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Overview of Buying ProcessOverview of Buying Process
Overview of Buying ProcessOverview of Buying Process
Domain AcademyDomain Academy
fewer CLIENTS more ATTENTION
Date: June 17 , 2012Date: June 17 , 2012
Version: 1.2Version: 1.2
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Table of ContentsTable of Contents
Course Contents
Overview of Buying process
Retail product management process
Assortment MixDifferent types of Buying process
Buying organization roles
Buying National Brand products
Negotiating with Vendors Legal and ethical issues in the buying process
Pricing Concepts
Pricing Strategies
Pricing approaches
Merchandising budget plan
Delivery of the order
Shipment methods
Payment methods
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Overview of Buying processOverview of Buying process
The buying process is often considered to be one of a number of tasks
within Retail product management .
Buying process is a process through which the retailers replenish their store.
Replenishment is the process of filling your shelves as soon as the old stock
gets used.
Replenishment process is vital for all kinds of retail or trade businesses
Confidential and Proprietary - UST InternalSlide 3
, - - ,
detrimental.
Replenishment process differs from one business to another, depending on
the size and types of business.
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Overview of Buying process (Cont..)Overview of Buying process (Cont..)
Product and market specifics often influence the way the process is
carried out (e.g. seasonal vs staple products).
Relationship between retailers and suppliers can influence buying process,
e.g. length of time doing business.
Retail buyers have had an important role to link between manufacturers
and consumers.
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Overview of Buying process (Cont..)Overview of Buying process (Cont..)
To predict and buy what consumers want from their stores for the next
season, retail buyers can get information from
Store records and past experience,
Market representatives or agents,
Competitors,
Magazines,
ecommen a ons,
Trade directories,
Tradeshows,
Films,
and exhibitions. The information is the essential groundwork to be successful in their jobs.
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Overview of Buying process (Cont..)Overview of Buying process (Cont..)
The most important part of a retail buyers role in a retail company is
satisfying company objectives
by making accurate and timely decisions of merchandise planning and
assortment planning.
because decisions related to the acquisition of merchandise are critical to
the profit potential of a retail company.
Retail bu ers forecast and select merchandise that the stores customers
want or need all at acceptable prices from vendors. Factors that affects the buying decision
Customer demand (e.g. price, quality and availability)
Market trends
Store policy
Financial budgets.
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Overview of Buying process (Cont..)Overview of Buying process (Cont..)
Buyers source new merchandise and review existing ones to ensure
products remain competitive.
By fully understanding customer needs, they are able to maximize profits
and provide a commercially viable range of merchandise at competitiveprices.
Once the buying decisions are made the order will be placed to the
appropriate suppliers .
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Overview of Buying process (Cont..)Overview of Buying process (Cont..)
Supply Chain Between Store and Vendor
Based on the daily movement and
trend the BUYER
places the PURCHASE ORDERS
The Purchase Order is sent to the
Vendor by various means
EDI, Manual etc
8 Confidential and Proprietary - UST Internal
Vendor reviews the POs
placed by the Buyers
Vendor sends the items to store
either using the stores transport
or using vendors own transport
Store receives the POs (Items)
that is sent by the Vendor
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Retail product management process(Cont)Retail product management process(Cont)
RPM Process Stage 1
Recognition of Retail Customer Need
Recognition of new product requirements
Tracking existing customers requirements
Information sources available:
Internal sales data
Trade publications Consumer publications, special interest mags.
Suppliers
Market research
Competitor analysis
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Retail product management process(Cont)Retail product management process(Cont)
RPM Process Stage 2
Write Specification Of Product to Satisfy Need
Convert recognised need into product opportunity
Blend a set of features to benefit customers
Formal specification of product features and/or approval of prototype
NB: This stage often starts the process, with a suggestion (sometime
rom supp er o owe y pro uc mar e eva ua on
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RPM Process Stage 3
Search For a Supplier
Find a supplier that is able to make and deliver product
Assess different suppliers for suitability based on value (e.g. product
quality, short lead time) for price
NB There may be a restricted choice, especially if buyer wants a
Retail product management process(Cont)Retail product management process(Cont)
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RPM Process Stage 4 and Stage 5
Specify Order
quantity detailed, e.g. by size, variety, colour
in terms of how, when and where delivered
Evaluate Performance
Retail product management process(Cont)Retail product management process(Cont)
. . , .
