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Product management > Retail > Flashcards

Retail Flashcards

1
Q

4 MERCHANDISE MANAGEMENT

A

Managing the Merchandise Planning Process

Buying Merchandise

Retail Pricing

Retail Communication Mix

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2
Q

Process by which a retailer offers the correct quantity
of the right merchandise in the right place at the right
time and meets the company’s financial goals.

  • Sense market trends
  • Analyze sales data
  • Make appropriate adjustments ?in prices and
    inventory levels
A

MERCHANDISE MANAGEMENT

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3
Q

4 Types of Merchandise

A

Staple Merchandise

Fashion Merchandise

Staple Merchandise (BASIC)

Fashion Merchandise

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4
Q
  • Predictable Demand
  • History of Past Sales
  • Relatively Accurate Forecasts
A

Staple Merchandise

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5
Q
  • Unpredictable Demand
  • Limited Sales History
  • Difficult to Forecast Sales
A

Fashion Merchandise

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6
Q
  • Continuous demand over an extended time period
  • Limited number of new product introductions
  • Hosiery, basic casual apparel
  • Easy to forecast demand
  • Continuous replenishment
A

Staple Merchandise (BASIC)

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7
Q
  • In demand for a relatively short period of time
  • Continuous introductions of new products, making existing products obsolete
  • Athletic shoes, laptop computers, women’s apparel
A

Fashion Merchandise

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8
Q

2 Factors Affecting Sales Projections

A

CONTROLLABLE

UNCONTROLLABLE

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9
Q

4 CONTROLLABLE

A

Promotions

  • Store Locations
  • Merchandise
    Placement
  • Cannibalization
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10
Q

5 UNCONTROLLABLE

A
  • Seasonality
  • Weather
  • Competitive Activity
  • Product Availability
  • Economic Conditions
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11
Q

5 Buying Organization

A

Merchandise Group
Department
Classification
Category
SKU

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12
Q

Each _______ is managed by a general merchandise manager (GMM), senior VP.

A

Merchandise Group

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13
Q

______ are manage by a Divisional Merchandise Manager (DMM)

A

Department

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14
Q

A group of items targeting the same customer type, such as girls sizes 4-6

A

Classification

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15
Q

Each buyer manages several merchandise categories (eg. sport, sportswear, dresses, swimwear, outerwear categories for girls’ sizes 4-6)

A

Category

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16
Q

The smallest unit available for inventory control size, color, style

A

SKU

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17
Q

7 Merchandise Planning Process

A

Forecast Category Sales (Ch.12)

Develop an assortment Plan (Ch.12)

Develop an Appropriate Inventory Level and product availability (Ch.12)

Develop a Plan for Managing Inventory
(Ch.12)

Allocate Merchandise for stores (Ch.12)

Buy Merchandise (Ch.13)

Monitor and evaluate Performance and make adjustments (Ch.12,14)

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18
Q

A _______is a way to classify a sales opportunity
based on how confident the sales rep is in closing the deal in a
given time frame. It helps sales reps organize the sales pipeline and
estimate how much revenue the company can expect within a given
time period.

A

Forecast Category SALES

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19
Q

Assortment planning is the process of selecting the collection of
products that will be on offer in particular areas (localisation) and
during specified periods (seasonality). It considers the financial
objectives and seasonality of the product selection so that both you
and your customers gain from the outcome.

Assortment planning entails evaluating individual product attributes,
including Brand, Size, Style, Colour, Function, Price and Stock
Keeping Unit (SKU) performance during selection to address the
preferences and needs of your customers. The assortment plan
defines the products that make up your categories, sub-categories,
segments, and sub-segments.

A

develop an assortment plan

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20
Q

Factors considered to determine the appropriate level of buffer stock and thus the
product availability for each SKU
* ABC Classification of merchandise (inventory)
A – higher product availability
B – medium product availability
C – lower product availability is acceptable
* Fluctuations in demand
* Lead time for deliver from the vendor
* Frequency of store deliveries

A

Determining Variety and Assortment

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21
Q
  • Optimal inventory levels are the ideal quantities of products that you
    should have in a fulfillment center(s) at any given time. By optimizing
    inventory levels, you reduce the risk of common inventory issues, from
    high storage costs to out-of-stock items.
  • Too much inventory can require too much capital, sit on shelves too
    long, or eventually become unsellable. But too little stock can lead to

stockouts and backorders, which can reduce customer satisfaction.

