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DECA Retail Merchandising A
Terms in this set (118)
process on how to get goods from the manufacturer to the consumer.
What is the supply chain
Manufacturer - Wholesaler - retailer - consumer
Doing more than one job in the supply chain. When a retailer engages in wholesaling activities.
occurs when a manufacturer undertakes retailing and wholesaling activities.
When a retailers performs some wholesaling and manufacturing activities,
How do retailers add value
providing assortments, breaking bulk, holding inventory, providing services
technological, social and ethical/legal/political factors
competitors and customers
Compartment stores compete against other compartment stores and supermarkets compete against other supermarkets.
when retailers offer merchandise not typically sold in their store. Example: clothing in a drug store.
competition between retailers that sell similar merchandise using different types of stores such as department and discount stores.
When is there intense competition
when retailers are located near one another who offer similar merchandise.
how the retailer plans to focus its resources to accomplish its objectives. It identifies the target market, the nature of the merchandise and the services it will offer, and how to build a long term advantage over its competitors.
6 elements in the retail mix
1. Customer service
2. Store design and display
3. Communication mix
5. Merchandise management
North American Industry Classification system. Every business has a 6 digit code based on the type of products and services it sells. First 2 # are the firms business sector, remaining 4 identify various subsectors.
is the number of merchandise categories a retailer offers. Example: Food, nonfood, fashion, perishable, household, etc.
is the number of different items offered in a merchandise category. Example: (Fashion) Girls, boys, infant apparel are all different items in the fashion category.
Services retailers offer
displaying merchandise, accepting credit cards, providing parking, and being open convenient hours.
When do you need to charge higher prices?
when you offer broader variety, deeper assortments and/or additional services in order to make a profit.
large, self service retail food store offering groceries, meat and produce as well as some nonfood items such as health and beauty aids and general merchandise. Example Byerlys
reducing carbon footprint caused by the transportation of food throughout the world
large stores (185,000 sq. ft) that combine a supermarket with a full line discount store. Example: Walmart and Super Target
retailers that offer a limited and irregular assortment of food and general merchandise with little service at low prices for ultimate consumers and small businesses. Example: Costco and Sams Club
provide a limited variety and assortment of merchandise at a convenient location in 3 - 5,000 sq. ft. store with speedy checkouts. Example: Holiday Gas Station
7 General Merchandise Retailers
Full line discount stores
Home improvement centers
Off price retailers
Extreme value stores
carry a broad variety and deep assortment
carry a broad variety and shallow assortment
Narrow variety and deep assortment
Narrow variety and very deep assortment. Example: Bass Pro Shops
narrow variety and very deep assortment
Home improvement centers
narrow variety and very deep assortment
Off price stores
average variety and deep but varying assortment
Extreme value retailers
average variety and average but varying assortment
4 unique characteristics of service retailing
simultaneous production and consumption
inconsistency of the offering to custoemrs
customers cannot see or touch services compared to products. retailers often use tangible symbols to inform customers of the quality of their service.
Simultaneous production and consumption
the retailer creates and delivers the serve as the customer is consuming it. Example: when you eat at a restaurant your meal is prepared and consumed almost at the same time.
cannot be saved, stored or resold. Example: one an airplane takes off with an empty seat, the sale is lost forever. To compensate retailers must match supply and demand.
services are performed by people so no two services are identical. Retailers carefully select and train employees
is the way a retailer sells and delivers merchandise and services to its customers
using multiple channels to improve their offerings to their customers and build a competitive advantage.
when a manufacturer sells directly to the consumer and skips the retailer
refers to a situation where a new product "eats" up the sales and demand of an existing product.
Share of wallet
the % of purchases made from a specific retailer
Types of channels
internet, catalog, direct selling, home shopping, automated
where sales people interact with customers face to face in a convenient location, either at their home or work. Example: Mary Kay
Direct response advertising
a 1 - 2 min advertisement on TV or radio that describes products and provides the opportunity to order them
when merchandise or service is stored in a machine and dispensed to customer. Example: redbox
percentage of customers who come into the store and buy something
Customers use one channel of business to research products and move to a different channel of business to purchase.
