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25 Cards in this Set

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considerations in setting retail prices
-customer sensitivity- how sensitive they are to price and thus value change.
-competition
-legal and ethical issues
-cost
elasticity
%changed in quantity sold / %changed in price

product market is c onsidered inelastic if ratio is greater than .
considered elastic if less than -1
price discrimintaion
when a retailer offers same service/product at a different price as competitor (usually legal)
3 degrees of price discrimination
first degree- charging each customer a different price based on their willingness to pay
second degree- markdowns, changing prices based on the a particular offering
third degree discrimination- charging different prices to diferent demographics, segments etc.
GRMOI
gross margin of investment return
how much of a gross margin are we making on our inventory
-how much cash is converted from our inventory ABOVE what we paid for it.
GROSS MARGIN / AVG INV COST
price bundling
offering two or more different products/services at one price
-increases unit and dollar sales
resident buying offices
report on mkt and fashion trends
assist in order placement, adjustments with vendor
introduction to new resources
exclusivity of merchandise
ie. The Donegan Group
classifications on merchandise
a- 100-95
b- 95-90
c. 90 and below
fluctuations in demand make C classifications hard to maintain so they may have more back up stock.
stable v fashion merchandise
staple- basic, necessities, few innovations, high demand over long period of time
fashion- a lot of innovations, new products, high demand for a little bit,
Staple merchandise systems
helps buyers perform 3 functions
- monitoring current sales and inventory
- forecasting how many SKUs will be sold, forecast allowance made for changes in demand
- decide on reordering decision rules to keep optimum level of inventory
high low pricing
when retailers cut prices, usually weekly, in response to competition and to get a good response from value driven customers
everyday low pricing
when retailers boast they have the lowest avg sales,
a good way to say it is that they dont fluctuate their prices and theyre usually in between a high-low price and a sales price
category captain
a selected vendor who is in charge of a category
adv and disadv of using a category captain
adv
vendors usually have better analytical tools and skills
creates assortments that satisfy the customer
improves profitability of category

dis
vendor category captain may have a different plan than the retailer
advan and diadvan of using national labels
advan
-helps reatailers build image and traffic flow
- reducing selling/promotional expense
-more desired by customers
- large retailers can push some of the risk of buying back onto the vendor

disadv
-lower margins
- vulnerable to cometitive pressures
- limits retailers flexibility
reverse auction
works good bc the price falls bc there are so many sellers, and only one buyer.
works good with seasonal items
-however, if the items dont sell, the inventory cost could outweigh the savings you get from the reverse auction
merchandise budget plan
plans for how much money can be spent to meet seals, maring, and inventory turnovers and GMROI ovjevtives
-does NOT include what specific SKU's to buy and how much of em
benefits of high inventory turnover
increased sales volume
less risk of obsolete markdowns
improved salesperson morale
you have the ability to buy new products when they become available/popular
reduction
markdowns, shrinkage

shrinkage = shrinkage/ net sales
buybacks
when retailers make vendors buy back inventory that isn't selling
- done when a vendor is trying to make room for their produt
chargebacks
when a retailer takes off what he thinks shouldn't be paid to a vendor for a previous deal bc of inventory not selling or vendor mistake
planner
in charge of ALLOCATING the merchandise and planning them for a specific geographic location
buyers
get the merchandise they see that will sell, negotiates prices, setting store prices, managing inventory, in charge of latest fashions.
steps in merchandise planning process
1) set margin and inv turnover goal
2)forecast seasonal sales for category
3) breakdown sales by month
4)plan makrdowns (due to sales, inventory loss)
5) determine stock needed to support forecasted sales
6) determine open to buy for teach month
5 ways to liquidate merchandise
sell it to another retailer
consolidate the unsold
special clearance or place on ebay
give it away to charity
hold onto it for next season