Category management is a concept in which all the products which are purchased by the business are arranged into different categories of similar or related products. It is a systematic approach to maintain stock in an orderly manner. Category management is also a strategic approach to procurement.


  • Definition: We have to define the different categories and sub-categories.
  • Spend analysis: We have to analyze how much we are going to spend on each category and sub-category.
  • Market analysis: We have to analyze how the supply market looks for each category and if it fits the customer’s needs.
  • Improvement: Here, we apply the market intelligence we obtained from the market analysis. It may lead to a change in specifications, finding new vendors, and a new supply base.
  • Continuous application: We have to continuously apply this knowledge in strategic sourcing and transactional purchasing.


The 4 P’s of Category management are – Product, Price, Place, and Promotion. The four P’s are the key factors involved in the marketing of goods and services. They are known as the “Marketing mix”. A marketing mix is a set of marketing tools that a business uses to pursue its marketing objectives in a target market.

The elements of the marketing mix are used to identify some key factors for the business like what kind of product a consumer expects from the business, what pricing strategy they should use, where they should sell the product and what kind of promotional technique they should use. Let us see how the four P’s work :

  1. PRODUCT: Product refers to the goods or services offered by the business to meet the consumer’s needs. The product can also be defined as “anything of value”. The concept of product not only refers to the physical product but also refers to the benefits offered by the product from the customer’s point of view.

The concept of the product also includes extended products or services like after-sales services, handling complaints, etc. These aspects are very important especially in the marketing of consumer durable products.

The Important product decisions include deciding about a product’s features, quality, packaging, labeling, and branding of the products. It is important to make sure that the product offered will satisfy the consumer’s needs or create a new market demand for the product.

  1. PRICE: Price is the amount of money the customers have to pay to obtain the product. While deciding the price, marketers must also consider supply costs, discounts, and competitor’s prices. Pricing is a very crucial element of the marketing mix as the customers are highly price-sensitive and the level of price affects the level of demand.

Marketers have to decide the objectives for price-setting and also analyze the factors affecting the price of the products. Decisions must be taken in terms of discounts allowed to the customers and traders, so the consumers will believe the price to be worth the value of the product.

  1. PLACE: Place or physical distribution includes activities that make the firm’s products available to the target customers. The firm has to decide where to sell the product and how to deliver it to the target customers.

In this process, the firm must also select the line of intermediaries who will deliver the products to the consumer. The intermediaries keep an inventory of the firm’s products, demonstrate it to the potential buyers, negotiate price, and close sales.

  1. PROMOTION: Promotion refers to all such activities that communicate the availability, features, merits, etc., of the products to the target customers and persuade them to buy them. The various kinds of promotional techniques are advertising, personal selling, sales promotion, and public relations.

The success of a firm depends on how well these elements are mixed to create a superior value for the customers and simultaneously achieve the objectives of the firm.