module 7 retail mgt

8/8/2019 Module 7 Retail Mgt

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Module 7

Retailing Channels



Pr oduct management

STRATEGIC PRODUCT MANAGEMENT

1. Provides the planning guidelines

2.

Direction of growth (e.g

.introduction of newproduct ranges, extending successful ranges,

rationalising less popular products)

3. Positioning in market (e.g. which customers to

target and how)4. Setting financial objectives: sales, profits,

productivity and control of costs

5. Assessing and managing risks associated with

new product ranges



OPERATIONAL PR ODUCT

MA N

AGEME N

T Tr anslate ideas into feasible plans

Select and manage supplier s

Select pr oducts and br ands

Make pr oducts available (for ecast, or der , arr ange delivery)

Communicate the pr oduct offer ( pr omotions, adver tising)

Set pr ices

Decide wher e and how to display pr oducts



PR ODUCT MA NAGEME NT

WITHI N

THE OU

TLET Implement oper ational plans

Allocate display space and arr ange pr oducts

Or ganise in-stor e mar keting

Match pr oduct featur es and benefits to customer

needs and desir es (per sonal selling)



Ways of allocating display space

and arr anging pr oductsMer chandise displays gener ally take one of sever al basic for ms:

Storefront Window Displays ² These ty pically open on to a str eet or shopping mall

walk or cour tyar d and ar e intended to attr act passer by that might not other wise enter

the stor e.

Showcase Displays ² These ty pically featur e items that

1) ar e deemed to be too valuable for display in stor ef r ont set-ups or

2) ar e niche items of high inter est to the business's pr imary clientele. These display

center s ar e usually located in high tr affic ar eas and ty pically featur e multiple tier s for

pr oduct display and a sliding door on the cler k's side for access.

"Found-Space"Displays ² This ter m r efer s to pr oduct pr esentations that utilizesmall but nonetheless usable ar eas of the stor e, such as the tops of pr oduct car ousels

or available wall space.

Stor ef r ont window displays and "found space" displays ar e par ticular ly popular tools for

publicizing and selling sale items.



In-stor e mar keting

The theory is that people come into a retail establishment with one or a few key items in

mind; the goal is to entice these shoppers to buy more with well-planned advertising and

marketing within the store.

In-store advertising can:

Trigger recall. The human memory is far more likely to recall an item upon seeing it

again. In-store advertising can serve to trigger such recall.

Introduce new products. Unfamiliar products may not draw people to a store, but

within the store such products can attract attention through their look, feel, or smell.

Promote sale items. While a "one day only" newspaper ad can draw people to your

store, in-store sales place those lower prices in front of your customer and encourage

additional -- and even impulse -- buys.

Provide more inf ormation. Whether you use a plasma screen or simple signs to

highlight your featured merchandise, you want to communicate the information to your

customers that will convince them to make smart purchases.



BALANCING BENEFITS AND COSTS TO

CREATE VALUE

Money

Shopping timeTravel time

Physical effort

Stress

Risk to personal safety

Risk of wrong purchase

BENEFITS COSTS

High quality products

Favourite brandsWide range of products

Good shopping

environment

Ease of use

Pleasant service



Mer chandise Management

It is the pr ocess by which r etailer attempts to offer

the r ight quantity of the r ight pr oduct at the r ight

place and time while meeting the r etail fir m¶s

financial goals.

It is the analysis, planning, pr ocur ement, handling,

and contr ol of the mer chandise investments of ar etail oper ation.



Components of Mer chandise

Management.

Merchandise

management

Analysis

Control

Handling Acquisition

Planning



Dimensions of mer chandise mix

Variety

Assortment

Support

Assortment strategies

1. Wide and deep

2. Wide and shallow

3. Narrow and deep

4. Narrow and shallow



Components

Merchandise planning: consist of establishing objectives and

devising plans for obtaining merchandise well in advance of the

selling season.

Merchandise Control involves designing the policies and procedure

in order to determine whether the stated objectives or goals have

been achieved.

The merchandise Mix represents the full range of mixture of products a retailer offer to its target customers. Merchandise mix

management covers a host of variety of aspects

1. Merchandise variety ² number of different product lines that a

retailer stocks in the store.

