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Marketing Strategies & Merchandising ProcessMerchandising Process

ADM4307 Apparel ManufacturingBy S. H. Shin, Ph.D.

The role of the marketing division

Marketing is a part of a firm’s strategic plan.To market product successfully;

Positioning the firm relative to target markets and the titicompetition.

Identifying “Target markets” for their products Continually monitoring markets.

The role of the marketing divisionMarket segmentation and Target markets

Target marketsDescribed in demographic characteristics (See Table 2-1, p. 34)1) Core customers (the foundation of their business)2) Fringe customers (potential for business growth)

Market segmentationMass market strategies

Middle income class, large portion of the U.S. population (about 80%) Multiple-segment strategies

Two or more marketing, Examples: men’s sport shirt + a line for women’s shirtsNiche marketing (or Micromarketing)

Narrowly defined target market (gender, price range, size range, life style)A firm may change its conception of target market;

1) Distribution changes among age groups (Example: Y Generation)2) Population shift to the south and west.3) Needs of special market segments: petite, plus, tall, and large size.

Strategic marketing processesMarketing strategy considers;

Marketing objectivesAnalysis of the competitionMarket positioning and product differentiationProduct sell-through

Marketing objectivesMarket penetrationMarket penetration

Expends sales of current products in current marketsAchieved through

Price promotion/ Low pricingBrand/ Store loyaltyConvenience/ Accessibility /Internet

Market developmentSeek new markets or new uses for products (Example: Nylon)

DiversificationDevelop new products aimed at new markets (Example: Liz Claiborne’s diversification Elizabeth for large sizes, Liz sport for casual market, Claiborne for men’s wear)

Marketing strategy

Analysis of the competition (see p. 37)Identify by

asking customers/ reading the trade press/ consulting industry directories/ and participating in trade associations.

Determining potential competition is difficult.M k t iti i d d t diff ti tiMarket positioning and product differentiation

To make positioning decisions, the firm must know1) purchase criteria of their target customers2) product performance expectations3) customers’ perceptions of competing product

Market analysis example (see Figure 2-1 p. 39)Product differentiation by using

Labeling, price, quality, customer service, fit, fashion, styling.Market positioning example (see Table 2-2. p. 38)

Marketing strategy

Product sell-throughIt must be sold at “regular” price.

1) Push-through system2) Pull-through system (the essence of QR)

S l F tiSale Forecasting“Outlines expected company sales for a specific good to a specific consumer group over a specific period of time”

Research method: Qualitative methods (Consulting)Quantitative methods (statistical analysis)

Reflect market potential (Pull), NOT production capability (push).

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Retail/Wholesale Marketing StrategiesRelate to Channel distribution.Developing retail strategies

Selling distressed merchandise in outlet store.Examples: VF Corp. using Dual-distribution system (own stores+ traditional discount, specialty, or department store), Lands’ End (Internet + catalogue)(Internet + catalogue)

Developing wholesale market strategiesA place where a group of apparel manufacturers is showing their product lines for sale at wholesale.

MAGIC International trade show in Las Vegas (twice a year) www.magiconline.comTarget of the wholesale force-> Retailers ->target consumers.

Sale reps (2 types)Inside sales rep.Outside sales rep.

QR Partnering arrangements

Marketing calendar

Marketing calendar Timing of product development, production, and presentation is critical (p. 45).Selling periods:

Factors: Seasonal, Holidays, fashion change.T hi t (52 k ) S l it (8 12 k )T-shirts (52 weeks), Seasonal items (8-12 weeks)

6 selling periods a year and 5 lines a season.Marketing calendar example (Table 2-3, p. 45)Marketing dates

Line review: Presentation of the line to the sales staff. (2wks prior to line release)Line release: Line must be complete for showing. Start to ship: Line is ready for delivery to retail store. Ship complete: date by which retailer orders are to be completely filled. (within 3 wks).