When it comes to optimizing inventory levels, here are a few things to consider:
* It will be different for every brand.
* Each SKU may require a different optimal inventory level based on demand.
* Optimal inventory levels can change quickly (monthly, seasonally, and annually as
you grow).
Ultimately, optimizing inventory becomes more complex as:
* Your order volume increases.
* You introduce more products.
* You expand your physical distribution.

A

DETERMINE APPROPRIATE INVENTORY
LEVEL AND PRODUCT AVAILABILITY

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22
Q
  • The percentage of demand for a particular SKU that is
    satisfied
  • Level of support or service level
  • The backup (buffer) stock in the model stock plan determine
    product availability
  • The higher product availability, the higher the amount of
    backup stock necessary to ensure that the retailer won’t be out
    of stock on a particular SKU when consumers demand it

Factors considered to determine the appropriate level of buffer stock and thus the
product availability for each SKU
* ABC Classification of merchandise (inventory)
A – higher product availability
B – medium product availability
C – lower product availability is acceptable
* Fluctuations in demand
* Lead time for deliver from the vendor
* Frequency of store deliveries

A

PRODUCT AVAILABILITY

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23
Q
  • Inventory planning is the process of determining the optimal
    quantity and timing of inventory for the purpose of aligning it
    with sales and production capacity. Inventory planning affects a
    company’s cash flow and profits while contributing to an
    efficient supply chain.
A

DEVELOP A PLAN FOR MANAGING

INVENTORY

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24
Q

2 Inventory Levels for Staple
Merchandise

A

Cycle (base) stock

Backup (buffer, safety) stock

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25
Q

Inventory that goes up and down
due to the replenishment process

A

Cycle (base) stock

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26
Q

Inventory needed to avoid stockout

A

Backup (buffer, safety) stock

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26
Q

Three types of analyses related to the
monitoring and adjustment step are:
* Sell through analysis
* ABC analysis of assortments
* Multi-attribute analysis of vendors

A

Analyzing
Merchandise Management
Performance

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27
Q

Three types of analyses related to the
monitoring and adjustment step are:

A
  • Sell through analysis
  • ABC analysis of assortments
  • Multi-attribute analysis of vendors
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28
Q

A ________ compares actual and planned sales to determine
whether more merchandise is needed to satisfy demand or whether price
reductions are required.

A

sell-through analysis

28
Q

An_____ identifies the performance of individual SKUs in the
assortment plan.

A

ABC analysis

29
Q
  • orders merchandise by some performance measure determine
    which items:
    should never be out of stock
    should be allowed to be out of stock occasionally
    should be deleted from the stock selection.
  • A items: 5% of SKUs, represent 70% of sales
  • B items: 10% of SKUs, represent 20% of sales
  • C items: 65% of SKUs, represent 10% of sales
  • D items: 20% of SKUs, represent 10% of sales
A

Rank

30
Q

The _______ for evaluating vendors
uses a weighted average score for each vendor.
The score is based on the importance of various
issues and the vendor’s performance on those issues.

A

multi-attribute method

31
Q

Retailers and their buyer face a strategic decision about
the mix of national and private brands sold exclusively by
the retailer. So different factors are discussed about-
1. National brands
2. Private label brands.

A

Brand alternatives

32
Q

Retailers and their buyer face a strategic decision about
the mix of national and private brands sold exclusively by
the retailer. So different factors are discussed about-

A
  1. National brands
  2. Private label brands.
33
Q
  • known as manufacturer brands, designed, produced and
    marketed the product to retailers.
  • Vendors are responsible for developing quality products
    consistently.
  • Sometimes they create UMBRELLA or FAMILY brand with sub
    brands.
    example: Marico (family brand) produces Parachute coconut oil,
    Saffola cooking oil, Hair and care shampoo, Nihar hair oil (all sub
    brands)
A

NATIONAL BRANDS

34
Q
  • ALSO CALLED STORE BRANDS, HOUSE BRANDS OR OWN
    BRANDS.

It offered products developed by the retailers.
* retailers develop design and speciation, contract with manufacturers.
* sometimes national brands work with retailers to make special version
sold exclusively by particular retailers.
* In past national brands had more resource to do aggressive marketing
than private brands.
* but at present private brands are investing in private merchandise to
create their own their identity.