Of supplier e.g. on time, delivery accuracy
Includes qualitative measures e.g. customer feedback
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What is Assortment Mix?
Assortment Mix is the Breadth and depth of the product carried by the
retailers.
The retailer defines the merchandise strategy and allocates a Purchasebudget for procuring the assortment mix defined.
At this stage the retailer would like to get into SKU level planning in terms
of the number of units to rocure in order to match the forecasted sales.
Assortment MixAssortment Mix
Planned numbers at the SKU level need to match the numbers defined ata category level.
Examples: - During the holidays, our retail store increases its merchandise
mix so customers can find more gift giving ideas.
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Considerations In Deciding Ordering QuantityConsiderations In Deciding Ordering Quantity
Considerations in Determining How Much to Order
Basic Stock Plan
Present Inventory
Merchandise on Order
Sales Forecast
Rate of Sales of SKU (Velocity)
Seasonality
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Stock Levels :- This is the quantity of goods kept in stock.
Basic Stock List
Indicates the Desired Inventory Level for Each SKU
Amount of Stock Desired
Stock LevelsStock Levels
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Cost of CarryingInventory
Lost Sale Due
to Stock out
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When to place an order?When to place an order?
Order Point
The point at which inventory available should not go below or else we will
run out of stock before the next order arrives.
The order point depends on the expected level of sales, the time requiredto obtain new stock, and the amount of safety stock that is desired.
Assume Lead time = 3 weeks, review time = 1 week, demand = 100 units
er week Buffer stock = 50 units
Order point = demand (lead time + review time) + buffer stock
Order point = 100 (3+1) + 50 = 450
We will order something when order point gets below 450 units.
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ForecastingForecasting
Unlike the domestic consumers, businesses cannot afford to wait till the
entire stock goes out, because it usually takes quite some time before the
suppliers can deliver the required goods.
Therefore, the businesses need to develop a replenishment process bytaking into consideration the demand and lead-time, and making an order
accordingly.
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Forecasting (Cont ..)Forecasting (Cont ..)
Sales Forecasting is the process of estimating what a company's
future sales are likely to be based on sales records as well as market
research.
The purpose of sales forecasting is to provide information that you can useto make intelligent business decisions.
Information used for sales forecasting must be well organized and may
include information on the competition and statistics that affect the
businesses' customer base. Companies conduct sales forecasting in hopes of identifying patterns so
that revenue and cash flow can be maximized.
Managers must think about changes in customer sales or other changes
that could affect forecasting figures. They must be competitive whenassessing the competition.
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Forecasting (Cont..)Forecasting (Cont..)
Lead time forecasting
Theres always some waiting-period between the buyer placing an order
and the merchandise reaching its place. This delay between the order and
the receipt is known as the lead-time. Lead time forecasting has nearly as much impact on the replenishment
process as demand forecasting.
Lead time refers to the number of da s between order lacement and
receipt, including the time it takes to enter the receipt into the system,place it on the shelf, or otherwise make it available for sale.
It is important to have an idea of the lead-time so that you can place the
order in advance.
As replenishment focuses on acquiring product to support anticipatedneed, the lead time forecast is the key to understanding how long ahead
of that future need orders should be placed.
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Buying organization rolesBuying organization roles
Buying Center
Buying centre (also known as a decision making unit or DMU) is a group of
employees, family members, or members of any type of organization
responsible for finalizing major decisions, usually involving a purchase.
In a business setting, major purchases typically require input from various
parts of the organization, including finance, accounting, purchasing,
information technology management, and senior management.
g y tec n ca purc ases, suc as n ormat on systems or pro uct on
equipment, also require the expertise of technical specialists.
In some cases the buying centre is an informal ad hoc group, but in other
cases, it is a formally sanctioned group with specific mandates, criteria,
and procedures.
The employees that constitute the buying centre will vary depending onthe item being purchased.
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Buying organization roles(Cont)Buying organization roles(Cont)
People responsible for buying decisions in an organization:
The Buying Director
Represents all or, in a large retailer, a key part of the buying organisation.
Not all but some buying directors will be part of main board of directors
Lead, and set overall aims for, product management teams
Involved in strategic planning decisions such as
changing major suppliers, introduction or deletion of product
categories, major promotional campaigns, adoption of systems and
management approaches
Corresponds with General Merchandise Manager or VP.
