos. La innovación y el monitoreo continuo son clave para maximizar la rentabilidad y el rendimiento a largo plazo.

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2 Define your objectives

The next step is to define your objectives for your category. You need to set clear, measurable, and realistic goals that align with your overall business strategy and vision. You also need to consider the trade-offs and constraints that you may face in achieving your objectives, such as budget, resources, time, and supplier relationships. You can use tools such as SMART goals, KPIs, and benchmarks to define and track your objectives.

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Derry Sakti

Entrepreneur & Business Leader | Solving Daily Business Challenges | Empowering SMEs for Growth
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Be mindful with timeframe. Developing low margin category doesnt mean the objective is for you only to fix the margin. The objective can be increasing the volume (lead to a bigger absolute margin), or reducing the cost (leading to overall better financial outcomes).

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3 Develop your strategies

The third step is to develop your strategies for your category. You need to decide how you will achieve your objectives by leveraging your competitive advantages and addressing your gaps. You also need to consider how you will create value for your customers and differentiate your category from your competitors. You can use tools such as category role, category segmentation, value proposition, and positioning to develop your strategies.

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4 Implement your tactics

The fourth step is to implement your tactics for your category. You need to execute your strategies by making specific decisions on your assortment, pricing, promotion, placement, and merchandising. You also need to coordinate with your suppliers, store teams, and marketing teams to ensure a smooth and consistent implementation. You can use tools such as planogram, price ladder, promotion calendar, shelf layout, and display guidelines to implement your tactics.

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alireza sharafi

managing director at Farda cooperative
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Increase your brand value and create demand in the customer And maintain and develop your market , Keep your customers and insist on the continuity of the market and work with your customers in promoting sales and developing them.

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5 Monitor and evaluate your results

The final step is to monitor and evaluate your results for your category. You need to measure and analyze the impact of your category plan on your sales, profit, market share, customer satisfaction, and loyalty. You also need to identify the best practices, learnings, challenges, and areas for improvement. You can use tools such as sales reports, margin analysis, market share data, customer feedback, and loyalty metrics to monitor and evaluate your results.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you develop a category plan for a category with low margins?

1

2

3

4

5

6

1 Understand your category

2 Define your objectives

3 Develop your strategies

4 Implement your tactics

5 Monitor and evaluate your results

6 Here’s what else to consider

Sales Management

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How can you develop a category plan for a category with low margins?

1

2

3

4

5

6

1 Understand your category

2 Define your objectives

3 Develop your strategies

4 Implement your tactics

5 Monitor and evaluate your results

6 Here’s what else to consider

Sales Management

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