A

PRIVATE LABEL BRANDS

35
Q

There are four types of private label brands.

A
  1. premium brands.
  2. copycat brands.
  3. exclusive brands.
  4. generic brands.
36
Q
  • offer consumer a private label comparable to manufacturers quality with
    little price savings. SUCH AS- Tesco’s finest “the men’s collection”.
  • a subcategory of private label brand is environmentally sensitive or
    organic.
A

PREMIUM BRANDS

37
Q
  • imitate the manufacturers brand in appearance and packaging but in low
    quality with lower price. Generally provided in drug and grocery industry.
  • SUCH AS – CVS or Walgreens are look like manufacturers.
A

COPYCAT BRANDS

38
Q
  • developed by a national brand often added with a retailer and sold by
    that particular retailer. Exclusive brand has different model numbers for
    different retailers to sold.
  • SUCH AS- Canon digital camera sold at both Best Buy and Walmart of
    similar features has different model number.
A

EXCLUSIVE BRANDS

39
Q
  • targets a price sensitive segments by offering non-frills products at a
    discount price. Typically used for commodities like milk, egg at grocery
    stores and underwear at discount stores. When the generic products sales
    declines, labelled with the name of commodity. So it has no distinguishing
    brand name.
A

GENERIC BRANDS

40
Q

Goods and services can be bought from national based brand
in many ways. Most successful and promptly used market are-
* Meeting national based vendors.
* Wholesale Market centres
* Trade shows

A

Buying National based Merchandise

41
Q

Generally retailers meet at market weeks or in trade shows
with vendors, take appointment and discuss about the
transactional factors.
Sometimes they do not negotiate rather place orders and
reviews from different source about factors and take
managerial decisions.

A

National Brand Buying process

42
Q

The most important thing for negotiation is?

A

“KNOWLEDGE IS POWER”

43
Q

6 Negotiation issues:

A
  • Prices and gross margins
  • Additional mark-up
  • Terms of purchase
  • Exclusivity
  • Advertising allowance
  • Transportation
44
Q

9 Tips for effective negotiation

A
  • Choose a good place to negotiate
  • Be aware of real deadlines
  • Separate the people from problems
  • Insist on objective information
  • Invent option for mutual gain
  • Let them do talking
  • Know how far to go
  • Don’t burn bridges
  • Don’t assume
45
Q
  • emerges when a retailers and vendors committed to build long term
    relationship, investing opportunities profitable for both parties.
A

STRATEGIC RELATIONSHIP

46
Q

5 Maintaining relationship

A
  • Mutual trust
  • Common goals
  • Open communication
  • Credible commitments
  • Awareness
47
Q
  • the law passed on terms and condition that vendors can not offer
    different to different retailers for same quality and features products.
A

Terms and condition of purchase

48
Q
  • is illegal in merchandising to influence the buying decision of retailers by
    offering something valuable.
A

Commercial Bribery

49
Q
  • deducting owe money by retailers to vendors when the time of payment
    missed. It is unethical in merchandising.
A

Chargeback

50
Q
  • is system that gives favors to vendors by buying back and sniffing space
    allowance rather than competitors or buying back of products which slow
    moving in store. It’s unethical.
A

buybacks

51
Q
  • includes goods made without the permission of the owner of a trademark
    or a copyright. Copyright is an intellectual property. Counterfeit
    merchandise is an illegal
A

Counterfeit merchandise

52
Q
  • Gray-Market goods, also known as parallel imports, involve the flow of
    merchandise channels, usually across the international borders.
A

Gray-Market Merchandise

53
Q
  • It is similar to gray-market merchandise except there need not be
    distribution across international borders.
A

Diverted merchandise

54
Q
  • It occurs when consumer goods are scarce, such as water or gasoline after
    a natural disaster; heavily taxed such as cigarettes or alcohol; or illegal,
    such as drugs or arms.
A

Black Market Merchandise

55
Q

is what consumers pay for the finished product. These
customers don

‘t purchase the item to resell it but to use it.
The fundamental objective for a retailer when setting a
price is to maximize the profit while setting a price that
customers will be ready to pay.

