The document discusses merchandising activities and key terms. It describes the core activities of merchandising companies as buying inventory from suppliers, storing and pricing products, marketing and selling to customers, fulfilling orders, and providing customer service. It outlines the income components and differences between merchandising and service businesses. Finally, it defines important merchandising terms related to inventory, pricing, vendors, and visual merchandising strategies.

1. LESSON 1: MERCHANDISING ACTIVITIES
• Describe merchandising activities and identify income
components for a merchandising company
• Describe and differentiate service business from
merchandising business
• Identify and have deep understanding of key terms
used in merchandising

2. MERCHANDISING ACTIVITIES
involve the buying, selling, and managing of goods for
the purpose of making a profit. Merchandising
companies buy products from suppliers or
manufacturers and then sell those products to
customers.

3. MERCHANDISING ACTIVITIES
•Purchasing Inventory:
Merchandising companies start by purchasing
inventory, which consists of the products they intend to
sell to customers. The process of selecting suppliers,
negotiating terms, and placing orders is a critical part of
merchandising.

4. MERCHANDISING ACTIVITIES
Receiving and Storing Inventory:
Once inventory is purchased, it needs to be received,
inspected, and stored appropriately. Companies need
efficient inventory management systems to keep track
of their stock.

5. MERCHANDISING ACTIVITIES
Pricing:
Setting the selling price for each product is a crucial
decision. The price must cover the cost of goods sold
(COGS) and provide a markup to generate profit.

6. MERCHANDISING ACTIVITIES
Sales and Marketing:
Merchandising companies engage in various sales and
marketing activities to attract customers. This includes
advertising, promotions, creating attractive displays,
and maintaining an online presence for e-commerce.

7. MERCHANDISING ACTIVITIES
Order Fulfillment:
When customers place orders, the company must pick,
pack, and ship the products efficiently. This involves
logistics and order processing.

8. MERCHANDISING ACTIVITIES
Customer Service:
Providing excellent customer service is essential for
repeat business and maintaining a positive reputation.
Handling inquiries, returns, and addressing customer
concerns are key aspects.

9. INCOME COMPONENTS FOR A MERCHANDISING
COMPANY:
Sales Revenue:
This is the primary source of income for a
merchandising company. It represents the total
revenue generated from selling products to customers
at the established selling prices.

10. INCOME COMPONENTS FOR A MERCHANDISING
COMPANY:
Cost of Goods Sold (COGS):
COGS represents the direct costs associated with the
production or purchase of the products sold. It includes
the cost of inventory, shipping, and any other expenses
directly tied to acquiring and preparing products for
sale.

11. INCOME COMPONENTS FOR A MERCHANDISING
COMPANY:
Gross Profit:
Gross profit is calculated by subtracting the COGS from
the sales revenue. It represents the profit made before
deducting operating expenses.

12. INCOME COMPONENTS FOR A MERCHANDISING
COMPANY:
Operating Expenses: These are the costs incurred to
run the business, such as rent, utilities, salaries,
advertising, and office supplies.

13. INCOME COMPONENTS FOR A MERCHANDISING
COMPANY:
Operating Income (Operating Profit):
Operating income is the difference between gross
profit and operating expenses. It represents the profit
generated from the core operations of the business

14. INCOME COMPONENTS FOR A MERCHANDISING
COMPANY:
Other Income and Expenses:
This category includes non-operating income and
expenses, such as interest income, interest expenses,
and gains or losses from investments or asset sales.

15. INCOME COMPONENTS FOR A MERCHANDISING
COMPANY:
Net Income (Profit):
Net income is the final profit figure for the company
and is calculated by subtracting all expenses, including
operating expenses and other income and expenses,
from the gross profit. It represents the company's
overall profitability.

16. INCOME COMPONENTS FOR A MERCHANDISING
COMPANY:
Earnings Before Interest and Taxes (EBIT):
EBIT is a measure of a company's operating
performance before interest and income taxes are
deducted. It's used to assess the profitability of the
company's core operations

17. DIFFERENCE BETWEEN SERVICE AND
MERCHANDISING BUSINESS
SERVICE BUSINESS
Nature of Business:
Service businesses primarily
provide intangible services to
customers. These services can
range from consulting and
healthcare to education and
entertainment.
MERCHANDISING BUSINESS
Nature of Business:
Merchandising businesses buy
physical goods (merchandise)
from suppliers or manufacturers
and sell those products to
customers. They deal with
tangible products.

18. DIFFERENCE BETWEEN SERVICE AND
MERCHANDISING BUSINESS
SERVICE BUSINESS
Inventory:
Service businesses typically do not
have physical inventory. Instead,
they offer expertise, time, and
skills to meet their customers'
needs.
MERCHANDISING BUSINESS
Inventory:
These businesses maintain and
manage physical inventory, which
can include a wide range of
products, from clothing and
electronics to food and furniture.

