White Book- Chapters 14-16 Flashcards
If the customer doesn’t understand the product, they will be unable to recognize _____.
Value
The correlation beteen product ignorance and the sale of the least expensive product is probably more pronounced in ____ _____ than in other retail situations.
Funeral Service
- The funeral home- because it does not achieve its objective sale
- The Consumer himself- because he did not understand the comparative value of the merchandise purchased.
- Feel like he paid too much
- Recieve merchandise that fails to meet his expectations.
A Funeral Consumer that “Buys Down” Produces two Unhappy Parties:
The purchasing, pricing, display, and sale of merchandise.
Merchandising
Goods sold by a funeral home in conjunction with the disposition of a dead human body.
Funeral Merchandise
- Caskets and other burial/transfer containers
- Outer burial containers, including vaults and grave liners
- Cremation containers and alternative containers
- Urns, temporary containers, scattering/keepsake urns
- Urn vaults
- Other cremation-oriented products
- Monuments/memorials and other cemetery merchandise
- Burial clothing
- Personalization options
- Register books, memorial folders, flag cases, and other sundries
Funeral Merchandise Includes, but is not limited to:
- Develop target sales objectives that meet the firm’s profit requirements
- Help choose products and suppliers that facilitate the merchandising plan
- Aid in determining product prices that ensure value for the customer and a fair profit for the funeral home
- Enable the firm to present, display, and sell funeral merchandise in the most effective manner possible.
- Incorporate means to evaluate sales data
- Assure efficient and adequate inventory stock
- Effectively merchandise the firm’s service offerings.
A Funeral Home’s Merchandising Program:
To generate enough profit to ensure its existence and ability to continue serving its clientele year after year.
A Primary Rsponsibillity of any Business
Critical to any funeral firm’s achieving its target profit:
The Careful Development of Sales Objectives
- The funeral home must evaluate its market
- The firm must scrutinize its sales history
- The firm must take into account and consider a number of criteria specific to the merchandise it plans to offer.
- The funeral firm must integrate its proposed product line with its existing service offerings- or visa versa.
Developing Sales Objectives
May include a careful examination of the demographics, vital statistics, economic base, and burial habits of the funeral home’s proposed or existing clientele. To a lesser extent, the firm should consider the merchandising tactics of its competitors.
Evaluating Market
- What has sold well
- What didn’t sell well
- What didn’t sell at all
- What has sold too much, etc.
- As a general guideline, when considering sales history, the funeral home should evaluate at least the previous 6 months sales.
- Accuracy will increase proportionately to the size of the sample period, up to a period of 2 years
Scrutinize Sales History
- Product availability
- Price
- Quality
- Eye appeal
- Suppier recommendations
Take into Account and Consider a Number of Criteria Specific to the Merchandise it Plans to Offer:
What items are available that might need the firm’s sales objectives and fit into the existing product offering?
Product Availability
Both the wholesale cost and the retail price must be considered to ensure that the funeral home receives a fair profit and the consumer receives good value.
Price
Items chosen for any product line offering must be of the highest quality possible for their cost/price category.
Quality
Are the aesthetics of this product too grat for its price position? Conversely, is the eye appeal sufficient to justify its price?
Eye Appeal
It stands to reason that if a funeral home is successful in its merchandising plan, its suppliers benefit as well. Manufacturers and suppliers expend considerable resources to help funeral homes develop merchandising plans.
Supplier Recommendations
- Manufacturer that produce and wholesale products to funeral homes
- Wholesalers (middlemen, jobbers) that purchase products from manufacturers and then re-sell them to funeral firms
- Importers that bring a product from overseas production facilities
- Cooperative buying groups, wherein several funeral homes ally themselves in order to take advantage of quantity purchase discounts available from manufacturers, wholesalers, or importers.
Suppliers of Funeral Merchandise Come in a Variety of Forms:
- Can the supplier raliably and consistently provide the product? Future availability?
- Do the supplier’s prices relfect adequate value for the funeral home’s dollar?
- What level of customer service does the supplier provide? Guarantee of quality? Delivery? Traning? Returns?
Evaluating Suppliers
- Credit rating of funeral home or payment history
- Volume if the product purchased
- The firm’s overall relationship with the supplier
Payment Terms Between Suppliers may Depend on:
- C.O.D. (cash on delivery)
- C.B.D. (Cash before delivery)
A funeral Home that is New to the Supplier and Has a History of Bad Credit:
- Cash Discount
- Quantity Discount
- Rebate
- Consignment
Payment Options for a Firm with Established Credit with a Supplier:
A reduction of the price given for the payment of an account within the time limits established by teh sales contract.