Store channel information systems are this
Non store channel information systems are this
shopping for pleasure
shopping for a specific item/work
Stages in the buying process
can be hedonic or utilitarian
buying both premium and low price merchandise
can be internal (memory) or external (friend recommendation)
Use the multi-attribute model. Put things into a consideration set.
set of alternatives customer evaluates when making a choice of a retailer to buy from
Extended problem solving
purchase decision process which require a lot of time and effort and used when a lot of risk is involved. Example: buying a car
Limited Problem Solving
purchase decision process which require a moderate amount of time and effort and used when customer has prior experience with product and risk is moderate. Example: buying a toaster. Used with IMPULSE buying
Habitual Decision making
purchase decision process which requires little to no effort and customer has purchased product before, decision is not that important. Example: buying toothpaste
group of customers whose needs are satisfied by the same retail mix because they have similar needs
retailer should know what to do to satisfy the needs of the customer
retailer can identify which customers are in the market segment
if a market is too small of buying power is insignificant its not substantial
the retailer can reach those customers in the market segment with promotions
geographic, demographic, geodemographic, lifestyle, buying situation, benefits and composite
"birds of a feather flock together" - consumers in the same neighborhoods tend to buy the same products. retailers use this to select locations for their stores. Tapestry classifies neighborhoods into 65 segments
groups customers according to where they live, they can be identifiable, substantial and reachable.
group customers by age, gender, income and eduation
how people live their life and they spend their time and money. uses VALS. better at predicting behavior then demographics.
identifiable, actionable and reachable
use multiple variables to identify customers in the target segment according to their benefits sought, lifestyles and demographics.
Fashion lifecycle stages
compatibility, complexity, triability, observability and relative advantage
degree to which fashion is consistent with existing norms, values and behaviors
how easy the new fashion is to use and understand
costs and commitment required to adopt the fashion initially
degree to which the new fashion is visible and easily communicated to others in the social group
degree to which the new fashion is advantageous to the customers than competing brands.
statement identifying retailers target market, format the retailer is going to use to satisfy target market needs and how the retailer is going to build a competitive advantage
5 ways to build a sustainable competitive advantage
customer loyalty, supplier relationships, internal operations, location and combination of all
4 growth strategies
market penetration, market expansion, retail format development and diversification
growth opportunity directed towards existing customers using the retailers present retailing format. Example: opening more stores in target market or staying open longer hours
involves using the retailers existing retail format in a new market segment. Example: opening up stores in new areas
Retail format development
retailer develops a new retail format (different retail mix) for the same target market. Example: Target express and target supercenters
retailer introduces a new retail format to a new target market
retailer shares something in common with the new opportunity
retailer has little commonality between the existing and new business
Retail Planning Process
define the mission
conduct situation audit
establish objectives and allocate resources
develop retail mix
evaluate performance and make adjustments
Define the mission
broad description of a retailers objectives and the scope of activities it plans to undertake.
Conduct situation audit
environmental scan to evaluate the current conditions which include market, competitive and environmental factors and a swot analysis
barriers to entry
conditions that make it difficult for other firms to enter the market such as scales of economy, customer loyalty and available locations
The cost advantage that arises with a large retailer
Bargaining power of vendors
when only a few vendors control the merchandise sold in the market
frequency and intensity of reactions to actions undertaken by competitors.
Return on Asset (ROA)
An indicator of how profitable a company is relative to its total assets.(NET PROFIT/TOTAL ASSETS). High numbers are best
Gross Profit Margin %
profit margin/net sales x 100
assets that require more than a year to convert to cash. Example: building, distribution centers, fixtures
assets that can normally be converted to cash within one year. Example: primarily cash, accounts receivable, merchandise inventory
values that cannot be objective measured.
Example: brand image, customer loyalty
a firm's use of its assets in generating sales
Net sales / Total assets
measure of efficiency of retailers' utilization of investment in inventory
COGS / Average inventory
Cost of goods sold (COGS)
the amount paid by the retailer for the merchandise
A category of expenditure that a business incurs as a result of performing its normal business operations. Include selling, general and administrative.
A revenue or expense stream that changes a cash account over a given period. Cash inflows usually arise from one of three activities - financing, operations or investing
A liquidity ratio that measures a company's ability to pay short-term obligations. (current ASSETS/current LIABILITIES)
(total liabilities/ stockholders equity) Measures how much money a firm can borrow over long periods of time. Low # is good. A measure of a company's financial leverage.
An indicator of a company's short-term liquidity. The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. (current assets - inventories) / current liabilities
Which is larger, net profit margin or gross margin?
Gross margin will be larger.
revenue - cost of goods sold
Gross margin %
revenue - cost of goods sold/ revenue
are net sales smaller than net profit?
net profit is always smaller than net sales
strategic profit model
provides insights into how retailers can improve their performance.
Net profit margin %
= net profit margin / net sales x 100
Net profit margin
= net sales - COGS - operating expenses - tax
THIS SET IS OFTEN IN FOLDERS WITH...
DECA Marketing Cluster Core
DECA Marketing Performance Indicators
DECA Retail Merchandising
DECA Buying and Merchandising
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