CHAPTER 11

Planning / Assessing Retail Organizations

3 Groups whose needs must be satisfied

Figure 11.1 p. 281

Target Market / Employee / Management = 3

Principles for Organizing Human Resources in a Retail Firm
Table 11.1 p. 285
Functional = divided by tasks needed to do
Product = Divided by product specialty
Geographic = divided by location
Combination = F + P + G
4 Key Functions of the Mazur Retail Plan p. 287
Merchandise
Communications
Store Management
Financial Accounting
Line components (Direct)
Staff Components (support)
3 Branch Store Organization Formats for Buying Control p. 288
Main Store Control
Separate Store
Equal Stores
Human Resource Management: 5 functions p. 290
Recruit
Select
Training
Compensating
Supervising

True Cost of Employee Turnover Table 11-2 p. 291

Cost of mistakes, severance pay, replacement costs, new training costs,
loss of continuity with co-workers, poor employee morale, dissatisfied
customers, lower employer loyalty

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CHAPTER 12
Key Components of a Profit-and-loss (Income) Statement p. 306
Net sales
COGS
Gross Profit (Margin)
Operating Expenses
Taxes
Net Profit After Taxes
Key Components of a Balance Sheet p. 307
Assets
Liabilities
Net worth (Shareholder equity)
5 Key Financial Ratios and the Strategic Profit Model:
Net profit Margin (net profit / net sales)
Asset Turnover (net sales / total Assets)
Return on Assets (Net profit margin X asset Turnover)
Financial Leverage (total assets / net worth)
Return on Net Worth ( Net profit margin X Asset Turnover X F.L. = R.O.N.W)

5 Other Key Ratios:

Quick Ratio= (Cash + A/R) / current liabilities
Current Ratio= (total current assets / total current liabilities)
Collection Period = (A/R / Net Sales) X 365
Accounts Payable to Net Sales = (A/P / net sales)
Overall Gross Profit (Return on Net Sales) = (Net Sales Cogs)/ Net Sales

The Budgeting Process p. 317 (Goals/ PStandards/ PE/ AE/ Monitor

results/ ADJUSTMENTS)

CHAPTER 14
6 Attributes and Functions of Buying

Figure 14-2 p. 352

Formality
(Formal vs
Informal)
Centralization
(Centralized vs
Decentralized)
Breadth
(General vs
Specialized)
4 Personnel Resources
( Internal, External, Residence,
Cooperative)
Functions Performed
(Buying vs
Merchandising)
Staffing
Buyer Only / Sales Manager / Buyer
(merchandising)
6 Basic Considerations of Merchandise Plans ROUND FIGURE W 6 LEGS
-Forecasts
(Staple, Assortment Model Stock Plan vs Product lines, Fashion,
Seasonal, Fad) Merchandise
-Innovativeness (Product Life Cycle, 4 stages)
-Timing
-Assortment (Wide/Narrow + Deep/Shallow)
-Brands (National / Private/ Generic)
-Allocation
4 Options for Retail Assortment Strategies
based on product categories and variety

Figure 14-9 p. 362

Wide + Deep Many categories + large assortment of each

Wide + Shallow Many Categories + small assortment of each
Narrow + Deep Few Categories + Large assortment of each
Narrow + Shallow Few Categories + small assortment of each

4 Category Management Classifications

based on profitability and unit sales

Figure 14-13 p. 368-369

Winners (High Direct Product Profitability, High Unit Sales)

Sleepers High Potential (High Direct Product Profitability, Low Unit Sales)
Dogs Underachievers (Low Direct Product Profitability, Low Unit Sales)
Traffic Builders (low Direct Product Profitability, High Unit Sales)

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CHAPTER 15
8 Steps for Implementing Merchandise Plans

Figure 15-1 p. 376-386

1. Gather Info
2. Selecting Sources (company owned, Outside old, outside New)
-chargebacks
3. Evaluating
4. Negotiating (Opportunistic vs Slot Allowances)
5. Concluding Purchases
6. Receiving and stocking
7. Reordering
8. Re- evaluation
4 Outside Sources of Supply: types and characteristics Figure 15-3 p. 379
Manufacturer
Full Service Merchant Wholesaler
Limited Service Merchant Wholesaler
Agents & Brokers
3 Methods of Evaluating Merchandise received p. 2379-380
Inspection
Sampling
Description

5 options for Concluding Purchases: taking ownership / title to the goods p.