Cash Discount
The amount by which the bill or invoice will be reduced when a minimum quantity of merchandise has been ordered.
Quantity Discount
The return of a portion of a payment.
Rebate
To give to an agent to be care for or sold. (Pays only when the merchandise is sold).
Consignment
The firm considers operating costs and profit requirements and then prices merchandise in line with the value it anticipates the consumer will perceive.
Perceived Value
Regardless of a casket’s wholesale cost, the firm will add a zero to that wholesale cost to determine retail price.
Zero Method of Pricing
The difference between merchandise cost and selling price. (does not reflect a measure of true profit).
Markup (Gross Margin, Margin)
The more a customer spends, the more value he should receive.
Value Progression
“You get what you pay for.”
Relative Value
The percentage derived by dividing the wholesale cost of the merchandise by the retail price of the merchandise. Measures the value of each consumer dollar that is spent to purchase a specific product.
Wholesale cost / Retail price= CVI
Consumer Value Index (CVI)
Examines teh relationship between the whoesale cost of the merchandise and the total cost (both service and merchandise) to the consumer.
Wholesale cost / (Total of merchandise + services) =
MVR
Merchandise Value Ratio (MVR)
- Fixed dollar amount method
- Fixed multiple method
- Graduated Recovery method
- Increasing graduated recovery
- Decreasing graduated recovery
- Modified graduated recovery
Pricing Strategies
Examine financial needs (overhead) and profit objectives to determine the amount of profit it wishes to generate on each casket sale; this amount is then added to the wholesale cost of each casket offered by the funeral home.
- People that must buy low-end merchandise are unfairly penalized and receive little value for each dollar spent.
- The final retail price can seem awkward
Fixed Dollar Amount Method
A price determination method whereby the casket cost is multiplied by a constant factor.
- As one moves up the price ladder, there is no improvement in the Consumer Value Index.
- No motivation for the customer to buy a higher end model.
- Prices can be awkward
Fixed Multiple Method (Stright Line, Times Factor)
A pricing method where the markup varies.
Graduated Recovery Method
Entry-level merchandise receives a relatively low markup while higher-end merchandise receives a comparatively higher markup.
- Causes the CVI to decrease with each step upward in the product assortment.
- Customers discouraged from buying higher-end merchandise
- Rewards those who choose to spend the least
- Funeral home receives the least possible dollar-amount of profit.
- Final retail price can be awkward
Increasing Graduated Recovery Method
Applies a markup that is inversely proportional to the wholesale cost of the casket. Upper-range caskets receive markups that are comparatively less than those applied to entry-level caskets.
- Consumers encouraged to buy up
- Purchasers of entry-level merchandise receive comparably little value
Decreasing Graduated Recovery Method (Declining Price Structure)
Essentially the same as the Decreasing Recovery Method with an important exception: The first entry-level offering (and perhaps the second and third units) receives a slightly less aggressive markup.
- Consumers encouraged to purchase higher
Modified Graduated Recovery Method (Modified Declining Price Model)
The number of times sales in a given price bracket occur over a fixed period of time.
Sales Frequency
Another way of describing a method of pricing so that actual price figures are familiar to the consumer; it is widely practiced in nearly every form of retailing, but in funeral service, where the products themselves are very unfamiliar to the consumer, this pricing takes on a special importance.
- The final digit will almost always be a 5, 7, 9, or 0.
Consumerized Pricing
A standard or point or reference to which all other offerings may be compared.
- Most expensive and least expensive caskets
Benchmark
Implicitly sets the buyer’s perceived middle price range. This should always be priced at a figure that is divisible by 2. This price, when divided in half should be slightly above the funeral home’s target sales objective.
Most Expensive Casket
Where customers are most comfortable spending.
Middle Range
Must possess reasonable aesthetics and quality in order to adequately serve the consumer who cannot afford any better. It cannot be too attractive, or the consumer who CAN afford to invest more will have no reason to do so.
Least Expensive Casket
Concerned with providing customers with a selection of prices, with steady and obvious value progression at each rung on the price ladder.
Verticle Merchandising
More concerned with the actual number of choices available at each price rung on the verticle merchandising ladder. A variety of choices at any given price level encourage the consumer to buy at that price level.
- The greatest number of model choices exist at or slightly above the target sales objective.
Horizontal Mechandising
Important to the financial well-being of any funeral home.
Frequent Examination of Sales
Facilitats the optimization of a firm’s product offerings, the value it offers to its clients, and its profit generating abilities.