A

Retail price

56
Q

13 Pricing strategies

A
  1. Cost-plus pricing
  2. Competitive pricing
  3. Value-based pricing
  4. Price skimming
  5. Discount pricing
  6. Penetration pricing
  7. Keystone pricing
  8. Manufacturer suggested retail price
  9. Dynamic pricing
  10. Multiple pricing
  11. Psychological pricing
  12. Loss-leader pricing
  13. Premium pricing
57
Q

4 Pricing strategy examples

A

Premium pricing: Gucci

Pricing strategy examples

Value-based pricing strategy: Fashion Nova

Penetration pricing strategy: Netflix

Competitive pricing strategy: Costco

58
Q

5 Store Design Objectives

A
  • CONSISTENT WITH RETAILERS IMAGE AND STRATEGY
  • Positive influence on customer satisfaction and purchase
    behavior
  • Cost effective
  • Flexible
  • MEET NEEDS OF DISABLED
59
Q

3 Types of Store Layouts

A

GRID LAYOUT

RACETRACK LAYOUT

FREE FORM LAYOUT

60
Q
  • Long gondolas in repetitive pattern.
  • Easy to locate merchandise.
  • Does not encourage customers to
    explore store.
  • Limited site lines to merchandise
  • Allows more merchandise to be
    displayed.
  • Cost efficient.
  • Used in grocery, discount, and drug
    stores.
A

GRID LAYOUT

61
Q
  • ALSO KNOWN AS LOOP LAYOUT
  • Loop with a major aisle that has
    access to departments and store’s
    multiple entrances.
  • Draws customers around the store.
  • Provide different site lines and
    encourage exploration, impulse
    buying.
  • Used in department stores.
A

RACETRACK LAYOUT

62
Q
  • Fixtures and aisles arranged
    asymmetrically
  • Pleasant relaxing ambiance doesn’t
    come cheap – small store experience
  • Inefficient use of space
  • More susceptible to shoplifting–sales
    people can not view adjacent spaces.
  • Used in specialty stores and upscale
    department stores
A

FREE-FORM (BOUTIQUE) LAYOUT

63
Q
  • Allocating floor/shelf space locating merchandise
    in store (or on website)
  • Where should merchandise be displayed?
  • How much space should be allocated to each
    category/item?
  • How many items of each stock keeping units
    (SKUs) should be displayed?
A

Space Planning

64
Q
  • Profitability of merchandise
  • Customer Buying considerations
    – Impulse products near front
    – Demand/Destination areas off the beaten path
  • Physical characteristics of product.
  • Complementary products should be adjacent
  • Sales rate
    – More units of faster selling merchandise need to
    be displayed
A

Space Planning Considerations

65
Q

Evaluating Space Productivity

3 Productivity ratios are output/input

A

Sales per square foot

Sales per linear foot

Gross or contribution margin per square foot

66
Q

is a calculation of the average revenue
earned per square foot of your retail space.

A

Sales per square foot

67
Q

dividing the total sales of a product
category by the total linear feet of shelf space allocated to that
category.

A

Sales per linear foot

68
Q

The gross
margin of a business equals a business’s revenue subtracted by
the cost of goods sold. The contribution margin is the amount of
money that remains after subtracting variable expenses.

A

Gross or contribution margin per square foot

69
Q

7 Merchandise Presentation
Techniques

A
  • Idea-Oriented Presentation
  • Style/Item Presentation
  • Color Organization
  • Price Lining
  • Vertical Merchandising
  • Tonnage Merchandising
  • Frontal Presentation

Product management (8 decks)

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