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Developing a framework to improve retail category management through category captain arrangements

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  • Bandyopadhyay, Subir
  • Rominger, Anna
  • Basaviah, Savitri

Abstract

Manufacturers and retailers have divergent profit objectives. A manufacturer wants to maximize the profits of its own brands. The retailer, on the other hand, wants to maximize the profit of the entire product category. In spite of these apparently diverging profit objectives, both manufacturers and retailers are increasingly realizing that profit margins of both can be increased through cooperation rather than confrontation. Category management is one such cooperative strategy that often involves the appointment of a leading manufacturer as the “category captain†. A category captain advises the retailer on the best way to price, display, and promote products in a category, including those of the competitors. This arrangement, therefore, ensures retail efficiency but raises doubt about possible misuse of power by the category captain to circumvent fair competition. In this paper, we outline the antitrust concerns about this arrangement, and provide a framework that effectively addresses these concerns.

Suggested Citation

  • Bandyopadhyay, Subir & Rominger, Anna & Basaviah, Savitri, 2009. "Developing a framework to improve retail category management through category captain arrangements," Journal of Retailing and Consumer Services, Elsevier, vol. 16(4), pages 315-319.
    • Handle: RePEc:eee:joreco:v:16:y:2009:i:4:p:315-319
    DOI: 10.1016/j.jretconser.2008.12.001
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    References listed on IDEAS

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    1. Magid M. Abraham & Leonard M. Lodish, 1993. "An Implemented System for Improving Promotion Productivity Using Store Scanner Data," Marketing Science, INFORMS, vol. 12(3), pages 248-269.
    2. Robert L. Steiner, 2004. "The Nature and Benefits of National Brand/Private Label Competition," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 24(2), pages 105-127, March.
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    2. Sinha, Somesh Kumar & Verma, Priyanka, 2020. "Impact of sales Promotion's benefits on perceived value: Does product category moderate the results?," Journal of Retailing and Consumer Services, Elsevier, vol. 52(C).

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