Purpose of Sales Analysis
- What products have sold well (and why)
- What products have not sold well
- Allows successful planning of future merchandise presentations, product selections, and pricing strategies.
Examination of a Funeral Home’s Sales History
- Average (Mean)
- Median
- Mode
- Range
Statistical Terminology:
The sum of a group of numbers divided by the number of units.
Average (Mean)
A value in an ordered set of numbers which represents the midpoint, whereby there are an equal number of values above and below the midpoint value.
Median
The value that occurs most frequently in a group of numbers.
Mode
The upper and lower limits of a series of numbers.
Range
A division of the total into four segments, each one representing one-fourth of the total.
- Simply categorize merchandise into manageable segments within definitions established by the funeral home and can be helpful in tracking sales history and establishing future sales goals.
Quartile
- Unit pricing
- Bi-unit pricing
- Functional pricing
- Itemization
- Package pricing
Methods of Price Quotation
A method of price quotation in which one price includes both service and casket.
Unit Pricing
A method of price quotation showing seprately the price of the service to be rendered and the price of the casket.
Bi-Unit Pricing
A method of price quotation in which the charges are broken down into several major component parts such as professional services, facilities, automobile, and merchandise.
Functional Pricing
Required in every United States funeral home since the advent of the 1984 FTC Funeral Rule. The method of price quotation by which each unit of service and/or merchandise is priced seprately.
Itemization
A pricing method which groups together selected services and/or merchandise so long as the consumer is given a General Price List and the appropriate merchandise price lists.
- Not prohibited by the Funeral Rule
Package Pricing
- The consumer recieves the information he needs to make a decision
- The information is given in a manner that gently and patiently educates the consumer
- Should not resemble a sales pitch or seem practiced or canned.
Effective Pre-Selection Merchandise Presentation
- The funeral director will give the consumer some basic information regarding caskets (or vaults, or cremation containers, etc.)
- The funeral director will give the buyer an idea of exacty how many caskets he will see on display and the range of prices he will encounter.
Common Key Elements in Presentation
- Remove some of the director’s burden of information delivery
- Can help depen the consumer’s understanding of the product
Visual Aids
- Visual aids
- Short informational videos
- Wood and metal samples
- Presentation binder containing professionally designed graphics
Manufacturer Aids for Presentation
The method of selling merchandise whereby the funeral director remains in the selection room throughout the selection process.
- Some see this as an annoyance, others welcome it.
Direct Selection Room Procedure
The method of selling merchandise whereby the funeral director does not stay in the selection room during the selection process.
Indirect Selection Room Procedure
There or four caskets utilized to educate the selecting party regarding the elements of casket construction.
Demonstration Group (Educational Group)
Has long been the preference of most funeral homes. Considered best if this is located within the funeral home itself, and on the building’s main level.
- Best if everything is displayed in a single room
Traditional On-Site Selection Room
- Within the funeral home, upper level location
- Within the funeral home, lower level/basement location.
- Within another building on the funeral home grounds
- An off-premises site
Other Location Possibilities of the Traditional On-Site Selection Room (In Order of Descending Preference).
- Greater control over the merchandise offered and the manner in which it is displayed; the selected product is available for immediate use by the funeral home.
- The consumer experiences a minimum of inconvience when the selection room is on-site; he needs not travel to another location
- Merchandise is tangibly displayed to the consumer. Some consumers find it difficult to assess value unless they can see and touch the actual product before them.
Advantages of the Traditional Selection Room
- The funeral home’s overhead expense is increased due to display stock, inventory and facilities.
- Increased funeral home overhead is reflected in the consumer’s final (higher) cost for goods and services.
- The traditional selection room occupies valuable floor space that may be better utilized by the funeral home for other purposes.
Disadvantages of the Traditional Selection Room
More common to urban areas.
Casket Manufacturer/Distributer Showroom
- Funeral home overhead is reduced because there is no need to invest in supply stock, inventory, or physical facilities needed for casket display.
- Reduced funeral home overhead may translate to either reduced consumer expense or increased funeral home profit.
Arguments in Favor of Casket Manufacturer/Distributor Showroom
- Whether the funeral home provides transportation or the customer travels via his own means- may be an inconvience to consumer
- Funeral home must wait for product delivery or arrange for the casket to be picked up from showroom- some products require immediate availability
- Funeral home may have little say over types of product offerings
- Some busy show rooms may require the funeral home to make an appointment
Arguments Against Casket Manufacturer/Distributor Showroom
- Overhead reduced; consumer may enjoy reduced costs, funeral home may increase profits
- Some apprehensive consumers find a catalog easier to choose from, may not emotionally be able to handle a room full of caskets
- Useful tool if arranging or prearranging in consumer’s home or other non funeral home sites
- May allow the funeral home to offer a greater range of merchandise than might be possible if the selection of merchandise were limited to whatever space the funeral home has available.
