Chapter 14 Flashcards
Define merchandising philosophy and list its considerations
Set of guiding principles (vision) for all merchandise decision that a retailer makes. It reflects:
- target market desires
- retailer’s institutional type
- market positioning
- costs
- competitors
- value chain
Define merchandising
Activities involved in getting inventory and making them available at the places, times, prices, quantities that allows the retailer to meet their goals
Define micro-merchandising
Retailers that have multiple stores adjust shelf-space allocation to match customers differences among each local market
Define cross-merchandising
A retailer carries complimentary products to encourage shoppers to buy more. Ex: Best Buy has mouses and keyboards along products, so that ppl buy impulsively. Pharmacies have a flu section during flu season (pills, Kleenex, flu syrups
What is the difference between merchandising view and buying view?
A retailer that has merchandising view have its employees do BOTH selling and buying activities. Buying and selling are the same department
Buying and selling functions:
- assortments
- advertising + ads
- employee utilization
- selling approaches
Buying view is when the retailer has 2 separate departments: buying and selling.
Buying functions:
- buying
- advertising
- pricing
Selling functions:
- assortments
- point-of-sale displays
- employee utilization
What is the meaning and purpose of forecast? Name some components of it.
Projections of expected retail sales for a period of time
Components:
- overall company projections
- product category projections
- item-by-item projections
Staple merchandise
Regular products carried by a retailer (ex: grocery store is expected to have milk, bread, canned soup, etc)
Basic stock list
Specifies the inventory level, color, brand, category, package for each staple product that a store has
Assortment merchandise
A retailer must carry a variety of products within its inventory to provide customers a decent selection
Model stock plan
It’s used to project specific items. Large quantities are ordered for popular sizes and Colors, smaller quantities are ordered for less popular ones
Fashion merchandise
Products that may have cyclical sales due to changing tastes and lifestyles
Fad merchandise
High sales are generated for a short time, then it quickly drops.
Seasonal merchandise
Products that sell well over nonconsecutive periods (ex: skis during winter, swimsuits during summer etc)
Never out list
Best selling products. Always in stock in inventory, and reordering on daily basis
What are some factors that a retailer should consider in deciding the level of innovation concerning selection of inventory?
Target market (target market = conservative or innovative?)
Goods/service growth potential (maximum sales per period, length of sales life)
Fashion trends (vertical and horizontal fashion trends)
Retailer image (carry products that reinforce the brands image)
Competition (lead or follow competition when selecting new products)
Responsiveness to consumers (carry new offerings when requested by the target market)
Amount of investment (consider all possible investment for each products)
Profitability (assess each new offering for potential profit)
Risk (be aware of possible tarnishing of the brands image, opportunity costs)
Declining goods/services (delete older goods if sales are too low)
List and describe the stages of product life cycle
- Introduction (with a limited target market)
- Growth (sales are rapidly increasing)
- Maturity (sales reach their maximum)
- Decline (brought on by shrinking market)
List and describe factors to consider when planning merchandise quality
Target market (match merchandise quality to the wishes of the desired market)
Competition (sell similar quality or different)
Retailer’s image (relate merchandise quality directly to the perception that the customer has of the retailer)
Store location (consider the impact of location on the retailer’s image)
Profitability ( recognize that high quality goods = bigger profit
Manufacturer vs private brands (high quality goods require personal selling, delivery etc)
Staff (hire skilled knowledgeable staff）
Explain the difference between width assortment and depth assortment
1) Width assortment: the number of goods/service category a retailer carries
2) Depth assortment: the variety of goods/service category a retailer carries
An assortment range can be wide and deep like a department store, or narrow and shallow (convenience store)
Explain the difference between manufacturer brands, private brands, generic brands
1) Manufacturer brands:
well known, well advertised, pre-sold. They require limited retailer investment in marketing, represents maximum quality. They dominate sales in many product categories. Ex: apple, nike, Microsoft, Sony
2) Private brands:
more profitable for retailers, better controlled by retailers, not sold by competing retailers, less expensive for consumers, lead customer loyalty. Retailers must line up suppliers, sponsor ads, create displays, and deal with losses from unsold items. Private labels are now seen as being good.
3) generic brands:
A type of consumer product that is rarely known, does not have a recognized name or logo because it’s not advertised. Generic brands are less expensive due to lack of promotion. Ex: selection chips at grocery store. Its cheaper bc its not widely known)
List some advantages of carrying private brands vs national brands
1) Store loyalty
2) differentiation strategy
Opportunity to be different bc of styling, features
3) increased power over suppliers
4) higher profit margins on private brands
Name some successful private label strategies:
1) develop distinct products
2) co-brand with famous designers
3) taste and product performance testing (ex:Costco)
4) tell a story about the product
Define category management
- It arranges product groupings into strategic units to meet customer needs and achieve profit goals
- Used to improve productivity
- Its a way to manage a business that focuses on the performance of the product category results rather than individual brands
Ex: the bay has perfume category where it hires a perfume category manager to deal with perfume functions.
