RETAIL MANAGEMENT

MERCHANDISE MANGEMENT
AND PRICING

GROUP 5
 MERCHANDISE MANAGEMENT
Merchandise management is the science of evaluating human behavior and buying
habits in order to determine the best way to stock , display and sell goods at retail
stores. It is a process where in you arrange a group of products that highlights those
that you want to sell fast or those that you want people to get noticed.

Types of merchandise:
◦ Convenience goods
◦ Impulse goods
◦ Shopping products
◦ Speciality goods
 MERCHANDISE PLANNING
Merchandise planning is planning & control of merchandise inventory of the retail
firm, in a manner which balances between the expectation of target customer &
strategy of firm. It’s a systematic approach & aimed at maximizing returns on
investment, through planning sales & inventory in order to increase profitability.
Process of merchandise planning:
1) Forecast of sales
2) Merchandise budget
3) Merchandise control
4) Assortment planning
5) The range plan
6) The model stock plan
 MERCHANDISE CATEGORY
Category management is a retailing concept in which the range of products sold by
a retailer is broken down into discrete groups of similar products, these are product
categories. Each category is then run like a mini business in its own right, with its
own set of turnover or profitability targets and strategies.
Category management process:

Category
Category definition Role of category Category scorecard
assessment

Category
Category tactics Implementation
strategies
 MERCHANDISE SOURCING
The term sourcing means finding or seeking out products from different places,
manufacturers or suppliers.
Process: Sources of merchandise:

Contacting and
Identifying the
sources of supply
evaluating the

Sources of merchandise
sources of supply
Manufacturer

Negotiating with Placing the Wholesalers

vendors purchase order

Resident buying
Analyzing
offices
Establishing
vendor
vendor relations
performance
 BUYING FUNCTION
A retail buyer is responsible for planning, selecting & purchasing quantities of
goods & merchandise that are sold in retail stores. They source new and review
existing goods to ensure their products remain competitive.
 Function of buying for different type of organisation:
1) Buying for independent store
2) Buying for retail chain store
3) Buying for non store retail
 BUYING FUNCTION
 Young and Rubicam’s brand asset valuator (Y&R / BAV):

Differentiation
Brand vitality
Brand value

Relevance

Knowledge
Brand stature
Esteem
 PRIVATE LABEL
Many retailers worldwide consider private labels to create customer loyalty & to
differentiate themselves from the competition. When the retailer decides to sell
products or a line of merchandise which is owned, controlled, merchandised and
sold by the retailer in his own store or chain of stores, he is said to be selling own
label or private label.
Private labels in India:
◦ The retail market is estimated at Rs 46,15,000 crore in 2017, and is expected to
grow at 9 percent to reach Rs 1,08,58,000 crore by 2027.
◦ The dynamics of Indian retail market is changing at a phenomenal pace. After the
implementation of unified taxation under GST regime, it is expected that the share
of organized retail will increase at higher rate.
 RETAIL PRICING
The price at which the product is sold to the end customer is called the retail price
of the product. Retail price is the summation of the manufacturing cost and all the
costs that retailers incur at the time of charging the customer.
Factors Influencing Retail Prices
Internal Factors External Factors

• Manufacturing Cost • Competition

• The Predetermined Objectives • Buying Power of Consumers
• Image of the Firm • Government Policies
• Product Status • Market Conditions
• Promotional Activity • Levels of Channels Involved
 PRICING STRATEGIES
◦ High/low pricing: it is a pricing strategy in which firm relies on sale promotion to
encourage consumer purchase.
◦ Every day low pricing: It is a pricing strategy in which firm promise customers
consistently low prices on products having without having to wait for sale events.
◦ Market skimming pricing: It calls for setting high price for a new product to skim
maximum revenues layer by layer from those segments willing to pay the high price.
◦ Market penetration pricing: Penetration pricing is a pricing strategy where the price of a
product is initially set low to rapidly reach a wide fraction of the market and initiate
word of mouth.
◦ Leader pricing: It is a common pricing strategy used by retailers to attract customers. It
involves setting lower price points and reducing typical profit margins to introduce
brands or stimulate interest in the business as a whole or a particular product line.
 PRICING STRATEGIES
◦ Odd pricing: It relies on the assumption that consumers are calculation-averse and will
therefore only read the first digits of a price when making their purchasing decision.
For example, the price of $17.99 looks more like $17 and not like $18.
◦ Single pricing: A pricing strategy in which the same pric is offered to every customer
who purchases the product under the same conditions.
◦ Multiple pricing: As the name suggests, multiple pricing refers to the practice of
offering more than one price for the same product. The supplier charges different prices
based on: • Ordered Quantity. • Type of customer. • Delivery time.
◦ Price anchoring: refers to the practice of establishing a price point which customers can
refer to when making decisions
◦ Variable pricing: is a pricing strategy for products in which the price depends upon
sales location, region, date.
 PRICE DISCRIMINATION
Price discrimination refers to a pricing strategy that charges consumers different prices
for identical goods or services.
Types:
◦ First Degree Price Discrimination/ Individualised variable pricing
◦ Second Degree Price Discrimination/ self selected variable pricing
1) Clearance and promotional markdowns
2) Coupons
3) Price bundling
4) Multiple unit pricing
◦ Third Degree Price Discrimination/ variable pricing by market segment