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Buying organization roles(Cont)Buying organization roles(Cont)
The Merchandise Manager
Oversee a division of the retailer or a number of departments.
Ensures co-ordination and consistency across departments.
May carry director status in a large organisation.
They may be supported by buying controllers who oversee small
numbers of inter-related departments.
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Buying organization roles(Cont)Buying organization roles(Cont)
Retail buyer
Traditionally the figurehead of a product department
May have shared responsibility with a merchandiser
A retail buyer is responsible for planning and selecting a range of products
to sell in retail outlets.
The buyer must consider the following factors when making purchasing
Customer demand (e.g. price, quality and availability);
Market trends;
Store policy;
Financial budgets.
Concerned with qualitative side of buying
Awareness of consumer trends,
Knowledge of product features,
Knowledge of supply market
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Buying organization roles(Buying organization roles(CondCond))
The Merchandiser
Concerned with quantitative side of buying
Estimating sales
Planning deliveries
Distributing products to stores
Responsible for financial management of department.
Sales analysis
Budget planning
Profit margin analysis
Implementation of price reductions
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Buying organization roles(Cont)Buying organization roles(Cont)
The Category Manager
Combined buying and merchandising role used in consumer-led product
management.
Leads a cross-functional team (category team). Involved in the performance of a group of products from product idea and
introduction through production, supply, store distribution, promotion,
sales and after sales.
More common in grocery / FMCG retailing. The Buying Committee
A group of people from different parts of the retail buying organisation
who meet to discuss and sanction buying plans.
Combines experience, expertise and different points of view.
Decisions are sanctioned and therefore supported by whole organisation
rather than individuals.
Time consuming and consensus may be difficult to achieve - buying
opportunities lost.Slide 27 Confidential and Proprietary - UST Internal
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Buying National Brand productsBuying National Brand products
What are National Brand Products?
Brand name used by a manufacturer whenever that product is sold.
For example, Del Monte is a national brand for food products.
In contrast, many marketers offer products under a variety of brand namescalled private labels, unique to each distributor or retailer.
National brand marketing requires greater advertising expenditure on the
-
brands. If consumer preference for the national brand is strong, then pricing can
be high enough to support the additional advertising and provide the
desired profit margin.
National brands are often perceived to be of higher quality and cantherefore demand a premium price.
Many national brands are now experiencing a loss of market share to
private label brands as a result of the narrowing quality gap.
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Buying National Brand products(Cont..)Buying National Brand products(Cont..)
Buying decision for staple merchandise
Less Frequent
Continuous replenishment
National Band Buying Process
Meet with vendors
Discuss performance of vendors merchandise during the previous
season
Review the vendors offering for the coming season
May place orders for the coming season
Some times they do not buy at market, but review merchandise, return to
their offices to discuss with the buying team before negotiating with the
vendors
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Buying Private Brand ProductsBuying Private Brand Products
What are Private Brand Products?
Private label goods are products sold by retail stores that are also
produced by the same retail store.
For example, Ralphs supermarket will sell Tropicana orange juice and rightnext to it will sell its own brand of orange juice.
Private label products are always less expensive than brand name
roducts because the need to be able to com ete with the bi brands.
They save money by not having to spend money on distribution channelsand advertising since they have their own.
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Buying Private Brand Products (cont)Buying Private Brand Products (cont)
Private Labels Growing Popularity
In the past, private label brands have been seen as inferior to brand name
products.
More recently however, private label brands are growing in popularitymost likely due to the economy and growing trust in private labels.
Buying Private Label.
consumer trust They are less expensive compared to national brand and are almost
identical
Their quality is same as of national brand
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Negotiating with VendorsNegotiating with Vendors
Bargaining is an age-old practice that is still common in the marketplace in
many countries today.
In the United States, most consumers want to avoid the haggle and will
simply accept the price on the tag. It is the successful retailer that has learned how to play the game of give
and take with their suppliers.
The bu ers can use the followin ti s to ne otiate with vendors to receive
the best pricing and terms on products. Be Prepared
Always Tell the Truth
Show Your Potential
Ask About Incentives Mention the Competition
Find a Fair Compromise
Think Long Term
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Negotiating with Vendors (Cont..)Negotiating with Vendors (Cont..)
