Transcript Ch. 4: Merchandise Assortments

Ch. 4: Merchandise Assortments
• The different types of brand identification, their
potential benefits & challenges
• The importance of private-label merchandise in
today’s marketplace
• Theories about the optimum breadth & depth of
assortments
• How demand and selection factors, seasons & (in
apparel) size, fashion, & fit all work to influence
assortment & buying patterns
• Setting policies about assortments for buyers to
work from
Copyright © 2006 by John Wiley &
Sons, Inc. All rights reserved
Private-Label Brands
PROS
CONS
• More variety for consumers
• Specialty and ethnic item
availability
• Cost advantages
• Increased customer loyalty
• Better profit margin for
retailers
• Positive store image for
“specially selected” items
• Increased shelf space for
some manufacturers
• Good alternative to pricey
“name brands” for smaller
retailers
• Store image issues may
backfire with consumers:
second-rate, “off-brand”
items
• Less financial support from
competitive manufacturers
• Greater difficulty ensuring
quality, product consistency
• Strained relationships with
manufacturers’ other
retailers
• Lower profit margins for
manufacturers
Copyright © 2006 by John Wiley &
Sons, Inc. All rights reserved
Assortment Planning: Terms to Know
• Breadth and depth (“wide and shallow,” “deep and
narrow”)
• Model stock
• Balanced assortment
• Pulling power
• Net marginal productivity
• Dominant (or “competent”) assortment
• Demand rigidity
• Classification
• Classification controls
• Product life cycle
Copyright © 2006 by John Wiley &
Sons, Inc. All rights reserved
Demand Rigidity Factors
• The product’s primary or intended use.
• Secondary considerations – “Wants” that, if
necessary, may be substituted.
• Purchase habits typical of this type of
product – Is it a convenience or a necessity?
• Price lines – Both high-end and bargain prices
are considerations here.
• Urgency – How soon is it needed? This
determines how selective the shopper can
be.
Copyright © 2006 by John Wiley &
Sons, Inc. All rights reserved
Setting Assortment Policy
• The nature of merchandise carried in the
store
• Characteristics of the trading area
• Community needs and special attributes that
might meet them
• Comparisons to competitors
• A price line that fits the target customers
• Availability of capital
• Realistic view of merchant’s capabilities
Copyright © 2006 by John Wiley &
Sons, Inc. All rights reserved