Merchandise Management Fundamentals
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Questions and Answers

What is the main goal of merchandise management?

  • To maximize sales through promotions
  • To meet the company's financial goals by offering the correct quantity of merchandise (correct)
  • To minimize inventory levels
  • To offer a wide range of products to customers
  • What type of merchandise has predictable demand and relatively accurate forecasts?

  • Promotional merchandise
  • Fashion merchandise
  • Staple merchandise (correct)
  • Seasonal merchandise
  • Which of the following is a controllable factor affecting sales projections?

  • Government policies
  • Cannibalization (correct)
  • Weather
  • Economic trends
  • What is the acronym for the merchandise planning process?

    <p>FDDDBM</p> Signup and view all the answers

    What is the purpose of assortment planning?

    <p>To select the collection of products to be offered in particular areas and during specified periods</p> Signup and view all the answers

    What is the term for the ideal quantities of products that should be in a fulfillment center at any given time?

    <p>Optimal inventory level</p> Signup and view all the answers

    What is the purpose of sell-through analysis?

    <p>To compare actual and planned sales to determine whether more merchandise is needed</p> Signup and view all the answers

    Which method is used to evaluate vendors based on weighted average scores?

    <p>Multi-Attribute Method</p> Signup and view all the answers

    What type of analysis identifies the performance of individual SKUs in the assortment plan?

    <p>ABC analysis</p> Signup and view all the answers

    What type of private label brand offers consumers a product comparable to a manufacturer's brand with little price savings?

    <p>Premium Brand</p> Signup and view all the answers

    What is the primary focus of the 'Terms and Conditions of Purchase' law?

    <p>Ensuring fair pricing for retailers</p> Signup and view all the answers

    What is the main objective of a strategic relationship between a retailer and a vendor?

    <p>To build a long-term, profitable partnership</p> Signup and view all the answers

    What is commercial bribery in the context of merchandising?

    <p>Influencing buying decisions through illegal means</p> Signup and view all the answers

    What type of private label brand is developed by a national brand and sold exclusively by a particular retailer?

    <p>Exclusive Brand</p> Signup and view all the answers

    What is the primary goal of effective negotiation in merchandising?

    <p>To build a long-term relationship with the vendor</p> Signup and view all the answers

    What is the primary difference between national brands and private label brands?

    <p>Ownership and marketing of products</p> Signup and view all the answers

    What is a chargeback in merchandising?

    <p>Deducting owed money by retailers to vendors when payment is missed</p> Signup and view all the answers

    What is the primary difference between gray-market merchandise and diverted merchandise?

    <p>Gray-market merchandise involves international borders, while diverted merchandise does not</p> Signup and view all the answers

    What is the main goal of penetration pricing?

    <p>To gain market share by introducing a product at a low price</p> Signup and view all the answers

    What is the definition of counterfeit merchandise?

    <p>Goods made without the permission of the trademark or copyright owner</p> Signup and view all the answers

    What is the primary purpose of discount pricing?

    <p>To attract customers by offering lower prices</p> Signup and view all the answers

    What is value-based pricing also known as?

    <p>Price-to-value</p> Signup and view all the answers

    What is the opposite of black market merchandise?

    <p>Legitimate market merchandise</p> Signup and view all the answers

    What is the main characteristic of price skimming?

    <p>Charging the highest initial price that customers will pay</p> Signup and view all the answers

    What is the primary goal of dynamic pricing?

    <p>To increase profit margins</p> Signup and view all the answers

    What is the pricing strategy used by Gucci?

    <p>Premium pricing</p> Signup and view all the answers

    What is the pricing strategy used by Netflix?

    <p>Penetration pricing</p> Signup and view all the answers

    What is the pricing strategy used by Fashion Nova?

    <p>Value-based pricing</p> Signup and view all the answers

    What is the purpose of keystone pricing?

    <p>To mark up the retail price by doubling the wholesale cost</p> Signup and view all the answers

    What is the pricing strategy used by Costco?

    <p>Competitive pricing</p> Signup and view all the answers

    Study Notes

    Merchandise Management

    • Merchandise management is the process of offering the correct quantity of the right merchandise in the right place at the right time to meet the company's financial goals.

