What kind of business impact can category management create? If the concept is not just about buying stuff, then surely it has a lot more depth to it — where can it shine light on hidden opportunities, thereby creating competitive advantage?
Yes, category management can help create new opportunities for businesses. My first experience with creating new opportunities was in the medical imaging field. I worked with the medical imaging category management team of physicians and support staff. During our supply market review, we uncovered upcoming technological innovations that were potentially transformative and outside the current specifications. One of the suppliers mentioned 3D, color, and high-resolution ultrasound and asked if it would be useful for Obstetrician-Gynecologist (OB-GYN). For context, back then the best available in utero imaging was 2D, black and white, with a low resolution. OB-GYNs were asked how this could improve their practice of medicine. They jumped at the opportunity and it was transformational for the field.
Later, I worked with a CEO and his leadership team at a company that manufactured asphalt. I took them through the primary tools of category management. During the workshop, they realized that their commodities could also be sold to higher-value customers. The CEO had a “lightbulb moment”, and he enlarged the company strategy; they branched out to paving racetracks! This gave them higher brand value because it differentiated them from their competition and grew their main business, the general pavement segment.
Another example of using these approaches to differentiate one’s market offerings is airplane interiors. One company sold seats to aircraft manufacturers, such as Boeing and Airbus. A number of companies make airplane seats and compete with each other, primarily on price. This company’s leadership thought, ‘What if we can sell an entire interior versus just seats?’ By doing so, they moved out of the price-competitive seat market and moved up the value stream to the entire interior market.
Companies that use the category management strategic thought process differentiate themselves from their competition.
Read more about The Global Category Manager’s Handbook