At first glance “category leadership” has a very simple definition, from the Financial Times Lexicon, the term is defined as to be “the company that sells the most of a particular kind of product.” But our exploration into innovation leaders, we found the benefits of achieving, and maintaining category leadership are significant in terms of market share, profitability and stock-price.
I reached out to one of my former colleagues at the Boston American Marketing Association in beverage brand marketing, Derek Archambault, Sr. Brand Manager at Green Mountain Coffee Roasters to help round out the definition. Here’s what Derek had to say, “For me as a CPG marketer, “category leadership” has some very specific connotations – it is usually associated with the field of “category management” which at its heart is about working with retailers to maximize sales and profitability in a given product category. If you are a leader in a given category, then you are often given the title of “category captain” for a retailer, which means you are leading the decisions made in the category in conjunction with the retailer.
What determines a “category leader” is a combination of overall sales, growth, innovation, and ability to bring value to the retailer by way of value-driven consultation that helps their business?
The parallels to this in other industries are obvious – “category leadership” is more than just being the leader in sales. It is about helping to grow the entire category with innovation and bringing value to your partners by helping them with their business as well.”
Manufacturers and retailers aim for category leadership through the idea of category management. Derek went onto to say, “Green Mountain recently started a category management department to both further our” grow” and satisfy retailer’s requests for guidance on the fast-growing single cup beverage category.”
As Green Mountain shows, achieving category leadership gives a brand a much stronger competitive position. Not only are the category leaders’ products establishing performance and consumer perception expectations, but they have a unique partnership with retailers, as Derek describes, “I think that any CPG marketer would want to be a category leader – it gives you better position with retailers as they look to you for help in making decisions around the category that you compete with, and recognition that you bring value to the retailer and the category.”
You can read more about our research into category leadership, it’s definition, best practices and tools companies are using to achieve and maintain their category leadership positions here.