Merchandising Management Class 3

7/30/2019 Merchandising Management Class 3

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Merchandising Management

Class 3


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Assortment Planning

To know assortment planning we must know the following :

Product management-

Role of product management in Retail Business

Product Range and Assortment

Product assortment strategy

Consumers perception of Assortment


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Product Management

Products in retailing context are defined as anything soldand purchased in a retail transaction.They could be goods, services, places, events, ideas,etc. A product can be tangible or intangible.

Examples : Outlets selling intangible products are service-

focused stores like beauty parlors, banks, and other advisory services.

For Retail Outlets, services may take the form of home- delivery service, entertainment and child-carefacilities, information and advisory services likeinterior designing services provided by home solutionproduct retailers, etc.


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Product management is a key activity in themanagement of retail business.

It drives the business strategy of the retailer and hasimmense cost and profit implications.

A related aspect is the management of retail brandsand the decision to offer retailers private labelsalong with or instead of , national and local brands of manufacturers.

Product management deals with issues related to thekind of products sold by the retailer. The product plan is drawn keeping in mind various

factors that influence shopping behavior and thestrategic and cost concerns of the retailers.


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Products are critical to a retail firms existence andprofitability.

They constitute the basis of exchange transactionsbetween retailers and consumers.

Product management is critical to the success of retail business.

Identification of the products to be retailed forms thecore component of a retailers business plan.

There are varied demand patterns and competitivefactors for different product categories.

Good product management by the retail firm iscrucial to ensure the satisfaction of consumer needs.


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Source ; The Herald (2003)

LEVIS PRODUCT STRATEGY IN FRANCE

Out with unisex, in with jeans for women only . Thatbecame part of Levis new strategy in France . Hoping tolift sales in its vital European market, Levi Straussopened jeans boutique for young women. The companyalso implemented a gradual dividing of the sexes in other stores, with many just for women, and for men. One suchnew store in Paris, called Levis for Girls, was aimed atwomen between 19 and 25 years of age, though thecompany admitted that the average customer is morelikely to be aged between 15 and 22 years. Levi alsotransformed its Paris flagship into a store for men only .This was all part of a broad plan to have multiple outletsfor different corners of the market.


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A product range is the total product offering expressedin terms of width and depth.The width of the product range depends on the variety ,or number of different types of product category.The depth on the other hand refers to the amount of choice offered in terms of product and brand variationwithin a product category.

Increased depth will allow a retailer to cover a number of different price levels, should this be part of their overall product strayegy.


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Product similarity is a common way of managingproduct groups .The most relevant are the following :

End Use

Price

Brands

Core and non-core


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End UseProducts may be grouped on the basis of beingcomplementary with each other for end use. For

example B & Q, the international DIY (Do It Yourself) retailer, groups products according toprojects such as installing a new bathroom suite, or tiling the floor. Supermarket retailers sometimes groupproducts around meal themes, as a way of encouraging related sales. Consumers who areconvenience driven are likely to value retailers whoprovide products that are grouped according to lifestylesolutions.


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Brands A brand of a product can be the most important productfeature for some customers; and some brands might

have products across various product categories. Itmay therefore be appropriate to manage ranges bybrands rather than by product category.Department stores, like Debenhams , which have over fifty of their own house brands, often manage productsby brand in order to create and maintain a strong,consistent , and coordinated identity, from thedevelopment stage through to display within the store.


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Core and non core :For many retailers products can be divided into coreand non-core ranges.

Core items are those that have consistent demand ,which the retailer matches with continuous availability.These products are generally what are termed staple items and they do not tend to under go change.

Non-core lines may be seasonal, only being stocked for a short duration within the year, or they may be subjectto fashion trends and are replaced by different trendyitems once their appeal dies.


