The Pharmaceutical Journal Vol 265 No 7113 p374
September 9, 2000 Articles

Category management and community pharmacies

By Stephen Leadbeater

Category management seeks to "establish what it is the consumer wants, then deliver it". This article looks at how it can work for independent community pharmacies

Independent community pharmacies must look beyond the dispensing counter to the retail floor in order to maintain substantial revenue for the business. Pharmacies need to offer a complete service and range of products attractive to the consumer. According to the Institute of Grocery Distribution, category management, in its purest form, is defined as: "The strategic management of product groups through trade partnerships, which aims to maximise sales and profits by satisfying consumer needs." This is as logical as it seems: "Establish what it is the consumer wants - then deliver it." However, such marketing strategies can be easily overlooked by members of specialised professions, such as pharmacy. With the general dispensing and pharmaceutical service to oversee, the retail aspect of pharmacy often takes a back seat. However, since over-the-counter revenue accounts for more than a quarter of sales, it makes a significant contribution to the financial success of the pharmacy. Therefore, effective consumer marketing is not only worthwhile, but also essential in running a profitable business.

AAH Pharmaceuticals has a team of merchandisers for pharmacies in its Vantage Refresh symbol group. Linda Clarke, merchandising team leader, studies the planogram and core range items for a pharmacy in Barnsley

Category management

Essentially, category management reflects the needs of the consumer. With increased competition in the marketplace and high consumer demands, suppliers and retailers need to offer:

• Competitive pricing
• Guaranteed quality of products
• An attractive range of products
• Enticing promotions
• Effective service facilities
• Information
• A socially responsible attitude

Successful category management operates in a cyclical manner, with constant updating of the products on offer.
The process begins with category managers (CMs) in a wholesaler's marketing department studying a product category and identifying a core product range.
Using the dental category as an example, an initial product range in excess of 800 items was, using consumer and market research, studied and refined to just 120 key products. These products are then recommended by the CMs to pharmacists as "core-need" and "best-sellers", and are incorporated into a comprehensive range proposal and model layout, illustrating the most effective means of displaying product to capitalise on available retail space.
A strengths, weaknesses, opportunities and threats (SWOT) analysis is applied to the category to determine market, consumer and performance trends, which assist in the development of merchandising and the ultimate planogram. Unproductive and duplicate lines can be eliminated from the shelves, through an understanding of consumer behaviour, while retaining sufficient products to allow for customer choice.
A planogram, which can be tailored to fit the space requirements of each individual pharmacy, in conjunction with effective point-of-sale material, is developed by the CMs to support the category and assist the retailer in maximising sale opportunities, using limited floor and linear space.
Once the planogram and core range are in place, CMs instruct the wholesaler's warehouses and buying department to reflect a projected increase in sales of those specific items. The buyers also instruct the warehouses to adjust stock levels for anticipated seasonal requirements - for example, antihistamine products in the hay fever months - thus ensuring adequate supplies and reducing out-of-stocks.

Merchandising

Teams of merchandisers are used to implement planograms and point-of-sale materials at pharmacies taking part in the category management schemes. Merchandisers typically visit pharmacies once every six weeks to update displays, restock shelves in accordance with the planogram and check product expiry dates.
The merchandisers' job is more than simply making the pharmacy look attractive. Their role is also to educate pharmacy assistants on the importance of product placement and shelf position, core range stock, and, perhaps most importantly, to keep the otherwise isolated independent pharmacist up to date with the latest national marketing trends and activities in the sector.
The end result reflects the research into product and supply chain carried out by the CMs. They work closely with manufacturers to determine promotional calendars and advertising campaigns and align product placement accordingly. For example, best-selling products are placed on shelves at eye-level, second-selling products above, and slower moving and larger stock is displayed at a lower level. Each category is segmented into sub-categories to make purchase decisions (and impulse buys) easier for the customer.
The objectives of the team of merchandisers and point of sale packs are to reflect current retail thinking and allow our customers to maximise the potential of each product category. All in all, the successful pharmacist will be one who has the opportunity to benefit from both expert and comprehensive advice from manufacturers and the impartial "pharmacist-comes-first" viewpoint of independent merchandisers.

Mr Leadbeater is head of marketing at AAH Pharmaceuticals Ltd and has responsibility for brand and category management