Category management is a process, which is split into eight steps. As mentioned previously the category manager is not solely responsible for the first two steps, the definition of the category and its role. Category and role are not reviewed on an annual basis or even more frequently. In later process phases the category management team evaluates the categories and defines targets. The team then determines strategies and measures. Once these have been implemented the results are checked. Controlling and possibly revising measures is done on a quarterly basis, while preceding steps are generally only executed once a year.

Even the largest distribution line within a trading group is not able to stock every item. Serving the individual needs of all 33 million households and businesses in Germany is hardly possible. As a result attention has to be focused on certain customer groups - especially if the sales area is limited. This decision is a crucial part of the corporate strategy and therefore in the hands of corporate management. Data from consumer research as well as internal customer data is available to support this. Young families with have been identified as the core customer group.

As soon as the focus on customer groups has been defined, the next step in the eight-level process of category management starts: defining the category. Category managers pool products to categories, so that they best cover customers needs. They may be supported by category partners in this process. A category which caters to dog owners is called "Everything for Dogs".

The question is: How significant are the defined categories, especially for core customer groups? The answer is that all categories cover an optimized role portfolio tuned to customer needs. Four roles within these categories can be differentiated: firstly, the destination role. It is typical for categories which are vital to the respective distribution line and the core customer base. Secondly, the preferred role. These are products which are simply a must. Thirdly, convenience items, which complement the core product range. Fourthly, occasional/seasonal goods, which are only on sale during a particular time-frame such as Easter or Christmas.

Every category is evaluated depending on its role: What is the status quo and which potential is there within the category? Category managers analyse information in internal data bases and from market research institutes. Customers, stores and competitors are carefully scrutinized to identify strengths and weaknesses in the product range. Category managers consider a range of criteria, e.g. market trends, regional peculiarities and data about customer reach and needs coverage. In the case of the latter, retailers answer the following question: Which proportion of their demand for dog food do pet owners cover in a store of the trading group and which proportion do they get from a competitor?

Based on the result for the category, the category manager and the category partner jointly define the objectives for the individual categories - such as "defend market share", "build market share", "improve product image" or "access more free-spending consumers". The objective of the role has to meet the needs of the category. An emphasis on growth is not compatible with goods, which only have a convenience role, such a hair accessories in a food store.

The next step is closely related to the definition of roles and objectives: the choice of strategy for the category. The trading company and manufacturers agree how to fill the category roles with life. They sort, channel and prioritize tactical measures which are to support the implementation of the roles. The traditional strategies are boosting customer rates, creating awareness as well as generating more earnings and profits.

The category manager derives measures from the category strategy and answers the following questions: Which items are to be included in the range? How are they to be stocked on the shelf? Which price policy does the retailer pursue? Which categories should be advertised when? Information from internal data bases and from consumer and retail panels support decision making.

Now the implementation into day-to-day business is on the agenda. The category manager comes to an agreement with buyers and the sales team and defines the necessary deadlines and responsibilities. The defined measures are implemented in the stores - from product selection, locating products in shelves right down to the organization of promotion activities. During this time, the category manager keeps close contact to sales and coordinates the implementation by manufacturers: sales representatives. Sales reps of the category partners are not only responsible for the presentation of their own products, but of all products which are part of a category.

The category management team continually checks if targets are being met and if measures are being implemented successfully. This is also done with the help of a category management scorecard, a standardized analysis framework, which is part of the software CMplus, which is used by METRO Group for category management. The category management scorecard highlights all relevant business figures and answers such question as: How has the store and the distribution line developed? How has customer behavior changed? How successful were promotion activities? The category manager can compare industry averages with the results of the company and if necessary revise measures and strategies. He/she may also recommend the allocation of a new category role.