2. MERCHANDISING
Merchandising consists of the activities involved in acquiring
particular goods and services and making them available at
the places, time, and prices and in the quantity that enable a
retailer to reach its goals. Merchandising decision can
dramatically affect performance.
3. Merchandising philosophy
Merchandising philosophy sets the guiding principles all the
merchandise decisions that a retailer makes. It must
reflect
Target market desires
Retailers institutional type
Market place positioning
Defined value chain
Supplier capabilities
Cost
Competitors
Product trend
4. Micro merchandising
with micro merchandising, a retailer adjusts shelf-space
allocations to respond to customer and other differences
among local markets.
5. Cross merchandising
In cross merchandising, a retailer carries complementary goods
and services to encourage shoppers to buy more.
6. The attributes and functions of buying
organization Formal
Informal
Centralized
Decentralized
General
Specialized
Internal
External
Resident buying office
Cooperative buying
Merchandising
Buying
Buyer (buying only)
Sales manager
Buyer(merchandising)
Level of formality
Degree of decentralization
Organizational breadth
Personnel resources
Functions performed
Staffing
7. 1. Level of formality
Level of formality involve two types of buying
organization
1. Formal buying organization
2. Informal buying organization
8. 1. Formal buying organization :
With a formal buying organization, merchandising is a
distinct retail task and a separate department is set up. The functions
involved in acquiring merchandise and making it available for sale are
under the control of this department. A formal organization is most often
used by large firms and involves distinct task.
a. Advantages of formal organization
• Clarity of responsibilities
• Use of full time
• Specialized merchandisers.
b. Disadvantages of formal organization
• Cost of a separate department
9. 2. Informal buying organizations
In an informal buying organization, merchandising (buying) is not a distinct task.
The same personnel handle both merchandising and other retail task;
responsibility and authority are not always clear-cut. Informal organizations
generally occur in smaller retailers.
A. Advantages of informal organization
• Low cost
• Flexibility
B . Disadvantages of informal organization
• Less defined responsibilities
• Lesser emphasis on merchandise planning
10. 2. Degree of centralization
It involved in two types organization
1. Centralized buying organization
2. Decentralized buying organization
11. 1.centralized buying organization
In a centralized buying organization, all purchase decision emanate from one
office. A chain may have eight stores, with all merchandise decisions made at the
headquarters store.
a. Advantages
include integrated effort, strict control, consistent image, closeness to top
management
b. Disadvantages
Inflexibility, time delays, morale and excessive uniformity
12. 2. Decentralized
In a decentralized buying organization, purchase decision are made locally or
regionally.
a. Advantages
Adaptability to local condition, quick order processing, potential, improved
morale because of branch autonomy.
b. Disadvantages
Disjointed planning, an inconsistent image, limited controls, little staff support
13. 3.Organizational breadth
1. Generalized approach
Generalized approach is where one buyer buys for complete
store which is possible with small organizations.
2. Specialist approach
Specialist approach is needed for large retailers where it is best
to use buyers for each department.
14. 4.Personnel resources
Retailer can choose between an inside buying organization and an outside
buying organization.
Inside buying: staffed by retailer personal and decisions are made by
permanent employees. Used by very large retailers and very small retailers.
Outside buying: external source is hired on a fee basis. Used by small or
medium sized retailers.
Resident buying office: touch with key market trends, provide data and
contacts.
Cooperative buying: group of retailers come together to avail of volume
discount.
15. 5.Functions performed
1. Merchandising view :
Oversee all buying and selling functions, including
assortment, advertisement, pricing, point of sale
display, employee utilization and personnel selling
approaches.
2. Buying view:
Merchandise personnel oversee the buying of products,
advertisement and pricing while in store personnel
oversee the assortments, displays, employee
utilization and sales presentation
16. 6. Staffing
1. Buyer
A buyer is responsible for selecting the merchandise to be
carried by a retailer and setting a strategy to market
that merchandise.
2. Sales manager
Sales manager supervise the on floor selling and
operational activities for a specific retail department.
He/she must be a good organizer, administrator and
motivator.
