One of the ongoing challenges in category management is to decide when the category
needs to be reinvestigated. The usual approach is to suggest that this is done when
indicators seem to suggest that there have been changes in the marketplace. The
question, as ever, is which indicators?
On a daily basis, many of us will see reporting on the performance of the FTSE 100
share index which gives a regularly reported and updated picture of the sentiment
of the market for shares in major businesses. Behind those reported numbers is an
entire industry which dedicates itself to looking for performance indicators, which
has annalists poring over figures and making projections about future performance
and how a business will react over time to market conditions and indicators.
There are complexities in this approach, of course. The most evident problem is that many of the businesses reported in these figures are giant congglomerates, and as such their activity is spread over many areas of business. Even more challenging is the spin and the bias that can be put on some analysts reports, as a particular predilection comes to the fore. A typical example is the way in which the Apple share price is both talked up and talk down at the same time depending on the way in which particular analysts choose to take a view.
However, none of this is insurmountable. It is possible to build a picture of both large and smaller traded shares which give a reasonable picture of the economic health of a whole series of relevant businesses. This can be done by not only focusing on FTSE performance, but some of the other smaller indices as well. In addition, we should be seeking out the various analysts who report on the areas that we are most interested in, and make sure we’re keeping up with the direction that they believe the marketplace is going. By keeping a view on a broad variety of analysts reports, we can take some of the reporting bias out of our own summation of the available analysis.
In addition of course we also need to keep track of reporting in good quality journals such as the Financial Times and the Economist, as there are often articles of interest which again will bend and flex our view of what is happening in the marketplace.
Of course, the insights required to decide if a category strategy needs to be reconsidered does not come immediately after reading a number of analysts reports. This is a discipline that needs to be maintained over a long period of time to ensure that we’re right on top of the challenges and movements in any particular marketplace. To do this well, we need to set aside time during the day to identified read and digests articles and reports that are critical in our areas. It sounds easy to say set aside some time and far harder to do in practice, but the reality is if we wish to be an expert in a particular category area, this is the sort of thing we need to do.
Ask yourself at the end of today how much time you spent reading and reviewing background and information about the category areas that you most involved in. If the answer is ‘none at all’, then perhaps you’re not developing the level of expertise that is required. And if you don’t have expertise in a category area, how will you make a decision?
Mark Hubbard thinks about Category Mangament and Negotiation in Procurement.
by Mark Hubbard