A ‘category’ is a group of products with similar attributes which are distinct from other products. Thus, a category is an assortment of items that a customer sees as reasonable substitutes of each other. So, products of the same category can be stored, stacked and sold in a similar manner. Therefore, a category is a group of products with similar traits which meet a consumer need so that the products are inter-related or substitutable. Examples of a few categories are: Beverages, Cooking Oils, Shampoos, Shaving Products, Toys and Games etc.

Category Management can be defined as: “The distributor/supplier process of maximizing sales and profits while enhancing product value and customer experience by managing categories as SBUs and producing enhanced business results by focusing on delivering customer value”.

So, ‘Category Management’ is a process of maximizing sales and profits while enhancing product value and customer experience. The main aim of category management is to gain a better understanding of consumer needs which would ultimately form the basis for retailers’ & suppliers’ strategies, goal and work processes. Hence, the concept of category management leads to better Efficient Consumer Response (ECR). Efficient Consumer Response (ECR) in turn leads to reduced costs, controlled inventory levels and efficient replenishment or refilling of stock. Thus, category management provides renewed opportunities to meet consumer needs and at the same time achieve competitive advantage as well as lower costs through greater work process efficiencies.

For effective and efficient Category Management, it is important to have the active involvement of all stake holders, manufacturer, retailer and customer. So, effective category management can be achieved by partnership between retailer and manufacturer. Also, the buying behavior and preferences of the customer is understood by actively engaging the customer to gain more profits.