Merchandise Financial Planning (MFP) Objectives

Study Notes

Merchandise Financial Planning (MFP)

Guides product decisions from a financial angle across different stages of the GTM (Go-To-Market) to ensure profitability and revenue maximization.
Provides financial framework for assortment planning, allocation, replenishment, and end-of-season activities.

Goals of MFP

Break down revenue target into achievable goals for channels (DTC, ecommerce, DTP, and Wholesale).
Allocate investments to meet or exceed revenue goals while maintaining profitability.

Channel Breakdown

Channels refer to Distribution channels (DTC, ecommerce, DTP, and Wholesale).
Product Type refers to categories (e.g., Men's Sandals).

Annual Revenue Target Breakdown

Based on Strategic channel revenue growth targets (top-down Brand Target) and Channel growth forecast (bottom-up commercial Forecast).
Example: DTC Channel is expected to contribute 10 million to the overall APAC revenue target of 100 million for the Brand.

Channel Contribution

Considerations: historical sales by store cluster, revenue growth estimates, product pipeline, and Brand-specific assumptions.
Planned contribution ratio by gender within Key Categories combines top-down and bottom-up planning approaches.

Translating Revenue Goals into Strategic Sales Plans and Budgets

Collaborative effort between Brand Planning teams and Digital Hub Team.
Involves business analysis, forecasting, and consumer insights.
Ensures Sales plans and budgets are aligned with revenue targets and optimized to minimize markdowns and maintain lean End-of-Season Inventory.

Sales Plan Calculation

Utilizes building-blocks concept, incorporating 4 out of the 5P's of strategic planning (Place, Promotion, Product, Price).
Focuses on adjustments versus previous season or long-range plan (e.g., portfolio changes, sell out mechanics, and product offering).
Consider brand-specific factors to be considered in the sales plan calculation.

Description

MFP is a process guiding product decisions from a financial angle across stages of the GTM, ensuring profitability and revenue maximization. It provides a financial framework for assortment planning, allocation, and distribution.