Take Your Time
Get It in Writing
Practice Makes Perfect
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Legal and ethical issues in the buying processLegal and ethical issues in the buying process
Purchase Terms and Conditions
Resale Price Maintenance
Commercial Bribery
Charge backs
Buybacks
Counterfeit Merchandise
Gray Markets and Diverted Merchandise
Exclusive Dealing Agreements
Tying Contract
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L l d thi l i i th b iL l d thi l i i th b i
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Legal and ethical issues in the buying processLegal and ethical issues in the buying process
(Cont..)(Cont..)
Purchase Terms and Conditions
Restricts the prices and terms that vendors can offer to retailers.
Forbid vendors from offering different terms and conditions to different
retailers for the same merchandise and quantity. Different prices can be offered if
The costs of manufacturing, selling, and delivery are different.
e re a ers are prov ng eren unc ons e.g., s r u on, s ore
service, etc.)
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L l d thi l i i th b iL l d thi l i i th b i
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Legal and ethical issues in the buying processLegal and ethical issues in the buying process
(Cont..)(Cont..)
Resale Price Maintenance (RPM)
It is a practice whereby a manufacturer and its distributors agree that the
distributors will sell the manufacturer's product at certain prices .
If a reseller refuses to maintain prices, either openly or covertly , themanufacturer may stop doing business with it.
Reduces free riding of discount stores.
36 Confidential and Proprietary - UST Internal
Le al and ethical iss es in the b in processLe al and ethical iss es in the b in process
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Legal and ethical issues in the buying processLegal and ethical issues in the buying process
(Cont..)(Cont..)
Commercial Bribery
A vendor or its agent offers to give or pay a retail buyer something of
value to influence purchasing decisions.
A fine line between the social courtesy of a free lunch and an elaboratefree vacation.
Some retailers with a zero tolerance policy.
.
Chargeback
A practice used by retailers in which they deduct money from the amount
they owe a vendor without getting vendor approval.
Two Reasons:
Merchandise isnt selling.
Vendor mistakes.
Confidential and Proprietary - UST InternalSlide 37
Legal and ethical issues in the buying processLegal and ethical issues in the buying process
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Legal and ethical issues in the buying processLegal and ethical issues in the buying process
(Cont..)(Cont..)
Buybacks
The act of re buying something that one previously sold.
Used to get products into retail stores.
Two scenarios:
Retailer allows a vendor to create space for its goods by buying back
a competitors inventory and removing it from a retailers system.
e a er orces a ven or o uy ac s ow-mov ng merc an se.
Counterfeit Merchandise
Goods made and sold without the permission of the owner of a
trademark, a copyright, or a patented invention that
is legally protected in the country where it is
marketed.
Major problem is counterfeiting intellectual
property.
Confidential and Proprietary - UST InternalSlide 38
Legal and ethical issues in the buying processLegal and ethical issues in the buying process
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Legal and ethical issues in the buying processLegal and ethical issues in the buying process
(Cont..)(Cont..)
Gray-Market and Diverted Merchandise
Gray- Market Merchandise (parallel imports) possesses a valid U.S.
registered trademark and is made by a foreign manufacturer but is
imported into the United States without permission of the U.S. trademarkowner.
Not Counterfeit.
Is le al.
Diverted Merchandise is similar to gray-market merchandise except there
need not be distribution across international boundaries.
Gray-Market and Diverted Merchandise Taking Sides Discount stores argue customers benefit because it lowers prices.
Traditional retailers claim important service after sale will be unavailable
May hurt the trademarks image.
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Legal and ethical issues in the buying processLegal and ethical issues in the buying process
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Legal and ethical issues in the buying processLegal and ethical issues in the buying process
(Cont..)(Cont..)
Exclusive Dealing Agreements
Occur when a manufacturer or wholesaler restricts a retailer into carrying
only its products and nothing from competing vendors
Example: Safeway Coca-Cola Illegal when they restrict competition
Tying Contracts
n agreemen a requ res e re a er o a e a pro uc oesn
necessarily desire (the tied product) to ensure that it can buy a product itdoes desire (the tying product)
Illegal when they lessen competition.
Ok to protect goodwill and quality reputation of vendor .
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Pricing ConceptsPricing Concepts
What is Price?
