MERCHANDISING Process involved in marketing : Right Product Right Place Right time Right Price...

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Transcript of MERCHANDISING Process involved in marketing : Right Product Right Place Right time Right Price...

  • MERCHANDISINGProcess involved in marketing :Right ProductRight PlaceRight timeRight Price


  • Understanding the Lifecycle IntroductionTrialsGrowthStagnancyDeclineDeath

  • WHO IS A MERCHANDISER?Understands the customerProduct KnowledgeHigh levels of integrityAnalytical and Organising skillsNegotiating SkillsUnderstanding of the Financials

  • Terms to RememberMerchandiseCategoryAssortmentVarietyBackupstock/Safety stock/BufferstockBase stock or Cycle stockFill rate

  • Terms to RememberOrder level = Sales per day*( leadtime + Review time)+ buffer stockOrder qty = Order level-Avl qtyInventory Turnover = Net Sales @ cost/Avg Inventory @ CostStock to sales ratio = Stock @BOM (SP)/Net Sales @SPSales to stock ratio = Net Sales/ Avg Stock @ costGMROII = Gross margin ratio * Sales to stock ratio Sales per Sq ftMark upsMarkdowns

  • MerchandiseA group of items that customers seek to fulfill their needs. Can be managed brand wise or categorized and managed at category level.Best from a retailer point of view is to manage it at a category level

  • Merchandise ManagementWhat product to buyWhen to buy, how much to buyHow to buy-credit terms,logistics,imports,domesticHow to display-planogramHow to promote-tactical schemes

  • Category Management

    Strategy for productTactical plans for product placement/offtakeInventory managementPlanograms- Display plans

  • CategoryGroup of items which customer see as substitutes , which cater to a similar need.

    Apparel (Merchandise level)Womens wear (Dept)Womens ethnic/western/formals/mix n match(Sub-Dept )Blouses/skirts(Category)Full sleeves/half sleeves(Sub category)Cotton,Silk(Class)Styles and collars( Sub class)Size 32,Size 34 (SKU)

  • Category managementCaters to customers needs for products not brands Retailer aims at maximizing customer service levels with an optimum inventory level so as to achieve maximum profit possible.Aims at a product assortment which achieves the above.

  • It involvesStrategic Define a category and its product assortmentDefine its role in the strategyDefine Strategies based on growth /share matrixTacticalTactics of (Pricing,promotion,place,product)Managing assortment mixAssessment and feedback

  • Defining a Category-FactorsCategory fit to the formatProfitability and market share in the category and targetsImage fit with the formatLegal issuesInternal competitionVariety and DepthBrands to keep ;SKUs to keep (Both from customers perspec and retailers perspec)Define complementary categories

  • Scheme of CategorizationFreq of purchaseHighLowMarket PenetrationHighLow



  • Assigning a role to a categoryCompare categories from the customers,retailers and competitions perspectiveHelps in targeting the category to specific customersEfficient management of resourcesBetter at tackling competition

  • Strategy:Role of a Category

  • Developing category strategies

  • Growth Share based StrategiesHigh


    LowLow Market ShareHigh

  • Role based decisionsEach of the strategies reflect in decision making in areas of ProcurementPlacementPricingPromotionInventory managementPerformance measurementPurchase behavior of customers

  • Category Tactics

  • Tactics and Cat. Roles

  • TacticalOn PricingOn PromotionsOn Shelf PresentationManaging category MixAssessment and Feedback

  • PricingInfluenced by Customer perception of price elasticityGovt min procurement price, price cabalsSuppliersCompetition

  • Basic Strategies Demand Oriented Price value proposition Prestige pricing Eg:Swarovski,Benz,HidesignCost orientedMark up pricingDirect Product ProfitabilityPer unit costs are added, then desired margin to get salesCompetition Based pricing

  • DPPRetail Selling PriceRs.20Product CostRs.10Disc allowances Re.1Adj Gross MarginRs.9

    Warehouse costRe.1Transport costRe.1Re packing costRe.1Direct selling costRe.1Other direct operating costRe.1DOCRs.5

    DPPRs.4.00Useful for assessing competitiveness

  • Implementing strategiesFlexible pricingEDLPSeasonal pricingAuction/Bid PriceFixed pricingCustomary pricingOdd pricingOne price policy (Dollar store)

  • Implementing StrategiesMultiple pricingVolume based pricingBundled Pricing/offerUnbundled pricing in case of complementary price tv/set top box; bed spread ,pillow casePrice liningRange of prices to diff qltyRs.250 tshirt, Rs.450 tshirt, Rs.600 tshirts

  • Based on Basis of pricing DemandSupply CostCompetitionPolicy is also based on intention to Build volume, Build image or Balance price and value

  • PromotionFeature Advt (Product based)Displays ,Kiosks,Sampling (Usage based)Discounting,Coupons,Freebies(Price/value based)

  • Promoting a product can lead toBrand Switching (Pantene to Dove hair care)Purchase time acceleration(Pre budget durables offer)Stockpiling ( typical in cat like toiletries)Dangerous as post promos sale falls.So time your promotions well enoughManage inventory pre and post promos

  • PlanogramsVisual or graphical representation of space allocated for selling ,merchandise, personnel,display,customer as well as product categories.

  • PlanogramsGondolasAisle spaceClassification of store offeringsWhere to place the destination categoriesSpecial handling products flowers, bakery,freezeTraffic flow .. Customer walk through

  • PlanogramsStraight grid patternCurving or Free flow patternDesigning customer service areas Cash tillsPacking and BaggingAllocation of space for rest and comfortAllocation of space for communication

  • Product displayWhich categories to place next to each otherWhich SKUs to take prominenceWhat height to stock products at Ease of accessAllocation of sales staff

  • Shelf PresentationSize and position of shelf (Top or midlevel (Visibility or bottom shelf for value offered)Placement context of the productMixed display structure Precedence given to one brand gives it a quality image edgeUnfamilar context

  • Some guidelines