2. Merchandise assortment refers to the number of different

product items the retailers stocks within a particular product line.

3. Merchandise support deals with the planning and control of the

number of units the retailer should have on hand to meet the

expected sales for a particular period.



Mer chandise Budget

It is the financial plan for inventor ies. Merchandise Budget is a

financial tool for planning and controlling a retailers

merchandise inventory investment.

Merchandise budget plan

Projected sales Inventory plan

Estimated

Reduction-mark downs,

discounts and

shortages

Estimated

purchases



The pr oduct category life cycle

Str ategy

var iable

Intr oduction gr owth matur ity decline

Target

market

Variety

Penetration

H-I innovator s

one basic

offer ing

Ltd or expensive

M-I

Ltd var iety

pr d featur es

Mor e

r etailer s

Mass mkt

Gr eater

var iety

multiple

r etail for mats

L-I

Less var iety

Fewer or nor etailer s



Strategy

variable

Introductio

n

growth maturity decline

Price

Promotion

Penetration

or skimming

Informative

induce trail

More

pricelevel

Persuasiv

e

Lower

prices

Competiti

ve

Lower

prices

Limited

The pr oduct category life cycle



Inventory plan

Methods to determine stock support levels

1. Beginning- of- the- month ratios-

BOM ratio- planned monthly sales * desired stock/ salesratio

2. Percentage variation method-BOM stock= average inventory * ½ (1 +(planned sales

for the month/ average monthly sales)

3.Week¶s supply method-

No of weeks to be stocked=No of weeks in the period/

stock turnover rate for the period4. Basic stock method

BOM stock= planned sales for month + averageinventory- average monthly sales



Factor s influencing mer chandise plan

External factors

Target market

Competitive analysis

Consumer characteristics that influencemerchandise plan

1. Geographical bases

2. Demographic bases

3. Environment bases

4. Psychographic bases



1. Target market analysis: Retailers need to incorporate demographics,shopping behaviour and psychographic data. This understanding provides a

clear explanation of the market situation and its implication for themerchandise mix.

Retailers analyse information related to their target segments on the following basic aspects:-who is the shopper, segments of the shoppers, consumers preference on

products, consumers complaints and suggestion, no. of non-patronizing

buyers, reasons for that, what extent the merchandise mix can influencetheir patronizing behaviour.

2. Competition Analysis: It covers evaluation of the competitive retail stores inthe trade area. The firm is expected to identify the merchandise strength andweakness, voids and opportunities and bases its merchandise mix planningwith required competitive edge.

The merchandise plan is also determined by competitive factors like number,types, and positioning of the anchor store and non-anchor stores and size andnature of the market area in which the particular retailer is operating hisbusiness.



Cr iter ia of mer chandise classification

Merchandise can be classified on

1. Unit value

2. Significance of each individual purchase to

the consumer

3. Time and effort spent by consumer

4. Rate of technological change

5. Consumer need for service

6. Rapidity of consumption



Dimensions of mer chandise line

Consistency

Breath

Depth



To deter mine the inclusion and viability of new pr oduct in the existing

mer chandise line, usually r etailer s examine such offer s on thr ee aspects.

Br eadth: also called assor tment, r efer s to the number of mer chandise

br ands found in the mer chandise line. Br eadth is especially a pr oblem for r etailer s selling pr ivate label br ands.

Depth of stock assor tment descr ibes a compr ehensive selection of br ands,

sizes, styles, colour s and pr ices within a par ticular category of pr oduct.

Consistency, the thir d dimension of the r etail mer chandise mix, r efer s to

how closely or compatible the pr oduct line ar e r elated in ter ms of consumer pur chasing habits and end use.



Supplier management

Types of suppliers

1. Agents

2. Government bodies

3. Other retailers

4. Manufacturers/ primary producers

5. Wholesalers



Cr iter ia for supplier selection

Delivery

Service

Product range and quality

Price



CATEGORY MANAGEMENT

A category is the basic unit of analysis for making mer chandising decisions.

Category management is the pr ocess of managing a r etail business with the

objective of maximizing the sales and pr ofits of a category r ather than the

per for mance of individual br ands or models.