Price is that which is given up in an exchange to acquire a good or service.
Importance of Price to Marketing Managers
Revenue :- The price charged to customers multiplied by the number ofunits sold.
Revenue = Unit Price * No of Units Sold
evenue pays or every ac v y
Profit:- Revenue minus expenses
Marketers must select a price that is not too high or not too low, a price
that equals the perceived value to target consumers.
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Pricing Concepts (Cont)Pricing Concepts (Cont)
Trends Influencing Price Setting
TrendsTrendsTrendsTrends
High rate of
new product introduction
High rate of
new product introduction
Increased availability of
bargain-priced dealer and
Increased availability of
bargain-priced dealer and
in thein theMarketMarketin thein theMarketMarket
Price cutting as a strategy tomaintain or regain
market share
Price cutting as a strategy tomaintain or regain
market share
More efficient and betterinformed buyersMore efficient and betterinformed buyers
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Pricing StrategiesPricing Strategies
The Cost Determinant of Price
Types of CostsTypes of Costs
Deviate with changesin level of output
Var a eVar a e
CostsCostsFixed CostsFixed Costs
Do not deviateas level of output changes
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Pricing Strategies (Cont)Pricing Strategies (Cont)
Key stoning
Markup pricing
MethodsMethods
Target-Return
Pricing
Break-Even
Pricing
ro t ax m zat on
Pricing
Set PricesSet Prices
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( )( )
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Pricing Strategies (Cont)Pricing Strategies (Cont)
Markup
Pricing
The cost of buying the product from the producer plus
amounts for
profit and for expenses not
otherwise accounted for.
Key stoningThe practice of marking up prices
by 100%, or doubling the cost.
Confidential and Proprietary - UST InternalSlide 45
Profit
Maximization
A method of setting prices that occurs when marginal
revenue
equals marginal cost.
Marginal Revenue
The extra revenue associated with selling an extra unit of
output, orthe change in total revenue with a
one-unit change in output.
i i i ( )i i i ( )
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Pricing Strategies (Cont)Pricing Strategies (Cont)
BreakBreak--Even PricingEven Pricing
cece
4,0004,000
Total RevenueTotal Revenue
Total CostsTotal Costs
BreakBreak--even pointeven point
QuantityQuantity
Pri
Pri
2,0002,000
00 1,0001,000 2,0002,000 3,0003,000 4,0004,000 5,0005,000 6,0006,000
Fixed costsFixed costs
Confidential and Proprietary - UST InternalSlide 46
P i i S i (C )P i i S i (C )
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Pricing Strategies (Cont)Pricing Strategies (Cont)
BreakBreak--Even PricingEven Pricing
Break-Even
Quantity=
Total Fixed Costs
Fixed cost Contribution
Fixed cost
Contribution= Price -- Avg. Variable Cost
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Pricing approachesPricing approaches
There are three main approaches a business takes to setting price:
Cost-based pricing: price is determined by adding a profit element on top
of the cost of making the product.
Customer-based pricing: where prices are determined by what a firmbelieves customers will be prepared to pay
Competitor-based pricing: where competitor prices are the main
influence on the rice set
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( )( )
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Pricing approaches (Cont..)Pricing approaches (Cont..)
Cost based pricing
This involves setting a price by adding a fixed amount or percentage to the
cost of making or buying the product.
In some ways this is quite an old-fashioned and somewhat discreditedpricing strategy, although it is still widely used.
After all, customers are not too bothered what it cost to make the product
the are interested in what value the roduct rovides them.
Cost-plus (or mark-up) pricing is widely used in retailing, where theretailer wants to know with some certainty what the gross profit margin of
each sale will be.
The main advantage of cost-based pricing is that selling prices are
relatively easy to calculate.
The main disadvantage is that cost-plus pricing may lead to products that
are priced un-competitively.
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P i i h (C )P i i h (C )
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Customer-based pricing
Penetration Pricing
Penetration pricing is the pricing technique of setting a relatively low
initial entry price, usually lower than the intended established price, toattract new customers.
The strategy aims to encourage customers to switch to the new
roduct because of the lower rice.
Pricing approaches (Cont)Pricing approaches (Cont)
The aim of penetration pricing is usually to increase market share of aproduct, providing the opportunity to increase price once this
objective has been achieved.
