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25 Cards in this Set
- Front
- Back
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considerations in setting retail prices
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-customer sensitivity- how sensitive they are to price and thus value change.
-competition -legal and ethical issues -cost |
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elasticity
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%changed in quantity sold / %changed in price
product market is c onsidered inelastic if ratio is greater than . considered elastic if less than -1 |
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price discrimintaion
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when a retailer offers same service/product at a different price as competitor (usually legal)
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3 degrees of price discrimination
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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. |
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GRMOI
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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 |
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price bundling
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offering two or more different products/services at one price
-increases unit and dollar sales |
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resident buying offices
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report on mkt and fashion trends
assist in order placement, adjustments with vendor introduction to new resources exclusivity of merchandise ie. The Donegan Group |
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classifications on merchandise
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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. |
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stable v fashion merchandise
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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, |
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Staple merchandise systems
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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 |
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high low pricing
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when retailers cut prices, usually weekly, in response to competition and to get a good response from value driven customers
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everyday low pricing
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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 |
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category captain
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a selected vendor who is in charge of a category
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adv and disadv of using a category captain
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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 |
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advan and diadvan of using national labels
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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 |
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reverse auction
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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 |
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merchandise budget plan
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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 |
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benefits of high inventory turnover
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increased sales volume
less risk of obsolete markdowns improved salesperson morale you have the ability to buy new products when they become available/popular |
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reduction
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markdowns, shrinkage
shrinkage = shrinkage/ net sales |
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buybacks
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when retailers make vendors buy back inventory that isn't selling
- done when a vendor is trying to make room for their produt |
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chargebacks
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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
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planner
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in charge of ALLOCATING the merchandise and planning them for a specific geographic location
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buyers
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get the merchandise they see that will sell, negotiates prices, setting store prices, managing inventory, in charge of latest fashions.
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steps in merchandise planning process
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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 |
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5 ways to liquidate merchandise
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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 |
