The Role Of Retail Product Mangagers

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The Role Of Retail Product Mangagers

  1. 1. CHAPTER 2 THE ROLE OF RETAIL PRODUCT MANGAGERS
  2. 2. LEARNING OBJECTIVES <ul><li>To understand the basic stages in the retail product management process </li></ul><ul><li>To appreciate the complexity of the RPM process, and the variations according to different buying situations </li></ul><ul><li>To understand the structure and function of the retail buying organisation </li></ul><ul><li>To become familiar with the roles played by retail buyers, merchandisers and category managers </li></ul><ul><li>To understand the relationship between the buying organisation and other departments in a retailer </li></ul><ul><li>To be familiar with the personal skills required </li></ul>
  3. 3. RETAIL BUYING ORGANISATIONS <ul><li>The entity within a retailer that buys in goods to sell to consumers </li></ul><ul><li>Small retailer: buying carried out as one of a number of managerial tasks </li></ul><ul><li>Large retailer </li></ul><ul><ul><li>Centralised </li></ul></ul><ul><ul><li>Dedicated personnel </li></ul></ul><ul><ul><li>Buyers control large sums of money </li></ul></ul><ul><ul><li>Buyers interact with other people who are involved with RPM </li></ul></ul>
  4. 4. THE RETAIL PRODUCT MANAGEMENT PROCESS: A TRADITIONAL VIEW
  5. 5. RPM PROCESS STAGE 1: RECOGNITION OF RETAIL CUSTOMER NEEDS <ul><li>Recognition of new product requirements </li></ul><ul><li>Tracking existing customers’ requirements </li></ul><ul><li>Information sources available: </li></ul><ul><ul><li>internal sales data </li></ul></ul><ul><ul><li>trade publications </li></ul></ul><ul><ul><li>consumer publications, special interest mags. </li></ul></ul><ul><ul><li>suppliers </li></ul></ul><ul><ul><li>market research </li></ul></ul><ul><ul><li>competitor analysis </li></ul></ul>
  6. 6. RPM PROCESS STAGE 2: WRITE SPECIFICATION OF PRODUCT TO SATISFY NEED <ul><li>Convert recognised need into product opportunity </li></ul><ul><li>Blend a set of features to benefit customers </li></ul><ul><li>Formal specification of product features and/or approval of prototype </li></ul><ul><li>NB: This stage often starts the process, with a suggestion (sometime from supplier) followed by product market evaluation </li></ul>
  7. 7. RPM PROCESS STAGE 3: SEARCH FOR A SUPPLIER <ul><li>Find a supplier that is able to make and deliver product </li></ul><ul><li>Assess different suppliers for suitability based on value (e.g. product quality, short lead time) for price </li></ul><ul><li>NB There may be a restricted choice, especially if buyer wants a particular manufacturer’s brand </li></ul>
  8. 8. RPM PROCESS STAGES 4 and 5: SPECIFY ORDER, EVAULATE PERFORMANCE <ul><li>Stage 4: Specify Order </li></ul><ul><ul><li>quantity detailed, e.g. by size, variety, colour </li></ul></ul><ul><ul><li>in terms of how, when and where delivered </li></ul></ul><ul><li>Stage 5: Evaluate Performance </li></ul><ul><ul><li>of product e.g. sales, profits etc. </li></ul></ul><ul><ul><li>of supplier e.g. on time, delivery accuracy </li></ul></ul><ul><ul><li>includes qualitative measures e.g. customer feedback </li></ul></ul>
  9. 9. COMPLEXITY OF BUYING TASKS: Table 2.1
  10. 11. LIMITATIONS OF TRADITIONAL BUYING PROCESS MODELS <ul><li>The use of the term ‘buying’ process: buying is often considered to be one of a number of tasks within RPM </li></ul><ul><li>Product and market specifics often influence the way the process is carried out (e.g. seasonal vs staple products) </li></ul><ul><li>Relationship between retailers and suppliers can influence buying process, e.g. length of time doing business </li></ul><ul><li>Concentrate on operational rather than strategic parts of RPM </li></ul>
  11. 12. CONSUMER-LED RETAIL PRODUCT MANAGEMENT <ul><li>Aims to more closely link head office planning with retail outlet (e.g. store) activities </li></ul><ul><li>Reacting and responding to customer’s purchasing; anticipating future needs through research and analysis (pull rather than push approach) </li></ul><ul><li>Brings management of demand close to management of supply </li></ul>
  12. 13. TRADITIONAL BUYING ORGANISATION Insert Figure 2.2a
  13. 14. CONSUMER-LED BUYING ORGANISATION Insert figure 2.2b
  14. 15. CENTRAL HEAD OFFICE Marketing Logistics Human Resource Management International Operations Non-Store Operations Property Finance Buying & M Stores Suppliers Distribution Centre Call Centre International Customers = Flow of products = Flow of information CENTRALISED RETAIL BUYING ORGANISATIONS (Figure 2.5) Stores
  15. 16. CENTRALISED DECISION MAKING: ADVANTAGES & DISADVANTAGES <ul><li>Buying power </li></ul><ul><li>Buyers become specialists </li></ul><ul><li>Aggregated sales data for better forecasting </li></ul><ul><li>EOS </li></ul><ul><li>Control </li></ul><ul><li>Consistency </li></ul><ul><li>Store personnel free </li></ul><ul><li>Conflict between head office and outlets </li></ul><ul><li>Feedback channels may not be open </li></ul><ul><li>Centralised buying may not be necessary if products are staple </li></ul><ul><li>Regional preferences may not be well catered for </li></ul>