381 - 882
Immediately
Started Shipping
Received
End of Billing Cycle
Consignment (only once sold)
3 Categories of Store Theft and their deterrents Figure 15-12 p. 395
Employee theft
Customer Theft w/ Store Open
Customer Theft w/ Store Closed
Logistics as a Total Process: Functions and Goals p. 386-387
Performance Goals
Supply Chain Management CPFR (Collaborative, Planning,
Forecasting, Replenishment)
Order Processing Quick Response Inventory , F-R M,
Transportation / Warehousing
Customer Service / Transactions
Reverse Logistics: from Customer or Retailer considerations through the
supply chain p. 395-396

CHAPTER 17
Price Elasticity of Demand p. 425
If 70% off makes me sell 10 more items
If a 10% decrease, I will sell 10% less
If 5% off makes me sell 10,000 more units

E < 1, Inelastic
E = 1, Unitary
E > 1, Elastic

Sensitivity of customers to price change in terms of quantities

4 External Factors (micro-environmental) Affecting Retail Price Strategy
Figure 17-3 p. 425
Consumers (Economic, Status, Assortment, Personalizing, Convenience)
Competition ( Market vs Administered Pricing)
MFG/Wholesalers (Grey Market goods)
Government (Horizontal PF, Vertical PF)
Minimum Pricing, Price Discrimination (Predatory Pricing, Loss Leader),
Unit Pricing, Item Price Removal, Price Advertising (bait&switch)
5 Internal Factors (corporate) Affecting Retail Price Strategy:
Figure 17-4 p. 431
Objectives (Penetration vs Skimming)
Broad Policy (General statements to follow)
Price Strategy (Demand / Cost / Competition)
Implementation
Price Adjustments

3 Pricing Strategy Orientations: Demand vs. Cost vs. Competition

P. 434-438
Demand Price-Quality Association , Prestige Pricing
Cost Markup Pricing (Retail and Cost)
Initial Markup,
Maintained Markup,
Gross Margin,
Variable Markup Policy,
DPP
Competition Below, At or Above Market Prices
Pricing Strategy: Terminology & Concepts

P. 440-442 I

Customary Pricing EDLP (extended period of time)

Variable Pricing Yield-management pricing (MAXIMIZED REVENUE)
One-Price Policy No bargaining
Flexible pricing ex: contingency pricing
Odd pricing 1.99
Leader Pricing loss leader
Multiple unit pricing Bundled Pricing ($250 for a hockey kit)
Unbundled pricing (each item separately)
Price Lining Product price points
Price Adjustments: Markdown Options
Markdown vs Additional MarkUp

p. 444-446

CHAPTER 18
10 Components of a Retail Image Figure 18-2 p. 458
3 Customer Service + Firm Positioning + Target Marget
3 Store Location + Merchandise Attributes + pricing
4 Physical Facilities + experience + Community + Promotion Tools
4 Elements of Store Atmosphere Figure 18-5 p. 462
Exterior
General Interior
Interior Displays
Store Layout
Store Layout: 4 categories of Floor Space Allocation p. 466-467
Selling Space
Merchandise Space
Personnel Space
Customer Space
4 Categories of Product Groupings p. 467
Functional (All mens apparel grouped together)
Purchase Motivation (impulse buys vs planned purchases)
Market Segment (music store separates by genre)

Storability (supermarket has freezers)

Store Layout: 2 Main Traffic Patterns Figures 18-9 + 18-10 p. 468

Gridiron Pattern (Straight)
Free-Flowing Pattern (Curving)
2 Methods of Determining Space Needs p. 469
Model-Stock Approach Based on Assortment
Sales- Profitability Approach Based on profit / ft.
7 Types of Point-of-Purchase Displays p. 470-471
POS Displays
Assortment Display (wide range of merchandise)
Rack Display (Apparel)
Theme Setting Display (specific mood)
Ensemble Display (complete product bundle presented)
Case Display (too heavy for racks)
Cute Case (original cartons)
Dump Bin

CHAPTER 19
Elements of the Retail Promotion Mix p. 480
Advertising
Public Relations
Sales Promotion
Personal Selling
Types of Advertising
(4 Content Messages / 2 Payment modes) Figure

19-4 p. 486

Paid Form (Ads vs publicity)

Non Paid Form (Standard message delivered to all)
Out of Store Mass Media (TV radio newspaper etc)
Identified Sponsor (Sponsor name divulged)
-Retailer Pays in Full OR Cooperative Advertising
Pioneer Ads awareness
Competitive Ads persuasion
Reminder Ads Loyalty
Institutional Ads Public Service Annoucements
7 Typical Personal Selling Functions Figure 19-7 p. 490
Order Getting / Order Taking / PMs
Greet customer find out wants Show merchandise- give presentation
demonstrate good service- answer objections- close sales
11 Types of Sales Promotions Figure 19-9 p. 492

5 Ways to Establish a Promotion Budget p. 497

1. Determine Objectives
2. Establish Overall Budget
-All you can afford method
-Incremental Method
-Competitive Parity
-POS method
-Objective- Task Method
3. Select Promotional Mix
4. Implementing Promotional Mix
5. Reviewing and revising plan
6 Hierarchy Levels: Effects of Promotion Figure 19-14 p. 500
Awareness knowledge liking- preference- conviction purchase
-Cost per Thousand
Promotion Timing: Reach + Frequency p. 501
Massed vs. Distributed effort
Massed Promotion Effort = promote seasonally
Distributed promotion effort = throughout the year

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