One of the great opportunities in Category Management is the way we can use a well-constructed category strategy, which is thoughtful, insightful, well-founded and socialised across our stakeholders, to understand what might happen if there are changes in the fundamentals on which the strategy is based.
This gives us the ability to pre-plan for particular situations – or in sporting terms, to create a playbook which allows for different scenarios. We are living in interesting times, and this does give the opportunity to establish what might happen over the next year or so and to contemplate the impact on our category strategies.
It is useful to have an example which has been well considered in terms of impact to see if the approach can be useful. This months news has been filled with the impact of increasing tariffs on a range of goods and how that might change over time. It feels like much of the reporting is speculation, but a dive into the US Congressional Research Service gives access to some interesting thought on what might unfold as things move forward.
Of particular interest is a paper from 2013 which looks at the amount of US debt which is held by China, and the implications of that for any trade based debate between the two nations, and the effect of that on the USD and RMB.
In essence, as China holds in excess $3 trillion of US debt, there is a degree of interdependence between the two sides which can both act as a stabilising mechanism under some situations, and a destabilising mechanism in others. The paper suggests that the point at which China’s risk from holding a high volume of debt turns into action to unload that debt is when the value of that debt decreases, driven by external factors. The consequence of that trigger is an increase in US interest rates and a devaluation of USD and RMB.
With that as a potential impact, it is possible to test existing strategies to see what that change would do. This also gives a sense of the sort of the depth that category strategies should contain; if they are written with placeholders showing areas to look at when significant changes happen, then changes to playbooks are relatively easy.
Using this concept as a foundation, we can see that a number of variables could trigger a different approach in a category playbook. A good strategy will aim to describe the various ways in which a category could be affected, including both internal and external factors. Market conditions and PESTLE analysis give good indicators for external factors, and business requirements point to areas to monitor for internal changes.
A question often asked is when a strategy should be reviewed, from a perspective of it reaching an age where it needs refreshing. We are in a period when the opportunity to adapt a strategy to changing conditions may be more prevalent.
We understand how organisations can deliver more value by increasing both the quality of strategies and of stakeholder engagement.
You can talk to us about how we can help you get the most out of your categories. Contact us at www.smartbrowndog.com