Used to support the launch of a new product
And it works best when a product enters a market with relatively littleproduct differentiation and where demand is price elastic so a lower
price than rival products is a competitive weapon.
Confidential and Proprietary - UST InternalSlide 50
P i i h (C t )P i i h (C t )
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Pricing approaches (Cont)Pricing approaches (Cont)
Price Skimming
Skimming involves setting a high price before other competitors come
into the market.
This is often used for the launch of a new product which faces little orno competition usually due to some technological features.
Such products are often bought by early adopters who are prepared
to a a hi her rice to have the latest or best roduct in the market.
Good examples of price skimming include innovative electronicproducts, such as the Apple iPad and Sony PlayStation 3.
Price skimming as a strategy cannot last for long, as competitors soon
launch rival products which put pressure on the price (e.g. the launch
of rival products to the iPhone or iPod).
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P i i h (C t )P i i h (C t )
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Loss Leaders
The use of loss leaders is a method of sales promotion.
A loss leader is a product priced below cost-price in order to attract
consumers into a shop or online store. The purpose of making a product a loss leader is to encourage
customers to make further purchases of profitable goods while they
are in the sho .
Pricing approaches (Cont)Pricing approaches (Cont)
Pricing is a key competitive weapon and a very flexible part of themarketing mix.
If a business undercuts its competitors on price, new customers may
be attracted and existing customers may become more loyal. So, using
a loss leader can help drive customer loyalty.
One risk of using a loss leader is that customers may take the
opportunity to bulk-buy.
Using a loss leader is essentially a short-term pricing tactic for any one
product.
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Pricing approaches (Cont )Pricing approaches (Cont )
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Predatory Pricing
With predatory pricing, prices are deliberately set very low by a
dominant competitor in the market in order to restrict or prevent
competition.
The price set might even be free, or lead to losses by the predator.
Whatever the approach, predatory pricing is illegal under competition
law.
Pricing approaches (Cont)Pricing approaches (Cont)
Psychological Pricing Sometimes prices are set at what seem to be unusual price points.
For example, why are DVDs priced at 12.99 or 14.99?
The answer is the perceived price barriers that customers may have.
They will buy something for 9.99, but think that 10 is a little toomuch. So a price that is one pence lower can make the difference
between closing the sale, or not.
The aim of psychological pricing is to make the customer believe the
product is cheaper than it really.Confidential and Proprietary - UST InternalSlide 53
Pricing approaches (Cont )Pricing approaches (Cont )
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Competitor-based pricing
If there is strong competition in a market, customers are faced with a
wide choice of who to buy from.
They may buy from the cheapest provider or perhaps from the onewhich offers the best customer service.
Most firms in a competitive market do not have sufficient power to be
able to set rices above their com etitors.
Pricing approaches (Cont)Pricing approaches (Cont)
They tend to use going-rate pricing i.e. setting a price that is in linewith the prices charged by direct competitors.
In effect such businesses are price-takers they must accept the
going market price as determined by the forces of demand and supply.
An advantage of using competitive pricing is that selling prices shouldbe line with rivals, so price should not be a competitive disadvantage.
The main problem is that the business needs some other way to
attract customers.
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Merchandising budget planMerchandising budget plan
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Merchandising budget planMerchandising budget plan
Plan for the financial aspects of a merchandise category
Specifies how much money can be spent each month to achieve the
sales, margin, inventory turnover, and GMROI objectives.
Not a complete buying plan--doesnt indicate what specific SKUs tobuy or in what quantities.
Six Month Merchandise Plan for Womens Casual SlacksSix Month Merchandise Plan for Womens Casual Slacks
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Delivery of the orderDelivery of the order
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Delivery of the orderDelivery of the order
Delivery time
Time period between product completion and customer receipt of the
item.
The estimated delivery time is based on the seller's handling time, theshipping service selected, and when the seller receives cleared payment.
Place
order Leave the warehouse A arrive at
store
Total time to receive the order
Slide 56 Confidential and Proprietary - UST Internal
Processing time Shipping time
Delivery of the order(Cont..)Delivery of the order(Cont..)
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Delivery of the order(Cont..)Delivery of the order(Cont..)
Processing time
The time taken to prepare the item to ship.
Shipping time
The time for the order to travel from the warehouse to reach thedestination.
