Chapter 15: Policy on the assortment

Question 1

The entire assortment of a retailer depends heavily on the retail formula. The assortment can be divided into product clusters or item clusters:

Answer 1

• Specialty stores (limited number of categories but lot of variants in that categories)
• Department stores (de Bijenkorf) (many product categories but fewer choices)
• Category killers (broad offering in terms of products + many choices in terms of depth

Question 2

Emotion/ratio-matrix:

Answer 2

classification based on the customer perspective

Two axes are emotional vs. rational perspectives.

Question 3

high ratio, low emotion:

Answer 3

preference goods

washing machine

Question 4

high ratio, high emotion:

Answer 4

speciality goods

sports car

Question 5

low ratio, low emotion:

Answer 5

convenience goods

supermarket

Question 6

low ratio, high emotion:

Answer 6

shopping goods

clothes

Question 7

Classification of assortment based on the function

Answer 7

• Core assortment: is the range which is necessary to keep the image of the formula. It is the range of items that the consumer always expects to find in the formula (ex. Books for a library)
• Secondary assortment: articles that are not necessary for the image of the formula but which reinforce the formula as they have a relationship with the core product (ex. Shoe polish in a shoe store)
• Supplementary assortment: items that do not have any significance to the formula but may be important for the success of the operation (ex. Lidl selling inflatable jacuzzi)

Question 8

Pyramid of choice - to choose combination categories of items based on a certain ratio.

Answer 8

reputation / image package - A brands
lower margin, high quality

formula package - B brands
right price-quality ratio, lower brand image

basic package - C brands (fighting brands)
little value

Question 9

Why add private label?

Answer 9

● Distinguish yourself from competition
● Increase consumer loyalty
● Higher margin than brand products
○ Example: AH and Lidl

Question 10

The importance of private label: 4 private-label categories

Answer 10

1. Generics
2. Fancy brands
3. Store brands
4. Premium store brands

Question 11

generics

Answer 11

1. Generics: “unbranded” products often in product categories with low brand preference. Commodity items as toilet paper. C-brands

Question 12

fancy brands

Answer 12

2. Fancy brands: only found at a particular retailer. Do not indicate a direct connection with the company often because of the retail image which might make customers hesitant about the expected quality of the product. Ex. Aldi initially gave all of its articles fancy-brand names. After the image of Aldi in terms of quality was improved, the retailer started to produce articles under its own brand name. The price level of fancy brands is usually at the level of the cheaper B brands.

Question 13

store brands

Answer 13

3. Store brands: linked to the brand name and store. The name of the store and the brand name is often the same, thus becoming an important component in constructing the image of the store. This connection means that the retail brand has to meet all the requirements of the formula in terms of quality, price and taste. Upper B brands

Question 14

Premium store brands

Answer 14

4. Premium store brands: special items which carry the name of the store. Usually special design to emphasise their premium character. Positioned above the A brand.

Question 15

category management

Answer 15

The cooperation between a retailer and the manufacturer whereby the retailer offers an assortment that meets consumer needs, which leads to sales increase and margin improvement

Question 16

classification of assortments, category role

Answer 16

destination
traffic builder
transaction bulder
routine
service

Question 17

destination

Answer 17

• consuemrs expect this category in this store
• determines the face of the store
• people go here especially for this

Question 18

traffic builder

Answer 18

to increase the attraction value

Question 19

transaction builder

Answer 19

to increase the transaction value

Question 20

routine

Answer 20

consumers buy these products on a regular basis

Question 21

service

Answer 21

it is convenient for consumer to sell these products in the store

Question 22

reasons category management

Answer 22

1. to attract customers
2. to fill customers
3. to engage customers
4. to convert customers into ambassadors