Other marketing strategiesGlobal marketingMarketing on the InternetLabeling and Licensing

LabelsNational brands and trademarksPrivate brandsLegally required labels

Merchandising license agreementsIntellectual propertyLicensing (Example: Lauren by Ralph Lauren, Peerless International, a licensee of RL)Licensing contractsRoyalty (1~15 % of sales)

Merchandising processes

Merchandising is:Planning, Developing, and Presenting product lines for a target market involving pricing, assortment, styling, and timing.

Gross margin (profit):The difference between net sales and cost of goods sold

Merchandising calendar

Merchandising calendar:The timing required to develop, plan, and present for each selling period.Based on 52 week merchandising cycleSelling periods (3~52 wk) defined as weeks of sale for products.

Merchandising calendar with Quick Response systemLead time:

The time between placing an order and delivering merchandise.Customer-driven.The importance of level of inventory

Enough inventory to minimize lost sales but not so much as to have lots of excess at the end of the selling period.

Quick Response(Short time)

In the past (56 weeks) Retailers

Manufacturers

Customers

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Concepts of apparel product linesProduct line:

The total merchandise mix presented for sale.Within each line/category/classification, the merchandiser builds an assortment (e.g. style). Merchandisers and designers when planning and developing product lines think in groups rather than individual styles.

Categories for merchandisable groups:Separate:

Tops/ bottoms or both itemsExample:1 Style+5 colors+4 sizes (see Figure 3-1, p.67)

Coordinates:Groups of different products with common characteristics such as style, trim, colors, etc. (see Figure 3-2, p.68).Example: 5 styles+2 colors+ 6 sizes

Multi-piece style (Example: Suits)Related separates:

Displayed and sold like a separates line but has even more coordinating potential because of common colors and materials. Example: 2 styles of shirts + 2 styles of sweaters (See Figure 3-3, p.68)

Dimensions of product change & Merchandising responsibilities

A perceptual map of product change (see Figure 3-4, p.70) Merchandising responsibilities:

Merchandising taxonomy detailing planning, developing, and presenting a product line (see Figure 3 6 p 75)

Line planning

Line Development

Line presentation

and presenting a product line (see Figure 3-6, p.75)

Merchandising Responsibilities

Line planning: guides, defines, and limits the line by evaluating merchandise mix and forecasting.

Look at last seasons sales at same selling period.Review current market informationBrainstorm for new ideasWorld market shopping.

Planning merchandise budgets by:Looking at last years sales and plan for sales increase/decreases.Take into consideration new accounts and current retail relationships.Talk with buyers on their projected buying % for the upcoming selling period.Example: See Figure 3-7, p. 78.

Line planningPlanning merchandise assortments based on budgets:

A balanced assortment matches the assortment plan to customer demand.Assortment balance is based on the development of model stock plans that identify SKU (number of Stock Keeping Units).

SKU = Number of Styles x Number of Sizes x Number of ColorsSKU = Number of Styles x Number of Sizes x Number of Colors

Number of Styles

Number of Sizes

Number of Colors

Line planningAssortment:

Range of choices offered, usually defined by:Style + Size + Color

Assortment variety:Total number of unique items that must be produced to satisfy the design plan

Assortment volume:Assortment volume:Number of units that must be sold to achieve planned sales

Assortment diversity:Is measured by Volume per SKU (VSA) for the assortment. Example: 5 or less means losing sales.

Assortment distribution:Allocation of volume broken down by style, size, and color.

Analyze and update merchandise plans when conditions change in the market, merchandising plans must be adjusted.

Example: see Figure 3-9, p. 81

Line development

Line development:Includes all processes required to translate a line plan into real merchandise.Line concept:

First phase, determining the look and appeal that establishes identity and salability.Current issues, fashion trendsInspiration/Concept board.

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Product development

Product development:The design and engineering required to make products salable and producible.Apparel product development (2 phases)

1) Creative design- focus on creativity and formation of merchandisable groups2) Technical design- perfecting the style, fit, patterns, also including specs and costing.

Line presentation

Line presentationWholesale level:

Line preview- Sales reps see the line and become i i d ith it l t ti linspired with its sales potential.Line release- must coincide with market dates, target date for showing to buyers.

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