    Types of Merchandise

    Staple Merchandise

    • Predictable demand
    • History of past sales
    • Relatively accurate forecasts

    Factors Affecting Sales Projections

    Controllable Factors

    • Promotions
    • Store locations
    • Merchandise placement
    • Cannibalization

    Merchandise Planning Process

    • Forecast category sales
    • Develop an assortment plan
    • Determine appropriate inventory level and product availability
    • Develop a plan for managing inventory
    • Buy merchandise
    • Monitor and evaluate performance and make adjustments (FDDDBM)

    Merchandise Planning Steps

    Forecast Category Sales

    • Classify sales opportunities based on confidence level

    Assortment Planning

    • Select the collection of products to be offered in particular areas and during specified periods

    Optimal Inventory Levels

    • Ideal quantities of products to have in a fulfillment center at any given time

    Product Availability

    • Percentage of demand for a particular SKU that is satisfied

    Inventory Planning

    • Determine the optimal quantity and timing of inventory to align with sales and production capacity

    Cycle (Base) Stock

    • Inventory that goes up and down due to the replenishment process

    Backup (Buffer, Safety) Stock

    • Inventory needed to avoid stockout

    Monitoring and Adjustment

    Three Types of Analyses

    • Sell-through analysis
    • ABC analysis of assortments
    • Multi-attribute analysis of vendors

    Sell-through Analysis

    • Compare actual and planned sales to determine whether more merchandise is needed to satisfy demand

    ABC Analysis

    • Identify the performance of individual SKUs in the assortment plan
    • Rank orders merchandise by performance measure

    Multi-Attribute Method

    • Evaluate vendors using a weighted average score for each vendor

    Brand Alternatives

    National Brands

    • Known as manufacturer brands, designed, produced, and marketed by the product to retailers

    Private Label Brands

    • Also called store brands, house brands, or own brands
    • Four types of private label brands:
      • Premium brands
      • Copycat brands
      • Exclusive brands
      • Generic brands

    Negotiation Issues

    • Prices and gross margins
    • Additional mark-up
    • Terms of purchase
    • Exclusivity
    • Advertising allowance
    • Transportation

    Tips for Effective Negotiation

    • Choose a good place to negotiate
    • Be aware of real deadlines
    • Separate the people from problems
    • Insist on objective information
    • Invent options for mutual gain
    • Let them do the talking
    • Know how far to go
    • Don't burn bridges
    • Don't assume

    Strategic Relationship

    • Emerges when a retailer and vendor commit to building a long-term relationship, investing in opportunities profitable for both parties

    Terms and Conditions of Purchase

    • Law passed on terms and conditions that vendors cannot offer differently to different retailers for same quality and features products

    Commercial Bribery

    • Illegal in merchandising to influence buying decisions by offering something valuable

    Chargeback

    • Deducting owed money by retailers to vendors when payment is missed (unethical in merchandising)

    Buybacks

    • System that gives favors to vendors by buying back and sniffing space allowance rather than competitors

    Counterfeit Merchandise

    • Goods made without permission of the owner of a trademark or copyright

    Gray-Market Merchandise

    • Goods that flow through unintended channels, usually across international borders

    Diverted Merchandise

    • Similar to gray-market merchandise, except without international borders

    Black Market Merchandise

    • Occurs when consumer goods are scarce, such as water or gasoline after a natural disaster

    Pricing Strategies

    Retail Price

    • What consumers pay for the finished product

    Pricing Strategies

    • Cost-plus pricing
    • Competitive pricing
    • Value-based pricing
    • Price skimming
    • Discount pricing
    • Penetration pricing
    • Keystone pricing
    • Manufacturer suggested retail price
    • Dynamic pricing
    • Multiple pricing
    • Psychological pricing
    • Loss-leader pricing
    • Premium pricing

    Examples of Pricing Strategies

    • Premium pricing: Gucci
    • Value-based pricing: Fashion Nova
    • Penetration pricing: Netflix
    • Competitive pricing: Costco

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    Related Documents

    RETAIL.docx

    Description

    Test your knowledge of merchandise management, including types of merchandise, factors affecting sales projections, and merchandise planning. Learn about staple merchandise, controllable factors, and more.

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