Chapter 14

Question 1

Define merchandising philosophy and list its considerations

Answer 1

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

Question 2

Define merchandising

Answer 2

Activities involved in getting inventory and making them available at the places, times, prices, quantities that allows the retailer to meet their goals

Question 3

Define micro-merchandising

Answer 3

Retailers that have multiple stores adjust shelf-space allocation to match customers differences among each local market

Question 4

Define cross-merchandising

Answer 4

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

Question 5

What is the difference between merchandising view and buying view?

Answer 5

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

Question 6

What is the meaning and purpose of forecast? Name some components of it.

Answer 6

Projections of expected retail sales for a period of time
Components:
- overall company projections
- product category projections
- item-by-item projections

Question 7

Staple merchandise

Answer 7

Regular products carried by a retailer (ex: grocery store is expected to have milk, bread, canned soup, etc)

Question 8

Basic stock list

Answer 8

Specifies the inventory level, color, brand, category, package for each staple product that a store has

Question 9

Assortment merchandise

Answer 9

A retailer must carry a variety of products within its inventory to provide customers a decent selection

Question 10

Model stock plan

Answer 10

It’s used to project specific items. Large quantities are ordered for popular sizes and Colors, smaller quantities are ordered for less popular ones

Question 11

Fashion merchandise

Answer 11

Products that may have cyclical sales due to changing tastes and lifestyles

Question 12

Fad merchandise

Answer 12

High sales are generated for a short time, then it quickly drops.

Question 13

Seasonal merchandise

Answer 13

Products that sell well over nonconsecutive periods (ex: skis during winter, swimsuits during summer etc)

Question 14

Never out list

Answer 14

Best selling products. Always in stock in inventory, and reordering on daily basis

Question 15

What are some factors that a retailer should consider in deciding the level of innovation concerning selection of inventory?

Answer 15

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)

Question 16

List and describe the stages of product life cycle

Answer 16

1. Introduction (with a limited target market)
2. Growth (sales are rapidly increasing)
3. Maturity (sales reach their maximum)
4. Decline (brought on by shrinking market)

Question 17

List and describe factors to consider when planning merchandise quality

Answer 17

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）

Question 18

Explain the difference between width assortment and depth assortment

Answer 18

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)

Question 19

Explain the difference between manufacturer brands, private brands, generic brands

Answer 19

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)

Question 20

List some advantages of carrying private brands vs national brands

Answer 20

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

Question 21

Name some successful private label strategies:

Answer 21

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

Question 22

Define category management

Answer 22

1. It arranges product groupings into strategic units to meet customer needs and achieve profit goals
2. Used to improve productivity
3. 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.