Chapter 14
? To Demonstrate Importance of Sound
Merchandising Philosophy
? To Study Buying Organization Formats
and Their Processes
? To Outline Devising Merchandise Plans
? To Discuss Category Management and
Merchandising Software
? Scope of Responsibilities
– Merchandising Function
? Buy
? Sell
– Buying Function
? Buy
? Smooth Chain of Command
? Expertise
? Responsibility and Authority Clear
? Buyer Involved with Display
? Reduced Costs
? Buyer Closer to Consumers
? Similar Skills Not Needed for Each
Task
? Higher Morale
? Selling Not Secondary
? Specialists
? Merchandisers Not Always Good
Supervisors
? Micromerchandising
? Cross-Merchandising
Level of Formality
Degree of Centralization
Breadth
Source of Personnel
Philosophy
Staffing
Formal
Informal
Centralized
Decentralized
General
Specialized
Internal
External
Resident Buying Office
Cooperative Buying
Buyer
Sales Manager
Merchandising Buyer
Merchandising
Buying
? Assistant Buyer
? Associate Buyer
? Buyer
? Divisional Merchandising
Manager (DMM)
? General Merchandising Manager
(GMM)
? Assistant Sales Manager
? Sales Manager
? Assistant Store Manager
? Store Manager
Merchandise
Plan
Innovativeness
Brands
Timing
Forecasts
Allocation
Assortments
? Staple Merchandise
? Assortment Merchandise
– Product Lines etc,
– Model Stock Plan
? Fashion Merchandise
? Seasonal Merchandise
? Fad Merchandise
? Target Market(s)
? Goods/Service Growth Potential
? Fashion Trends and Theories
? Retailer’s Image
? Competition
? Customer Segments
? Responsiveness to Consumers
? Investment Costs
? Profitability
? Risk
? Constrained Decision Making
? Declining Goods/Services
Introduction Maturity Decline
Growth
To
tal
Re
tai
l S
ale
s
Time
Life Cycle Stage
Strategy
Variable Decline Maturity Growth Introduction
Target Market
Good or Service
Distribution Intensity
Price
Promotion
Supplier Structure
High-Income
Innovators
Middle-Income
Adopters
Mass Market Low-Income
and Laggards
One Basic
Offering
Some Variety Greater
Variety
Less Variety
Limited or
Extensive
More
Retailers
More
Retailers
Fewer
Retailers
Penetration or
Skimming
Wide Range Lower Prices Lower Prices
Informative Persuasive Competitive Limited
Monopoly-
Oligopoly
Oligopoly-
Competition
Competition Oligopoly
? Vertical
? Horizontal
? Product Quality
? Width
? Depth
Retailer’s Image
Target Market(s)
Personnel
Customer Services Offered
Store Location
Stock Turnover
Manufacturer versus Private
Brands
Competition
Perceived Goods/Service
Benefits
Profitability
Constrained Decision Making
? Impact on Sales and Profit
? Space Requirements
? Inventory Turnover
? Cannibalization
Advantages
? Broad Market
? Full Selection of Items
? High Level of Customer
Traffic
? Customer Loyalty
? One-Stop Shopping
? No Disappointed
Customers
Disadvantages
? High Inventory
Investment
? General Image
? Many Items with Low
Turnover
? Some Obsolete
Merchandise
Advantages
? Broad Market
? High Level of Customer
Traffic
? Emphasis on
Convenience
Customers
? Less Costly Than Wide
and Deep
? One-Stop Shopping
Disadvantages
? Low Variety Within
Produce Lines
? Some Disappointed
Customers
? Weak Image
? Many Items with Low
Turnover
? Reduced Customer
Loyalty
Advantages
? Special Image
? Good Customer Choice
in Category(ies)
? Specialized Personnel
? Customer Loyalty
? No Disappointed
Customers
? Less Costly Than Wide
and Deep
Disadvantages
? Too Much Emphasis on
One Category
? No One-Stop Shopping
? More Susceptible to
Trends/Cycles
? Greater Effort Needed
to Enlarge the Size of
the Trading Area
? Little (no) Scrambled
Merchandising
Advantages
? Aimed at Convenience
Customers
? Least Costly
? High Turnover of Items
Disadvantages
? Little Width and Depth
? No One-Stop Shopping
? Some Disappointed
Customers
? Weak Image
? Limited Customer
Loyalty
? Small Trading Area
? Little (no) Scrambled
Merchandising
? Manufacturer (National)
? Private Label (Dealer)
? Arrange The Way Customers Would
? Configuration Function of Time,Space,and Product
Utilitization
? See to Drive Multiple Item Purchases
? Management is Fluid,Dynamic,Proprietary Set of
Decisions
? Create Unique Consumer Value
? Based on Overall Trading-Area Scenarios
? Management an Exclusionary Process
? Data from Pre-Customer Interface Analysis of Trading-
Area Needs
? Supplier and Retailer have Different Goals
? Management Strategy of Differentiation
Unit Sales
Few Many
High
High Potential (sleepers) --
Promote more,better position,
more facings,display more,
sample,back with store coupons
Underachievers (dogs) --
Raise prices,lower position,
cut promotions,consider delisting,
Traffic Builders --
Review prices,lower position,
expand space,mix with sleepers,
display,
Winners --
Promote more,better position,
more facings,display more
Low
Direct
Product
Profitability
? General Merchandising
? Forecasting
? Innovativeness
? Assortment
? Allocation
? Category Management
? The Importance of a Sound Merchandising
Philosophy
? The Various Buying Organization Formats and
Their Processes
? Considerations in Devising Merchandise Plans,
– Forecasts
– Innovativeness
– Assortment
– Brand Timing
– Allocation
? Category Management and Merchandising
Software