Advantages of Catalog-Based Display
- Consumers find it difficult to discern value via a photograph and prefer to select from a range of tangible merchandise.
- Additional pressure is put on the arranging director to give extra attention to a careful and thorough product presentation.
- Catalogs with less-than-professional appearance may reflect negatively on the funeral home/arranger and result in less-than-target sale.
- Delivery and availability may present a problem.
Disadvantages of Catalog-Based Displays
- Selecting funeral merchandise from a computer display is less “threatening” to some consumers
- Reduced funeral home overhead (if sole means) results in consumer savings/increased funeral home profit.
- Depending on the system software, inventory checks and product orderings may be performed instantly.
Advantages of a Computer-Based Display
- Some consumers (particularly eldery) may not be comfortable and may prefer something tangible
- Initial investment in hardware and software may be substantial. (still less so than traditional selection room).
- Product delivery/availability may be an issue.
- The funeral director must be careful to deliver a thorough product presentation.
Disadvantages of Computer-Based Display
- Square footage
- Merchandise arrangement
- Display equipment
- Lighting
- Aesthetic considerations
These are all considerations to contribute to some measure to the success of:
- Provide the consumer with a positive buying experience
- Generate the target amount of funeral home profit.
Considerations for Traditional Selection Room
- Recommended size is 40 to 60 square feet per casket.
- Average adult casket takes up 18 square feet
- 20 caskets would consume anywhere from 800 to 1200 square feet
Square Footage
- Artificial produces two forms- direct and indirect
- Basic fixture varieties include fluorescent and incandescent lighting
- It is the quality of lighting that most concerns the funeral director
Lighting
Refers to illumination directly shining on an object. Used to accent color, form, and shadow.
Direct Lighting
Refers to the reflected illumination of an object. Provides a general feeling of illumination.
Indirect Lighting
This is the measurement for the brightness of light or illumination. The amount of illumination produced by a source of one candle at a distance of one foot.
- 90 to 100 measured at the level of the casket pillow is the recommended standard for casket selection rooms.
Foot Candle
An indirect form of lighting, the illumination produced by a tubular electric discharge lamp or the florescence of phosphors coating the inside of the tube.
- Very cost effective
- Objects can appear flat and lifeless unless the tubes are of a “daylight” or “color-corrected” spectrum.
Fluorescent
The illumination resulting from the glowing of a heated element. (direct lighting)
- Has a warm quality and slightly yellow color temperature that allows more accurate color interpretation as compared to flourescent lighting.
- Varying degrees of operating efficiency
- Most do not approach the value of fluorescent tubes.
Incandescent Lighting
A relatively new addition to selection room lighting options. Produces a very clean, bright, white light that closely approoximates natural daylight; extremely good color rendering ability.
- Initial investment can be costly, but operating costs are slightly less than traditional incandescent bulbs.
High-Intensity Halogen Lighting (Incandescent)
- Clean and bright
- Light and neutral colors for walls (open feelng and emphasize, not detract from, merchandise on display)
- Carpeting should complement merchandise and not be distracting
- Focal points- small statues, flower arrangements, furniture groupings- soften and visually break up the room
Aesthetics in the Selection Room
- Bier
- Church Truck
- Casket Rack
- Placards
Display Equipment
The stand or support on which the casket rests.
- Ideal viewng height is 26-30 inches above the floor
Bier (Casket Stand, Casket Standard)
A wheeled collapsible support for the casket, used in the funeral home, church, or home.
Church Truck
A device upon which caskets are placed, one on top of the other, for display or storage.
- non obstructive and not distract the consumer’s attention from the casket itself
Casket Rack
- Clearly identifies the name and price and can be easily be cross-referenced on the casket price list
- Include the casket’s name, basic material, type of lining fabric, and particular features
Placards
- Consecutive method
- World approach
- Good-better-best approach
Arrangement of Merchandise
Placing caskets for selection in their order of increasing or decreasing value, in a sort of stair-step approach.
Consecutive Method
Grouping caskets on the basis of materials.
World Approach
Caskets are displayed in groups according to their relative positions within the value/price progression.
Good-Better-Best Approach
The use of portions of caskets (1/2, 1/4, 1/8) in the selection room rather than full sized caskets.
Fractional Display
