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Retail Marketing Exam 2
Chapter 12
24
Marketing
Undergraduate 4
10/29/2012

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Term
Merchandise Management
Definition
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.

-Sense market trends
-Analyze sales data
-Make appropriate adjustments in prices and inventory levels
Term
Category Management
Definition
The process of managing a retail business with the objective of maximizing the sales and profits of a category
Term
The objective of category management
Definition
maximize the sales and profits of the entire category, not just a particular brand
Term
Category Captain
Definition
is a selected vendor responsible for managing a category
Term
Merchandise Managers have control over
Definition
The merchandise they buy
The price at which the merchandise is sold
The cost of the merchandise
Term
Merchandise managers do not have control over
Definition
Operating expenses
Human resources
Real estate
Supply chain management
Information systems
Term
Merchandise managers are evaluated by:
Definition
Return of assets
GMROI
Term
Advantages of Rapid Turnover:
Definition
Increased sales volume
Less risk of obsolescence and markdowns
Improved salesperson morale
More resources to take advantage of new buying opportunities (flexibility)
Term
Approaches for Improving Inventory Turnover
Definition
Reduce number of categories
Reduce number of SKUs within a category
Reduce number of items in a SKU

BUT if a customer can’t find their size, color or brand, patronage and sales decrease! Buyer must use expertise to make this trade-off.
Term
Merchandise Management Process
Definition
1. Forecasting sales
2. Developing an assortment plan
3. Determining the appropriate inventory level
Term
Types of Merchandise Management Planning Processes
Definition
Staple
Fashion
Term
Staple (Basic) Merchandise Category
Definition
Continuous demand over an extended time period
Limited number of new product introductions
Easy to forecast demand
Continuous replenishment
Term
Fashion Merchandise Categories
Definition
-In demand for a relatively short period of time
-Continuous introductions of new products, making existing products obsolete
-More difficult to forecast demand
-Athletic shoes, laptop computers, women’s apparel
Term
The category product lifecycle
Definition
Introduction-growth-maturity-decline
Term
Developing a sales forecast
Definition
Understanding the nature of the product life cycle
Collecting data on sales of product and comparable products
Using statistical techniques to project sales
Term
Forecasting Staple Merchandise
Definition
Based on extrapolating historical sales
Yearly sales and trend are generally stable
Term
Forecasting Fashion Merchandise
Definition
Previous sales data
Personal awareness
Fashion and trend services
Vendors
Traditional market research
Term
How do fashion buyers know the trends
Definition
Internet chat rooms
Look in closets
Go to the movies
Go to rock concerts
Go to nightclubs
Term
SCAN
Definition
-Shop the retail stores, Web sites and catalogs of competitors as a customer would
-Converse with consumers, sales clerks, and neighbors
-Act like your customer
-Notice
Term
Buyers subscribe to forecasting services and fashion publications
Definition
Trendzine (www.FashionInformation.com)
Doneger Creative Services (www. Doneger.com/web )
Fashion Snoops (www. fashionsnoops.com)
Earnshaw’s
Women’s Wear Daily (WWD)
DNR
Home Furnishings News (HFN)
Term
assortment plan
Definition
is a list of the SKUs that a retailer will offer in a merchandise category and reflects the variety and assortment that the retailer plans to offer in a merchandise category
Term
Variety (breadth)
Definition
is the number of different merchandising categories within a store or department
Term
Assortment (Depth)
Definition
is the number of SKUs within a category.
Term
Importance of Backup (Buffer) Stock
Definition
-If the backup stock is too low = lose sales and customers
-If the backup stock is too high = scarce financial resources will be wasted on needless inventory that could be more profitably invested in more variety or assortment
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