CTE 4826 Midterm Study Guide 01 24 2014 Merchandise Buying 1 Involves selecting and purchasing products to satisfy the wants and needs of consumers Four P s Of Marketing 1 Product 2 Price 3 Promotion 4 Place All of these are needed to be successful Image 1 How your customer perceives your store Innovative high price or budget The customer s image can be incorrect 2 A retailer can change a customer s image by revamping their store s Positioning 1 Identifying a group of consumers and developing retail activities to meet their needs Used by buyers to match and coordinate get the right price for the target market deciding sourcing and mark ups They know if their customer will spend a lot and expects a lot of service 3 Types of Marketing 1 Undifferentiated Please all customers supermarkets drug stores and have a broadly defined potential customer 2 Concentrated One segment women s shoes does not appeal to every customer 3 Multi segmented More than one customer segment big and tall men s stores Target Market 1 Group of people with the ability desire and willingness to buy the targets of your retail strategy 2 Market Segmentations Demographic age sex income Geographic zip codes city state Behavioristic buying activities Psychographic lifestyle interest opinions Buyer s Job 1 Develop merchandise strategies 2 Keep abreast of trends and economic conditions 3 Analyze and interpret reports 4 Create assortments 5 Negotiate with vendors 6 Price merchandise Price competition rates 7 ID fast and slow selling merchandise 8 Maintain well balanced stock and assortments 9 Plan and develop private brands 10 Develop an awareness of trends 11 Make trips to market Factors Affecting Buyer s Job 1 The merchandise carried basic fashion 2 Organizational structure centralized buying office Macy s Everything done in one office Creates less jobs 3 The size of the retail organization specialization with larger stores The bigger the organization the smaller the product category Quantitative Measures a Buyer is Measured On 1 Net sales 2 Maintained Mark Up 3 Mark Down 4 Gross Margin 5 Stock Turn Centralized Buying Office 1 Having all functions in one office Benefits better communication consistency across departments Cons do not know customer that well less jobs can be less cuts costs consistency Central Merchandising Plan Warehouse Recognition Plan Most common Representing a group of 2 3 Types stores that has complete responsibility for the selection and purchase of merchandise Buying decisions are based on factors like sales history and current trends basic merchandise The buyer at HQ still determines the merchandise carried at the warehouse but each store manager is allowed to pick the assortment that he wishes for that individual store Buyers select the merchandise assortment in addition to the vendors that each store will purchase from A list of approved vendors is sent to each store manager who then orders directly from the vendor Typically used only by stores carrying Price Agreement Plan Departmentalization 1 Functional Activities of a similar nature are grouped together 2 Product Line Group merchandise by categories like furniture children s and jewelry 3 Geographic Breaks organization down by region of the country Organizing different store activities into departments or divisions Product Lines 1 Hard lines Electronics appliances furniture sporting goods and toys 2 Soft lines Jewelry apparel and bedding Collecting Data 1 Primary Info collected for a specific purpose 2 Secondary Already exists ex demographics 3 Internal Sources Store records most important management sales associates 4 External Sources Customers vendors magazines etc Buying Offices 1 Organizations that provide consulting services to retailers Doneger is one of the leading buying offices in NYC 2 Independent Privately owned Salary or fixed fee is paid directly from the retail store and the commission or merchandise broker is paid by the manufacturers represented by the firm 3 Store Owned Owned by stores or store they represent Large department stores or specialty stores Buyers choose a buying office mostly by how much it costs and if they can afford it 4 Pros Saves money by saving on man power making wiser decisions buying in bulk smaller firms 5 Cons They do not offer merchandise planning technology HR and etc Why Do Customers Buy 1 Rational Basic human needs such as food clothing and shelter 2 Emotional Purchases which involve feelings rather than logical thought 3 Patronage Why consumers choose one store over another Convenience value received assortment of merchandise services offered experienced and courteous sales associates Maslow Self Actualization Self Esteem Love and Belongingness Safety and Security Physiological Rational Computer Processes 1 Data Warehousing Allows retailers to access detailed customer inventory and financial data on a real time basis 2 Data Mining Searches through stored data to detect meaningful patterns and relationships Competitive price analysis markup and markdown opportunities promotional price analysis private brand analysis promo brand analysis and affinity analysis 3 Database Marketing Collecting data about consumers analyzing it to predict how likely customers are to buy a product and using that knowledge to develop a marketing message designed to match the needs and wants of the customers Fashion Style Fads 1 Style is the appearance of the product whereas fashion is the currently accepted or popular style 2 Customers determine fashion not the buyer 3 Fad Enter the marketplace quickly are purchased with zeal and then have sales decline quickly Tend to be inflexible and there are few ways to alter the product and trends are more flexible with many ways of expression and run on a cyclical cycle Products Customers Buy 1 Convenience Availability A rational decision when customers are not willing to spend time money and effort locating and purchasing Batteries toothpaste fast food gas 2 Impulse Availability An emotional decision which entails spontaneous and sudden purchases without much deliberation Candy at cash wrap newest kitchen gadget 3 Shopping Customers spend time money and effort in obtaining these products Furniture clothing cars appliances 4 Specialty Customers buying behavior is geared to obtaining a particular product without regard to time money or effort Brand of perfume newest CD by a favorite artist 5 Durables Quality Cars furniture appliances that are capable of surviving many uses and