Thursday, March 1, 2012

Category Management in B2B

Lately, I am seeing a lot of advertisements (and hearing a fair amount from recruiters) for category manager positions at business-to-business companies. There seem to be a shortage of these folks with the kind of B2B experience I have; rather, the applicants all come out of consumer packaged goods (CPG) companies. I think many business marketing organizations have finally realized that the product proliferation and price confusion is neither helping them increase sales nor helping their customers find the right solution. One need only look for products on Motorola's website to see how hard it is to find the right products among the category clutter...and this from one of the companies in our industry that has it organized well.

The main differences in my mind between CPG category management and B2B category management are as follows:
  • Many B2B companies have multiple products that have to be sold as an integrated solution, making SKU rationalization more complicated;
  • So many different B2B deployment environments (compared with relatively few different retail formats) require countless variations of what would otherwise be almost exactly the same SKUs;
  • Configuration is de rigeur versus low configurability (except for private label goods) in CPG;
  • Declaring "end-of-life" for products is harder, as the installed base for products from the distant past may continue to be sizable and upgradability for these customers can be difficult;
and last but certainly not least:
  • Salespeople have much more influence over marketing than in CPG companies, in which marketing is general management.
This last point marks the crucial difference between the B2B category manager and the CPG category manager. The B2B category manager must constantly determine how to sell category changes to the distributors, systems integrators, channel partners, and even their own salesforce. In contrast, the CPG category manager largely relies on data from the retail channel and takes that data to the sales team to show them why they decided to make a change.

Ironically, both the lack of B2B end-user data and the relative power of the sales team means that B2B company category managers end up less focused on the actual end-user needs than in CPGs. Hopefully the emergence of demand for B2B category management experts indicates a change towards more end-user focus. I personally hope the rise of this group as a real discipline (already showing up years ago in industry leaders like W.W. Grainger and John Deere & Company) will mean that B2B product sets will become more user-friendly over time, which will be a real relief to those of us who have to order them, configure them, and use them on a daily basis.

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