Total Delivery Time = Processing Time + Shipping Time
Slide 57 Confidential and Proprietary - UST Internal
The following deadlines are of importance for delivery processing: You must start picking and packing activities on the material availability
deadline. This deadline must be selected early enough in advance so that
the goods are ready by the given loading deadline.
The transportation scheduling deadline is the date on which you muststart to organize the transportation of the goods. This deadline must be
selected early enough to ensure that the means of transport is available
by the loading deadline.
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Delivery of the order(Cont..)Delivery of the order(Cont..)
The loading deadline is the date on which the goods must be available for
loading and on which all vehicles that are required to ship these goods
must be ready for loading. After the time required for loading the goods
(loading time) has expired, goods issue can be carried out.
The goods issue deadline is the date on which the goods leave the
company in order to arrive punctually at the customer location.
The delivery deadline is the date on which the goods are to arrive at the
customer location. The difference between the goods issue deadline and
the delivery deadline is calculated from the transit time required for theroute between the delivering plant and the customer.
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Delivery of the order(Cont..)Delivery of the order(Cont..)
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Delivery of the order(Cont..)Delivery of the order(Cont..)
Delivery scheduling
All activities that must be carried out before the goods can be delivered to
the customer are taken into account during delivery scheduling.
This includes loading, picking, and packing.
Delivery scheduling determines the material availability deadline and the
loading deadline.
All deadlines that are used for preparing and carrying out thetransportation of goods are taken into account during transportation
scheduling.
This includes the transit time and the transportation lead time that you
need for ordering a foreign forwarding agent or for arranging a truck from
the your company's truck fleet.
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Shipment MethodsShipment Methods
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pp
Once the ordered items are ready, it needs to be transported from the
vendor to the store/warehouse.
When shipping freight, its important to choose the appropriate mode of
transportation to ensure your products arrive on time and at the right
cost.
The transportation can be done using the vendors transport system or the
stores transport system or through a third party.
Different modes of transportation like road, rail, water and air can be used
for the effective management of merchandise.
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Shipment Methods (Cont..)Shipment Methods (Cont..)
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p ( )p ( )
Shipping by truck
It is one of the most basic and historical means of transportation from
one place to another.
Trucks and carriers typically are used for carrying or delivering freight.
Road transportation incurs a relatively lower cost than other logistic forms
and has a widely recognizable and flexible route.
,
other possible means of transportation, and it offers a limited capacity. Road transport is most often used for relatively inexpensive, non-
perishable items or for shorter distances.
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Shipment Methods (Cont..)Shipment Methods (Cont..)
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p ( )p ( )
Shipping by rail
Shipping via rail is another popular option, especially when transporting
over large distances or when shipping bulk goods.
Dominant solution for bulk quantities of freight, but as they lack theflexibility of road transport and incur an additional transshipment cost,
this logistics method has become a little less popular in recent times.
However usin rail trans ort can be less ex ensive if frei ht is lar e and
heavy and the pickup point as well as the delivery point is near the rail
head.
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pp
Shipping by sea
It uses ships and large commercial vessels that carry billions of tons of
cargo every year.
Sea, lake or river transport is particularly effective for significantly largequantities of goods that are non-perishable in nature and for cities or
states that have water access.
Moreover trans ort via water is considerabl less ex ensive than other
logistics methods, which makes it one of the most widely used choices of
transport for merchandise.
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Shipment Methods (Cont..)Shipment Methods (Cont..)
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Shipping by air
Shipping by air is the best option for time-sensitive exports.
Merchandise is carried in cargo holds within passenger airlines and/or via
aircraft designed to carry freight alone. Although air transport is more expensive than all other means of
transportation, it is undeniably most time-efficient.
.
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Payment methodsPayment methods
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There are four main methods for paying suppliers for the goods ordered
from them:
Advance payment. The supplier only ships goods once they have received
your payment.
Letters of credit. Your bank guarantees to pay when presented with a set
of specified export documents by the supplier - the bank guarantee
increases the cost of this method.
Documentary collection. When goods are shipped, the supplier sends the
export documents to your bank. You will need these documents to clear
your goods through customs, but will only given them when payment has
been made.
Open account trading. The supplier ships goods to you directly, and asks
for payment within an agreed period.
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Thank You!Thank You!
fewer CLIENTS more ATTENTION
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