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Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,Range Planning Assortment Strategies,Corinna Budnarowska,Intended Learning Outcomes,After studying Range Assortment Planning you should be able to:,Describe the circumstances that trigger buying decisions;,Compare product features and attributes;,Identify a range of assortment strategies and apply the appropriate strategy to an appropriate range;,Discuss how to select and manage suppliers,Range Planning,Range = offering consumer choice (Ghosh, 1990),Number of lines carried by retailer is determined,Consumer focus are retailers / manufacturers offering what customers want potential disparity? does assortment shape consumer preferences? (Hart & Rafiq, 2006),Helps to determine required service levels,Service levels are about meeting customer expectations “satisfaction is intimately linked to expectations (Diehl & Poynor, 2021),Provides link between supply & demand (Hart & Rafiq, 2006),Dynamic constantly needs to evolve, grow & change,Determines store image (Hart & rafiq, 2006),Defining Assortment Planning,The buying dept needs to establish a merchandise budget first,Once this is defined - need to establish a Range Structure Plan (the,planned,buy) in order to have a framework in place to finalise the Range Plan (the,actual,buy),Range Structure Plan considerations:,Range profile (price, style, appeal),Range width/depth (consumer choice, adequate promotional stock),Average selling price (market positioning),Margin mix (profit, risk),Sales density (space performance),1,Formulate,Merchandise,Plan,2,Determine,Purchase,Budget,3,Plan,Merchandise,Range,4,Product,Selection,5,Determine,Pricing strategy and price points (zones),6,Negotiate,Cost prices,and Terms,7,Determine,Distribution,Strategy,8,Allocate space,9,Visual,Merchandising,10,Maintain,Range,11,Evaluate,Performance,Consumer,The Buying Cycle,Re-examining The Buying Cycle to establish how assortment/range planning takes place,The Buying Cycle (Elliott & Rider, 2003),The Interrelationship between Marketing, Buying & Financial Management,NB we have to meet the overall business needs (marketing and financial goals),An example Gantt Chart to,illustrate the complexity and timescales of product planning,(Elliott & Rider, 2003),Range Planning - timescales,Time = crucial element of buying cycle / range plan,Planning not just about choosing products & negotiating budgets need to consider:,timescales,potential problems / hold ups,complexities of process,efficiency of cycle,all parties involved in cycle,The Planning Process for a Range Structure Plan (a series of inputs and outputs),(Elliott & Rider, 2003),The Product Mix,Assortment / range - made up of products that have different,prices, roles, features,and,attributes,Effective buyers:,Learn to select the right products,Manage the assortment to maximise profitability,The product mix = the full range / mixture of products a retailer offers to consumers - represents,appropriate combinations,to meet specific needs of target market,Appropriate combinations consist of:,Product lines,(merchandise grouping of related products),Product items,The Hierarchy of Merchandise Groupings - provides buyers framework or shopping list,Merchandise Group - e.g. furniture, appliances, house-wares,Merchandise category - e.g. dining furniture, washing machines, household textiles,Merchandise Class - e.g. dining tables, washer/dryers, bed linen,Range building is complex - classifications form the framework of the Buying Plan,A hierarchy of assortment decisions (Hart & Rafiq, 2006),Product lines,SKU,Depth,(no. of,variants,e.g. brands,styles, etc),breadth,Category,assortment,Categories,Departments,Store,Assortment,width,MACRO,LEVEL,MICRO,LEVEL,Model Stock Planning,Merchandise classification - provides buyer with a,model stock plan,Merchandise groups, categories or class groupings - referred to as,control units,Category management,is a retail buzz word also associated with ,merchandise scrambling,(Hart & Rafiq, 2006),Merchandise assortments can be categorised in many ways:,E.g. brand, style, product use, price, lifestyle, etc.,Leading retail associations - established classifications for standard merchandise,Model stock planning determines,how much stock to buy,Product selection criteria,We have established that consumers have a set of rules when they go out shopping,The rigidity of these rules is dependent on the nature and cost of the product they are planning to buy,There are many factors that effect product selection by the consumer, and so in turn determine the buyers criteria for product selection,What are they?,Factors Affecting Assortment Buying Decisions,Assortment,Quantity,Quality,Price,Time,Choice of Suppliers,Branded versus own brand,Where does the consumer fit into your buying decision?,Product,Role,Product,complexity,Choice of Policy,According to Wingate & Friedlander (1978), the determinants for policy choice are:,The nature of merchandise lines carried,Characteristics of the trading area,Community need,Competition,Personal capabilities of the merchant,Capital resources,Product Mix Strategies,Width/Depth Strategies dependant on the type of retail business,Product Mix Strategies,Width,- That characteristic of assortment that refers to the number of different (though possibly related) lines of merchandise carried by a retailer (defined by the number of options),Level of variety offered (Hart & Rafiq, 2006),Depth,- That characteristic of assortment that refers to the number of varieties of merchandise within a given category (defined by the units per option),Level of specialism offered (hart & Rafiq, 2006),NB Hart & Rafiq (2006) also discuss breadth the choice offered within each category (cited Ghosh, 1990),Product Mix Strategies,Narrow variety/Shallow assortment,Convenience philosophy,Most