19. DIFFERENCE BETWEEN SERVICE AND
MERCHANDISING BUSINESS
SERVICE BUSINESS
Revenue Generation:
Revenue in service businesses is
generated by providing services to
clients or customers. Payment is
often made for the time,
expertise, or specific services
rendered.
MERCHANDISING BUSINESS
Revenue Generation:
Revenue is generated by selling
products to customers at a
markup over the cost of goods
sold (COGS).

20. DIFFERENCE BETWEEN SERVICE AND
MERCHANDISING BUSINESS
SERVICE BUSINESS
Inventory Management:
Since they don't deal with physical
products, service businesses do
not have to manage inventory
levels, track stock, or worry about
issues like spoilage or
obsolescence.
MERCHANDISING BUSINESS
• Inventory Management:
Effective inventory management is
critical to merchandising
businesses. They must track stock
levels, reorder products, and
manage factors like spoilage,
shrinkage, and obsolescence.

21. DIFFERENCE BETWEEN SERVICE AND
MERCHANDISING BUSINESS
SERVICE BUSINESS
Cost Structure:
The primary costs in service
businesses are related to
personnel, training, equipment,
and overhead. Labor costs are a
significant component, and
employee skills and training are
critical.
MERCHANDISING BUSINESS
Cost Structure:
The primary costs in
merchandising businesses include
the purchase cost of inventory,
storage, logistics, and sometimes
manufacturing (if they produce
their goods).

22. DIFFERENCE BETWEEN SERVICE AND
MERCHANDISING BUSINESS
SERVICE BUSINESS
Marketing Focus:
Marketing for service businesses
often centers on promoting the
expertise, quality of service, and
customer satisfaction. Word-of-
mouth referrals and online
reviews play a significant role.
MERCHANDISING BUSINESS
Marketing Focus:
Marketing in merchandising
businesses often emphasizes
product selection, pricing,
promotions, and advertising to
attract customers to buy physical
products.

23. DIFFERENCE BETWEEN SERVICE AND
MERCHANDISING BUSINESS
SERVICE BUSINESS
Pricing:
Service pricing can be complex
and is often based on factors like
hourly rates, project scope, or
subscription models. It may not
involve markup on physical goods.
MERCHANDISING BUSINESS
Pricing:
Pricing strategies involve setting
selling prices that cover the COGS
and provide a margin for profit.
Markup is a common pricing
method used in merchandising.

24. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Merchandise:
Refers to the products or goods available for sale in a
retail store or through an online platform. It includes
everything from clothing and electronics to food and
household items.

25. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Inventory:
The total quantity of merchandise or products available
for sale at any given time. It can be divided into various
categories, such as raw materials, work-in-progress,
and finished goods.

26. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Stock Keeping Unit (SKU):
A unique identifier assigned to each product or item in
a retailer's inventory. SKUs help track and manage
individual products efficiently.

27. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Inventory Turnover:
A measure of how quickly a retailer sells its inventory.
It's calculated by dividing the cost of goods sold (COGS)
by the average inventory value. A high turnover
indicates efficient sales, while a low turnover suggests
slow-moving products.

28. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Reorder Point:
The inventory level at which a retailer should reorder
products to avoid stockouts. It's based on factors like
lead time, sales rate, and safety stock.

29. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Safety Stock:
Extra inventory kept on hand as a buffer against
unexpected spikes in demand or delays in supply. It
helps prevent stockouts during unforeseen
circumstances.

30. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Lead Time:
The time it takes for merchandise to be ordered,
delivered, and made available for sale. It includes the
time from placing an order with a supplier to receiving
the products.

31. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Vendor:
A supplier or manufacturer that provides merchandise
to a retailer. Effective vendor relationships are essential
for maintaining a consistent supply of products.

32. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Markdown:
A reduction in the selling price of merchandise to
encourage sales, clear slow-moving inventory, or
respond to competitive pricing. Markdowns are often
used during sales promotions or clearance events.

33. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Gross Margin:
The difference between the selling price of
merchandise and its cost of goods sold (COGS). It
represents the profit earned on each product sold and
is often expressed as a percentage.

34. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Shrinkage:
The loss of inventory due to theft, damage, spoilage, or
other factors. Reducing shrinkage is crucial for
maintaining profitability.

35. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Planogram:
A visual representation or layout of store shelves that
details the placement of products to optimize sales and
enhance the shopping experience.

36. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Seasonal Merchandise:
Products that are sold during specific times of the year,
such as holiday decorations, back-to-school items, or
swimwear.

37. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Private Label (Store Brand):
Products that are exclusively branded and sold by a
specific retailer. Private labels offer retailers higher
profit margins and greater control over product quality.

38. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Visual Merchandising:
The practice of arranging products and store displays in
an appealing and visually enticing manner to attract
customers and boost sales.

39. KEY TERMS IN MERCHANDISING ALONG WITH
THEIR EXPLANATIONS:
Cross-Merchandising:
The strategy of placing related or complementary
products near each other to encourage customers to
purchase multiple items.