The Assortment Planning Process Assortment Plan :- describes in general terms what should be carried in a particular Merchandise category. A Good Assortment plan requires -a good forecast for sales, -GMROI -Inventory Turnover -Mix of subjective & experienced judgment

Dimensions of Assortment Planning :- 1.Variety 2.Assortment 3.Product Availability VARIETY :- is the number of different merchandising categories within a store or department. Stores with a large variety are said to have good breadth. Variety = Breadth ASSORTMENT :- is the number of SKUs within a category. Stores with largeassortment are said to have good depth. Assortment = Depth PRODUCT AVAILABILITY :- defines the percentage of demand for a particular SKU that is satisfied. Product availability is also referred to as the level of support or service level.

Determining Variety & Assortment Following Factors :- 1. Profitability of Merchandise Mix 2. The Corporate Strategy & Positioning toward the Assortment 3.Physical Characteristics of the Store & Layout of the Internet 4.Balance between too much versus too little assortment 5.Complementary Merchandise Determining Product Availability The higher the product availability, the higher the amount of backup Stock necessary.

Cycle Stock :- also known as base stock :- inventory that result from the Replenishment proces & is required to meet demand when the retailer can predict demand & replenishment times (lead times) perfectly. Backup Stock :- also known as safety stock or buffer stock, as a cushion for the Cycle stock so they wont run out before the next order arrives Units Available Weeks Backup Stock Cycle Stock

Level of Backup Stock Depends on :- 1.Safety Stock Requirements 2.Product availability the retailer wishes to provide 3.Higher the fluctuations in demand 4.Lead time from the vendor Lead time :- is the amount of time between recognition that an order needs to be placed & the point at which the merchandise arrives in the store & is ready for sale. 5.Fluctuations in lead time :- uncertainty in lead time 6.Vendor’s product availability

Branding Strategies 1.Manufacturer Brands 2.Licensed Brands 3.Private-Label Brands Manufacturer Brands :- also known as national brands are products designed, produced and marketed by a vendor. Licensed Brands :- Special manufacturer brand is a Licensed brand, in which the owner of a well-known brand name (licensor) enters a contract with a licensee to develop, produce and sell the branded merchandise. Licensee may be 1.Retailer that contracts to have the manufacturer to produce the licensed product 2. Third party that contracts to have the merchandise produced & then sell it to the retailer

Private-label Brands Also called store brands, are products developed by a retailer & available for sale only from that retailer. Reasons for relatively small growth in past :- 1.National brands are heavily advertised, creating a strong consumer franchise. 2. Hard for retailers o gain economies of scale 3.No sophisticated enough to aggressively compete against manufacturer brands 4.Had a reputation of being inferior to manufacturer brands 5.Requires significant investments to design merchandise 6.Need to create customer awareness, develop favorable image for their private-label brands.

Benefits of Private labels to retailers :- 1.Strong private labels boosts store loyalty 2.Enhance store image if the brands are of high quality & fashionable 3.Successful private-label brands can draw customers to the store. 4.More control over manufacturing, quality control & distribution of the merchandise. 5. Gross margin opportunities may be greater. Categories of Private-labels 1.Bargain Branding :- price sensitive segment 2.Premium Branding 3.Copycat Branding :- imitates the manufacturer brand- appearance, packaging 4. Parallel Branding :- “ invitation to compare”

INTERNATIONAL SOURCING DECISIONS Reason for sourcing globally rather than domestically is to save money. COST ISSUES WHEN MAKING INTERNATIONAL SOURCING DECISIONS 1.Country-of –origin Effects 2.Foreign Currency Fluctuations 3.Tariffs 4.Free Trade Zones 5.Inventory carrying cost Cost of carrying inventory = Average inventory value (at cost) * Opportunity cost of capital 6. Transportation Cost

CONNECTING WITH VENDORS 1.Internet exchanges 2.Wholesale Market Centers 3.Trade Shows 4.Buying on their own Turf 5.Resident Buying Offices Internet Exchanges :- Retail exchanges :- are electronic marketplace operated by organizations that felicitate the buying & selling of merchandise using the Internet. Functions of Exchanges :- 1.Directory 2.Selection 3.Pricing (reverse auction) 4.Collaboration 5.Content

NEGOTIATING WITH VENDORS Guidelines for Planning Negotiations with Vendors :- PRICING STRATEGIES 1.EDLP :- Every Day Low Pricing :- Benefits :- 1.Reduced price wars 2.Reduced advertising 3.Reduced stock outs & improved inventory management 2. High/Low Pricing :- Benefits :- 1.The same merchandise appeals to multiple markets 2.Sales create excitement 3.Sales move merchandise 4.Emphasis is on quality