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Product Range and Assortment Retail format and typical product assortments :

Retail Format Example Depth ofAssortment

Width ofAssortment

Department store Harrods,Debenhams

Deep Wide

Variety Store Marks and

Spencer

Shallow Wide

Category Killer Toys R, Us, Deep Narrow

Specialty Store The Body Shop Deep Narrow

Conveniencestore

7- Eleven, Alldays

Shallow Medium

DiscountSupermarket

Aldi, Netto Shallow Wide


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Retail format and typical product assortments :

Retail Format Example Depth ofAssortment

Width ofAssortment

Superstore Wal - Mart Medium Wide

Mail order catalogue

Great Universalstores

Shallow Wide

Specialistcatalogue

Innovations Deep Narrow


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Product Assortment Strategy

Consumer Perception of Assortment

Number of unique SKU

offered

Space devotedto category

Availability of consumers

favorite SKU


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Consumer assortment perception has been shown tobe one of the top three criteria, along with location andprice, in determining retail patronage.

However carrying very large assortments results in thefollowing : Higher inventory costs and more out of stock for

retailers. These higher costs made it difficult for conventional

super markets to compete against the growing retailformats of discount store, warehouse clubs, andsuper markets.


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It makes choice difficult and decreases purchase atthe consumer end.

Consumer Perception of Assortment : Assortment perceptions are said to be influenced bythree factors: The number of Unique SKUs offered

The total space devoted to the category The availability of a consumers favorite SKU.


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PRODUCT SELECTIONSelecting the right product requires an understanding of thecomplexity of the modern shopper , and an ability to bendproduct detail in a way that satisfies both physical andemotional need of the shopper.

This must be carried out within the context of theretailers positioning strategy.

The product selection process involves a review of theperformance of the existing product range.

This exercise aids in deleting some products or assists inrevising various aspects of product portfolio.


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PRODUCT SELECTION A retailer is required to consider various issues relatedto the selection of the products to be retailed.

These pertain to the type of products to be retailed,lifecycle of the products, trends in the product category,and its strategic fit with the retailers business.

Broadly it helps to identify the opportunities to bring innew products or product-related attributes to meet thechanging preferences of the target customers.


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Product SelectionProduct performance review utilizes informationcollected from secondary data and primary sourcessuch as : Sales Report Product profitability Report Quality Report

Return Figures Promotional Campaign results and plans Product-market trend information Consumer Research


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Alternative decisions as a result of product range review

Product Range Review

Deletion of a product

Increase in variety and range

Change / Increase suppliers

Update or revamp product

Review and revision of Promotionalcampaign

Display product differently

Alternative product range decisions


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Retailers Criteria for Selection

Product Selection Criteria for the Retailer

Product selection Criteria for the retailer

PhysicalProperties of a

productPackaging Product Quality Brand


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PACKAGINGFor many products it is packaging that initially attracts apotential customer, and so the design of the package inwhich a product is enclosed is as important as theformulation of the product within.Packaging performs a variety of functions, includingaesthetic appeal to consumers, protection of theproduct, added value for the customer For example ,container that can be used when empty, an aid toproduct use such as spray container, a contributor tobrand identity and a vehicle for promotional messages.


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PRODUCT QUALITYProduct quality is determined to a large extent by its physicalproperties. However, the components or ingredients usedmay themselves be subject to physical variation thatdetermines the level of quality.

For example, a sweater may be made of 100 per cent wool,but the quality of wool used may determine how soft andsmooth the garment feels. Quality may also determine how

long the garment lasts.

Consumers are also increasingly concerned from a socialand ethical stance about what goes into a product and how itis made. Example concerns about child labor.


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PRODUCT QUALITY Achieving consistency in the level of quality in theproduct range is very important to retailers in order tomaintain customer trust and satisfaction.

Product specification is an important document inquality control process and includes a detaileddescription of the product .


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PRODUCT QUALITY- Product specification Relevant Product coding information Labeling and packaging information

Component materials Production method Details Dimensions ( with full size specification for

alternative sizes)

Sketch or blueprint (a technical representation of theitem


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BRAND Although the brand is an intangible product feature, for some consumer purchase decisions it may be the onlyattribute that counts.

A corollary of effective product management is brandmanagement. The nature of product assortment is anactive ingredient in building a strong retail brand.

Merchandising Management Class 3

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