A category is an assor tment of items that the customer sees as r easonable

substitutes for each other . For example, r etailer s in r eady to wear segment

consider female and male clothing as one category.

It systemizes gr ouping of pr oducts into str ategic units or category so as to

better meet consumer needs and achieve sales and pr ofit goals. Today, ther elevance of category management is dr iven by the emer gence of multiple

number of br ands in each pr oduct category. For the success of any

category management, r etail business r equir es changes in the

mer chandising system and or ganizational commitment.



Advantages of category management

Increased sales

Reduced inventory investment

Improved route and warehouse efficiency



The Essential Elements of Effective Category Management:

1. Category should be arr anged as if consumer s could stock the shelf

themselves

2. Category composition should be on the basis of time, space and

pr oduct benefit

3. Category management should dr ive multiple item pur chase

4. Category management is a dynamic, pr opr ietary set of decision, not

a standar d, univer sal pr actice.

5. It is dir ected to cr eate value for the consumer r ather than facilitating

r elations between supplier and r etailer .

6. Category management plan should be based on the over all

competitive envir onment in a specific tr ading ar ea.



Channel management

Strategic decisions in marketing channel design

Channel

length

DirectIndirect

Width-intensive, selective,

exclusive Channel control



Managing r etailer - supplier r elations

Pr oductsInf ormation

Social

Financial

become

Adaptations

Institutionalisation

SUPPLIER RETAILER



R etail pr icing

External influences on Retail price strategy

1. Customers

2. Competitors

3. Government



Customer segments based on pr ice

sensitivity

Loyalty oriented

Variety oriented

Economic

Image oriented

Convenience oriented



R etail pr icing objectives

1. Profit objective

2. Market share objective

3. Competitor- oriented objective

4. Buyer-oriented objective

5. Government-oriented objectives

6. Product-oriented objectives



Pr icing appr oaches

1. Discount orientation

2. At-the-market orientation

3. Upscale orientation



Pr icing str ategies

EDLP-improved customer services, lessreduction on prices to compete, reducedadvertising, better inventory management

High-low pricing- same merchandise for different segments, enthusiasm amongconsumers, store image is derived fromquality, ease of implementing

Loss leader pricing Skimming pricing

Penetration pricing




Price lining

Psychological pricing

Prestige pricing

Reference pricing

Traditional pricing

Odd-even pricing

Multiple unit pricing

Bundled pricing




Pre-emptive pricing

Extinction pricing

Perceived value pricing

Demand-oriented pricing

Fixed and variable pricing



Methods of setting pr ices

Cost-based method

Competition ±based method

Demand-oriented pricing method



Br and Management

Br and

Management

Value for

Brand

S ellersmarket

Buyers

market



Effective Branding Strategy needs a

Value Platform



O ptimize the media mix across channels for maximizing the

performance.

We have to determine the appropriate share of each media in

Campaigns.

Print Media

Electronic Media

Outdoor Advertising

FM/R adio

In-store POP

Direct Mailers

And mor e««.

Media Mix



Cr eative media mix

Tailored personal promotion.

Cross Promotions.

Advertising

Direct mail.

Public relations

Customized newsletters

Event marketing. Giveaways.

Web Marketing.

New Product launches.

Creative Promotions

With Limited Budgets

More S ales.

Better

Conversions.

More Traffic.

Better Inventory

Turns.

More time spend

inside the store.

Cost Savings Competitive

advantage

Planet M -Organizing Events inside

the store.

-Bringing in Celebrities.

-Tremendous Cost Saving.

-Less operational hassles.



Use of Effective Campaign

Management Techniques

O bjective.

Dur ation.

Ingr edients.

Tar get Segment.

Communication.

R esponsibility.

Quickly R eact &

adapt to ear ly

changes.

Top down

str ategy.

Adjustdownstr eam.

Stop losing out

campaign..

Fight competition

with r apid r ollouts.

Check the per for mance

par ameter s.

Check the audited r esults.

ROI on the Campaign



Shift in customer ty pe

JOINT FAMILY NUCLEAR FAMILYSINK S

DINK S

SINGLES

module 7 retail mgt

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