chapter 12: managing the merchandise planning process

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process by which a retailer offers the correct quantity of the right merchandise in the right place at the right time and meets the company’s financial goals.
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merchandise management
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sense market trends, analyze sales data and make appropriate adjustments in prices and inventory levels
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merchandise managment
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manage portfolio of stocks whereas retail buyers manage a portfolio of merchandise inventory.
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stock brokers
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the buying organization
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merchandise group –> department –> classification –> category –> sky
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managed by a general merchandise manager, senior VP, or GMM highest classification ex: mens & children apparal
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merchandise group
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second level, managed by DMM, ex: children
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department
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a group of items targeting the same customer type, ex: boys size 4-6
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classification
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ex: outwear for boys size 4-6
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category
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the smallest unit available for inventory control breaks it down by brand, size color, style ex: boys underarmour jacket, black, size 4
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SKU
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process of managing a retail business with the objective of maximizing the sales and profits of a category
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category management
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obejective of category managment
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maximize the sales and profits of the entire category, not just a particular brand
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selected vendor responsible for managing a category. works with the retailer to develop a better understanding of consumer shopping behaviors, create assortments that satisfy consumer needs and improve the profitability of the merchandise category
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category captain
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true or false: category captains frequently have more information and analytical skills about the category in which they compete than retailers
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true
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problems of category captain
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have different goals than retailer, take advantage of its position,
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category captain examples
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general mills, kellogs,
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merchandise managers have control over
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merchandise they buy, price it is sold, cost of merchandise
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merchandise managers do not have control over
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supply chain management, information systems, real estate, HR, operating expenses
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advantages of rapid turnover
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increased sale volume, less risk of markdowns,
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approaches to improve inventory turnover
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reduce number of categories, number of SKUs in category and number of items for eacch SKU
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true or false: another approach to inventory turnover is to buy merchandise more often but in smaller quantities
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true
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BUT by buying in smaller quantities
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gross margin decreases, operating expenses decrease and buyers spend more time monitoring and placing orders
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what are the two types of merchandise management planning processes
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staple (basic) and fashion
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continuous deamnd over an extended time period, limited number of new product introductions, east to forecast demand, and continuous replenishment
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staple (basic)
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in demand for a short period of time, continuous introductions of new products, more difficult to forecast demand
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fashion merchandise
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steps in merchandise management process
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1. forecasting sales, 2. developing an assortment plan 3. determining the appropriate inventory
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understanding the nature of the product life cycle, collect data on product and similar products
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developing a sales forecast
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introduction, growth, maturity, decline
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product life cycle
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true or false: knowing where a category is in its life cycle is important in developing a sales forecast and merchandising strategy
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true
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retailers develop fashion forecasts by relying on:
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previous sales data, personal awareness, fashion and trend services, vendors, traditional market research
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SCAN
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shop stores, websites, catalogs as the customer would converse with consumers, clerks, act like not a customer notice
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list of the SKUs that a retailer will offer in a merchandise category and reflects the variety and assortment that the retailer plan to offer in a merchandise category
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assortment plan
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number of different merchandising categories within a store or department
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variety (breadth)
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number of SKUs within a category
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assortment
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10 styles x 3 colors x 9 sizes x 3 lenthgths = 810 skus
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assortment plan
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number of each sky in the assortment plan the buyer wants to have available for purchase in each store
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model stock plan
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true or false: choosing an appropriate amount of backup stock is critical to successful assortment planning
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true
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if the backup stock is too low –>
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lose sales and customers
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if the backup stock is too high –>
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wasted money on needless inventory tithe could be invested in more variety
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the point at which innovatory available should not go below or else will run out of stock before the next order arrives
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order point

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