MAR3231 Exam 4 Hopkins FSU

Merchandising

activities involved in acquiring goods or services and making them available at the places, times, prices, and quantities that enable a retailer to reach goals

Merchandising Philosophy

sets the guiding principals for all the merchandise decisions made by the retailer

Micromerchandising

retailers adjust shelf space allocations to respond to customer differences and other differences among local markets

Cross-Merchandising

retailers carry complementary goods and services to encourage shoppers to buy more

-forecasts

-allocation

-timing

-brands

-assortment

-innovation

F ck All the B tches and Idiots

Devising Merchandise Plans

Forecasts

projections of expected retail sales for given periods

-overall company projections

-product category projections

-item-by-item projections

-store-by-store projections

Forecasting Components

1. Gathering Information

2. Selecting and Interacting with Merchandise Sources

3. Evaluation

4. Negotiation

5. Concluding Purchases

6. Receiving and Stocking Merchandise

7. Reordering

8. Re-Evaluation

Implementing Merchandise Plans

-consumer*

-suppliers

-manufacturers

-wholesalers

Gathering Information

-simple point system

-tier system to reward loyalty

-fee for VIP benefits

-customer values

-all-inclusive offers

Loyalty Programs

-company-owned

-outside, regularly used supplier

-outside, new supplier

Selecting Merchandise Sources

-inspection

-sampling

-description

Types of Evaluation

Inspection

occurs on every single unit delivered

Sampling

used with regular purchases of large quantities

Description

items not sampled or inspected

evaluate whether the target market in conservative or innovative

Factor: Target Market

consider each new offering on the basis of rapidity of initial sales, maximum sales potential per time period and length of sales life

Factor: Goods and Service Growth Potential

understand vertical and horizontal fashion trends if appropriate

Factor: Fashion Trends

carry goods and services that reinforce the firm's image

Factor: Retailer Image

lead or follow competition in the selection of new goods and services

Factor: Competition

segment customers by dividing merchandise into established product displays and new product displays

Factor: Customer Segment

carry new offerings when requested by the target market

Factor: Responsiveness to Consumers

consider all possible investments for each new good or service: product costs, new fixtures, and additional personnel

Factor: Amount of Investment

-manufacturer

-private

-generic

Types of Brands

.3%

How much does a 1% increase in Private Label purchasing increase a retailers market share of a household's purchase?

3%

How much does a 10% increase in Private Label purchasing increase a retailers market share of a household's purchase?

Differentiation Strategy

opportunity to differentiate store on the basis of recipe, styling, value, features

-differentiation

-increased channel power over suppliers

-higher profit margins

Advantages of Private Labels vs. National Brands

25%-30% higher

How much higher are profit margins on Private Labels?

-discount orientation (low price)

-at-the-market orientation (average price)

-upscale orientation (higher-est price)

Pricing Options for Retailers

Transparency Pricing

listing out every cost that goes into the product

-consumers

-government

-manufacturers, wholesalers, and other suppliers

-current and potential competitors

Factors Affecting Retail Price Strategy

Price Elasticity of Demand

the sensitivity of customers to price changes in terms of the quantities they will buy

Elastic

small % changes in price lead to substantial % changes in the number of units bought

Inelastic

large % changes in price lead to small % changes in the number of units bought

ex) internet, electricity, fuel, meds

1. Number of Substitutes

2. Cost of Switching

3. Degree of Necessity

4. Proportion of Income

5 Peak and Off-Peak Demand

Never Cum During Penis Penetration

Factors Affecting Elasticity

-economic consumers (sensitive)

-status-oriented consumers (brands)

-assortment-oriented consumers (selection)

-personalizing consumers (unique)

-convenience-oriented consumers (priority)

Market Segments by Price Sensitivity

-price skimming

-penetration pricing

Pricing Objectives

Price Skimming

maximizes profits by charging a high price for early adopters

Penetration Pricing

when a company launches a low-priced product with the goal of securing market share

-insight into what consumers will pay

-create aura of prestige

-late adopters pleased with bargain price

Skimming Advantages

-faster growth

-broad market potential

-combat competitors

Penetration Advantages

Surge Pricing

ex) Disney off or on season, uber surges

Dynamic Pricing

Retail Image

the way a firm is perceived by its customers

-target market

-firm's positioning

-customer service

-attributes of physical facilities

-shopping experiences

-promo tools

-store location

-merchandise attributes

-pricing

-community service

What contributes to a retailer's image?

-name

-line of trade

-personality

-claim to fame

-price position

In seconds, a shopper should be able to determine a store's...

Atmosphere

the psychological feeling a customer gets when visiting a retailer

-boost sales of certain products (as much as 2000%)

-boost sales of product categories over time

-create a positive atmosphere

Sampling has been shown to...

-retail employees

-other customers

-music

Store Atmospherics

-exterior planning

-general interior

-layout

Elements of Atmosphere

-efficient atmosphere created

-more floor space is devoted to product displays

-people can shop quickly

-inventory control and security are simplified

-self service is easy, reducing labor costs

Advantages of Straight (Gridiron) Traffic Pattern

-impersonal atmosphere

-more limited browsing by customers

-rushed shopping behavior

Disadvantages of Straight (Gridiron) Traffic Pattern

-friendly atmosphere

-shoppers do not feel rushed

-people encouraged to walk through in any direction

-impulse or unplanned purchases increased

Advantages of Curving (Free-Flowing) Traffic Pattern

-possible customer confusion

-wasted floor space

-difficulties in inventory control

-higher labor intensity

-potential loitering

-displays may cost more

Disadvantages of Curving (Free-Flowing) Traffic Pattern

-advertising

-public relations

-personal selling

Elements of the Promotional Mix

Advertising

paid, nonpersonal communication transmitted through out-of store mass media by an identified sponsor

-retail image

-inform customers

-demand for Private Labels

Goals of Advertising

-attracts a large audience

-low cost per contact

-many alternatives available

-control over message content, can be standardized

Advantages of Advertising

-standardized messages lack flexibility

-some media features require large investments

-geographic flexibility limited

-some media have high throwaway rate

-some media limit the ability to provide detailed information

Disdvantages of Advertising

-pioneer advertising (product category)

-competitive advertising (specific brand)

Types of Advertising

Public Relations

communication that fosters a favorable image for the retailer

Publicity

nonpersonal form communication whereby messages are transmitted by mass media (not paid for, no sponsor)

-increase awareness

-company image

-favorable message

-minimize promo costs

Objectives for Public Relations

-image can be presented or enhanced

-more credible source

-no costs for message's time or space

-mass audience addressed

-carryover effects possible

-people pay more attention than to clearly identified ads

Advantages of Public Relations

-some retailers do not believe in spending on image-related communication

-more suitable for short-run

Disadvantages of Public Relations

Personal Selling

oral communication with one or more prospective customers for the purpose of making a sale

-message can be adapted

-many ways to meet customer needs

-high attention span

-less waste

-better response

-immediate feedback

Advantages of Personal Selling

-limited number of customers at one time

-high costs

-doesn't get customer in store

-self-service discouraged

-negative attitudes toward salespeople

Disdvantages of Personal Selling