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Merchandise planning

Pgdm iv-7

Merchandise or product
Merchandise is anything that can be offered to a market or to customers that might satisfy a need or a want Characteristics of merchandise Shoppers exhibit Generate profit Manufacturer produce Customers requirement.

Determining the right assortment of merchandise


Type Quantity Price Quality Time Place

Steps in determining the right assortment


Assessing the target market Collecting information on assortment planning through internal & external sources Analyze the data Determine the breadth & depth of merchandise offerings, stock balances, price zone,size,color & style of assortment

Internal sources of information


Past sales records Direct communication Want slips Comparison-shopping

External sources of information


Vendors Trade publications Trading activities

merchandise assortment planningconcepts

Breadth & depth of merchandise Breadth or variety of merchandise refers to the number of different merchandise categories a retailer offer. depth refers to number of different items in merchandise categories. It refers to the variety of colors, size, style, sizes & price that a retailer offers in a given line

Planning tools for merchandise management


Planning sales forecast Past sales Product life cycle Category to which product belongs Information from other sources

Planning to introduce a new product


Appropriateness & compatibility with existing lines & ranges Growth potential Profitability Profit generation

Dropping to products
Criteria for product elimination Declining sales Little or no contribution in sales of other products Availability off good selling items that can be substituted for the product Failure of changes in merchandising efforts to improve the situation appreciably

Buying & handling merchandise


There are five major areas of concern Who buys What to buy How much to buy From whom to buy When to buy

The buyer
The buyer may be responsible for the purchase of a comparatively small range of merchandise or for several complete departments, depending on the size & type of the retail organization.

Acc. To diamond & pintel (1985) there are ten main personal attributes for an effective retail buyer Qualification Enthusiasm Analytical excellence Product knowledge

Dedication Objective reasoning Leadership Appearance flexibility

Sources of merchandise
Manufacturer or primary producers Wholesalers Importers Agents Private brands

Supplier selection
Prices including extra trade discount for bulk purchase Terms- length of credit, size of cash discount, other conditions & benefits. Deliveries- fast & prompt delivery, mode of delivery, safety of goods transported.

Negotiation with vendors


Past relation with vendors Additional mark up opportunities Transportation Delivery & exclusivity Communication Testing new items Other points to consider

Buying of staple goods


Purchase depends on estimated sales for the next period of time Quantity of goods presently in hand & under processing Desired stock at the end of the period Quantity to buy can be calculated from the following formula: Quantity to buy=[estimated sales + desires stock at the end of month]-[goods in hand & on order]

Buying of fashion merchandise


Formula is Amount of purchase for peak season selling= estimated sales (during peak season)+ desired stock (at the end of peak season)- goods in hand & on order

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