limited strategy,Low inventory, high stock turn,Low risk, simple operation,Can lead to low margins,E.g.vending machine, kiosk,Wide variety/Shallow assortment,Covers many product categories but with few products per category,Emphasis on convenience not price (less margin pressure),Limited customer loyalty but easy product substitution,Poor image and scrambled merchandise is a risk,E.g.Convenience store,Product Mix Strategies,Narrow variety/Deep assortment,Speciality philosophy,High customer loyalty and repeat purchase,Low level of out of stocks,Good buying power,Risk of too many eggs in one basket,Wide variety/Deep assortment,One-stop shopping philosophy,Element of convenience but with more depth,High customer traffic, loyalty and repeat purchases,Advantage of good margin mix and spread of risk,High stock investment and low stock turn,Risk of competition from niche players,What precipitates a buying decision?,McGoldrick (2002) identified 5 circumstances that may precipitate a buying decision:,New or different products/brands are offered to the buying unit,A need is perceived to produce new product lines,A need is perceived to widen the choice of brands available,A lack of satisfaction is noted with existing products/brands,A routine review is undertaken of all or part of the existing assortment,The B&Q Range Review Process,SCOPING,Scope range review,Agree critical path ,Conduct store survey ,Review footage options ,Agree merchandising principles ,Conduct sales trial ,Analyse sales trial,PLANNING,Define range,Create range planning spreadsheet ,Agree range and sales forecasts ,Lay-up merchandising layouts ,Agree stock exit plan ,Agree merchandising layouts ,Order equipment and POS ,Agree review at range review meeting,IMPLEMENTATION,Agree range review implementation dates,Prepare plannograms ,Conduct test implementation ,Analyse test implementation ,Order product, allocate to stores ,Brief merchandising agency ,Send range review pack to stores ,Monitor implementation ,Conduct post implementation review,Take a close look at your products to identify good/bad performance - this will assist in determining products to keep or drop - product categories carry space limitations - in order to introduce new products, under performing products are lost,Star,Question Mark,Cash Cow,Dog,The Boston Consultancy Group Approach - the BCG Matrix (1973),Relative Market Share,High,Low,Market growth rate,HighLow,How Much Stock to Buy,Essential to achieve balance between basic (staple products) and seasonal stock (in-season hot items),We have discussed the need to achieve this mix to provide excitement to ranges and a good margin mix (safe (limits sales growth) vs. risky (leads to higher markdowns),Open to buy,- used for in-season purchasing (result of whats left after pre-ordering stock commitments are made),Basic stock list planning,- used for staple products that are pre-ordered,Product lines are deleted where demand decreases and re-ordered where demand remains constant/rises,Buying framework must encompass an understanding of both sales history and emerging trends,Basic Stock Management,Management of staple stock - dependent on efficient re-ordering systems (stock is replenished when needed but excess stock is not financed).,The following questions need to be addressed:,Will reordering be triggered by a reorder point or time intervals?,Who will be responsible for counting stock (if not EPOS) i.e. store personnel or suppliers representatives,Frequency of stock counting,The order up to or economic order quantities will need to be established,Will undelivered items remain on order or be cancelled and re-ordered,How often should the reorder point or the order up to quantities be checked and analysed to ensure that slow moving options are not re-ordered and fast sellers are not out of stock,Summary,Range Planning is the result of establishing the merchandise budget,It is essential to provisionally establish the Range Structure Plan to determine the actual Range Plan,There are a number of different strategies and considerations for a buyer in determining the assortment strategy,The strategy must be appropriate for the nature of the retailer and product category,The result of the range plan must match the findings of the merchandise budget and the criteria of the Companys current mission (NB - the buying process requires financial, marketing and buying decisions to be cohesive),Recommended Reading,Diehl, K. Poynor, C. 2021. Great expectations?! Assortment size, expectations and satisfaction. Journal of Marketing Research. 47(2). 312-322.,Hart, C. Rafiq, M. 2006. The Dimensions of Assortment: A Proposed Hierarchy of Assortment Decision Making. International Review of Retail, Distribution and Consumer Research. 16:3. 333-351.,Hedley, B. 1977. Strategy and the “Business Portfolio. Long Range Planning. 10:1, 9-15.,Krishnan, T. Koelmeijer, K. Rao, R. 2002. Consistent Assortment Provision and Service Provision in a Retail Environment. Marketing Science. 21:1. 54-73.,Van Herpen, E. Pieters, R. 2002. The Variety of an Assortment: An Extension to the Attribute-Based Approach. Marketing Science. 21:3. 331-341.,References,Diehl, K. Poynor, C. 2021. Great expectations?! Assortment size, expectations and satisfaction. Journal of Marketing Research. 47(2). 312-322.,Elliott, F. Rider, J. 2003. Retail Buying Techniques. Management Books 2000.,Ghosh, A. 1990. Retail Management. Dryden Press. Orlando. FL.,Hart, C. Rafiq, M. 2006. The Dimensions of Assortment: A Proposed Hierarchy of Assortment Decision Making. International Review of Retail, Distribution and Consumer Research. 16:3. 333-351.,McGoldrick, P.J. 2002. Retail Marketing. McGraw-Hill. 2nd ed.,Wingate, J.W. Friedlander, J.S. 1978. The Management of Retail Buying. Prentice Hall. 2nd ed.,
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