  16. 17. BUYING ORGANISATION ROLES: The Buying Director <ul><li>Represents all or, in a large retailer, a key part of the buying organisation. </li></ul><ul><li>Not all but some buying directors will be part of main board of directors </li></ul><ul><li>Lead, and set overall aims for, product management teams </li></ul><ul><li>Involved in strategic planning decisions such as </li></ul><ul><ul><li>changing major suppliers, introduction or deletion of product categories, major promotional campaigns, adoption of systems and management approaches </li></ul></ul><ul><li>Corresponds with General Merchandise Manager or VP </li></ul>
  17. 18. BUYING ORGANISATION ROLES: The Merchandise Manager <ul><li>Oversee a division of the retailer or a number of departments </li></ul><ul><li>Ensures co-ordination and consistency across departments </li></ul><ul><li>May carry director status in a large organisation </li></ul><ul><li>They may be supported by ‘buying controllers’ who oversee small numbers of inter-related departments </li></ul>
  18. 19. BUYING ORGANISATION ROLES : The Buyer <ul><li>Traditionally the figurehead of a product department </li></ul><ul><li>May have shared responsibility with a merchandiser </li></ul><ul><li>Concerned with qualitative side of buying </li></ul><ul><ul><li>awareness of consumer trends, </li></ul></ul><ul><ul><li>knowledge of product features, </li></ul></ul><ul><ul><li>knowledge of supply market </li></ul></ul><ul><li>Price negotiation </li></ul><ul><li>Work with marketing team on promotions </li></ul>
  19. 20. BUYING ORGANISATION ROLES: The Merchandiser <ul><li>Concerned with quantitative side of buying </li></ul><ul><ul><li>estimating sales </li></ul></ul><ul><ul><li>planning deliveries </li></ul></ul><ul><ul><li>distributing products to stores </li></ul></ul><ul><li>Responsible for financial management of department </li></ul><ul><ul><li>sales analysis </li></ul></ul><ul><ul><li>budget planning </li></ul></ul><ul><ul><li>profit margin analysis </li></ul></ul><ul><ul><li>implementation of price reductions </li></ul></ul><ul><li>NB Merchandiser is a term used for a number of different roles within retailers, e.g. visual merchandiser </li></ul>
  20. 21. BUYING ORGANISATION ROLES: The Category Manager <ul><li>Combined buying and merchandising role used in consumer-led product management </li></ul><ul><li>Leads a cross-functional team (category team) </li></ul><ul><li>Involved in the performance of a group of products from product idea and introduction through production, supply, store distribution, promotion, sales and after sales </li></ul><ul><li>More common in grocery / FMCG retailing </li></ul>
  21. 22. BUYING ORGANISATION ROLES: The Assistant (buyer or merchandiser) <ul><li>In large retailers, buyers, merchandisers and category managers all have at least one assistant </li></ul><ul><li>Assistants play a key role in buying process, supporting their team leader on operational tasks. </li></ul><ul><li>Training to be full buyer / merchandiser </li></ul><ul><li>May take responsibility for part of the range </li></ul>
  22. 23. <ul><li>Buyer’s assistant / buying administrative assistant / buyer’s clerk </li></ul><ul><li>More junior role than ‘assistant buyer’ </li></ul><ul><li>Administrative support and routine duties </li></ul><ul><li>Allocator is a similar junior role on the merchandising side </li></ul><ul><ul><li>allocates stock to outlets </li></ul></ul><ul><li>Graduate entry level </li></ul>BUYING ORGANISATION ROLES: The Buying Assistant
  23. 24. ADDITIONAL BUYING DECISION MAKERS <ul><li>Technologists </li></ul><ul><li>Quality Controllers </li></ul><ul><li>Product Developers </li></ul><ul><li>Corporate Designers </li></ul><ul><li>Logistics managers </li></ul>
  24. 25. THE BUYING COMMITTEE <ul><li>A group of people from different parts of the retail buying organisation who meet to discuss and sanction buying plans </li></ul><ul><li>Combines experience, expertise and different points of view </li></ul><ul><li>Decisions are sanctioned and therefore supported by whole organisation rather than individuals </li></ul><ul><li>Time consuming and consensus may be difficult to achieve - buying opportunities lost </li></ul>
  25. 26. THE RETAIL ‘DMU’ <ul><li>THEORETICAL ROLE </li></ul><ul><ul><li>user </li></ul></ul><ul><ul><li>influencer </li></ul></ul><ul><ul><li>buyer </li></ul></ul><ul><ul><li>decider </li></ul></ul><ul><ul><li>gatekeeper </li></ul></ul><ul><li>RETAIL ROLE </li></ul><ul><ul><li>customer, represented by sales personnel or market research </li></ul></ul><ul><ul><li>technologists, designers, product developers etc. </li></ul></ul><ul><ul><li>buyer, assistant buyer or category manager </li></ul></ul><ul><ul><li>merchandise director </li></ul></ul><ul><ul><li>merchandise manager or assistant buyer </li></ul></ul>
  26. 27. DESIRABLE ATTRIBUTES IN RETAIL PRODUCT MANAGERS <ul><li>Analytical </li></ul><ul><li>Good communicator </li></ul><ul><li>Objective </li></ul><ul><li>Product knowledge </li></ul><ul><li>Degree </li></ul>
  27. 28. THE BUYING GROUP <ul><li>A buying organisation that acts on behalf of a group of independent retailers (may include franchisees) </li></ul><ul><li>Provides product management expertise for those without own internal resources </li></ul><ul><li>Combines orders to obtain better terms for retailers </li></ul><ul><li>May provide other services such as market trend analysis, visual merchandising and marketing </li></ul><ul><li>Examples: ‘symbol groups’ e.g. Spar or Londis, international buying group AMC, AIS </li></ul>

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