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CHAPTER 4. PRODUCT RANGE PLANNING AND SELECTION. LEARNING OBJECTIVES. Identify the dimensions of a retailer’s assortment plan, including variety, depth, availability and price level Understand the internal and external factors that will influence the assortment

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chapter 4

CHAPTER 4

PRODUCT RANGE PLANNING AND SELECTION

learning objectives
LEARNING OBJECTIVES
  • Identify the dimensions of a retailer’s assortment plan, including variety, depth, availability and price level
  • Understand the internal and external factors that will influence the assortment
  • Understand the criteria used for product selection and appreciate the attention to detail required in the process.
  • Understand the relationship between products and consumers and how this can influence product selection
  • Explore the product assortment monitoring and review process
the product range assortment
THE PRODUCT RANGE / ASSORTMENT
  • Used to refer to total retail offer or a sub-set of products (e.g. category, department, section)
  • Described by two key dimensions
    • WIDTH (variety of different types of product)
    • DEPTH (choice within a product type, e.g. brand, product variation and price levels)
managing product groups
MANAGING PRODUCT GROUPS
  • By product similarity
    • e.g. Yoghurts
  • By end use
    • e.g. according to DIY project
  • By price
    • e.g. budget range, premium range
  • By brand
    • e.g. designer name
  • Important Concept: Core and non-core
the assortment plan
THE ASSORTMENT PLAN
  • Also known as MODEL STOCK LIST
  • A planning aid that starts in the buying office and ends up in the store
  • A list of product types that are planned to be stocked at a particular time
  • Shows the variables that will be offered, but does not necessarily show product items
  • Ensures the product range offers customer appropriate level of choice
assortment plan considerations
ASSORTMENT PLAN CONSIDERATIONS
  • Store size, store characteristics and fixturing availability
  • Complementary merchandise (balance)
  • Profitability of merchandise
  • Corporate objectives (e.g. stock availability service Vs. exclusivity)
  • Feedback from store personnel
  • Disciplined or opportunistic range development
products and consumers
PRODUCTS AND CONSUMERS
  • Consumers have different types of needs and motivations for shopping
  • Consumer trends will affect the product category life cycle
  • Product managers, particularly buyers must track consumer trends and purchasing patterns, influenced by
    • demographics
    • consumer economics
    • social trends
  • Product managers must also be aware of
    • technological trends
    • legal requirements
new product development
NEW PRODUCT DEVELOPMENT
  • Essential to keep customers interested and inspired in a competitive market
  • Resource hungry, with high failure rates
  • Retailers who have a highly developed own-brand strategy usually have facilities for in-house product innovation
    • fashion design studio
    • development kitchen
    • research and development labs
    • graphics departments (packaging)
  • Innovative suppliers can gain competitive advantage
the product selection process
THE PRODUCT SELECTION PROCESS
  • Getting each product in its totality ‘right’ in terms of type and quality
  • Consideration of a product in minute, qualitative detail e.g. components, ingredient, branding, packaging
  • Ensuring each product criterion contributes to the product’s ability to satisfy consumer needs,
  • Usually the job of the buyer, or category manager
product selection criteria
PRODUCT SELECTION CRITERIA
  • Physical properties
  • Packaging
    • aesthetics, protection, function, brand identity, promotion, added value
  • Style
    • aesthetic blending of shape, colour and materials, related to fashion and taste, abstract
  • Utility
    • function, maintenance, durability, versatility, health, safety and environmental issues
  • Product Quality
quality assurance
QUALITY ASSURANCE
  • International product standards
  • Ethical and environmental assurance
  • Quality Assurance Systems to maintain consistent quality level
  • Quality Control to halt the progress of faulty products
  • Adoption of Quality Management Standard (ISO 9000)
product specification
PRODUCT SPECIFICATION
  • Provides a link between buyer’s product negotiations with supplier and deliveries
  • Describes in detail what the product is and comprises (e.g. dimensions, components, production methods)
  • May include a blueprint and/or ‘sealed’ prototype
  • Becomes the standard for production and quality checking
product brands
PRODUCT BRANDS
  • A brand is an intangible product feature
  • A brand can be the only attribute that counts for the consumer
  • Represents a quality guarantee
  • Manufacturer’s brands usually represent quality and expertise
  • Retailer brands (own brands, private label) have traditionally been low price variants, but now more complex
  • Endorsement of products is an important variation within the branding theme
retailer brand strategy
RETAILER BRAND STRATEGY
  • Managing the brand portfolio is at the heart of many retailers’ product strategy
  • Retailer brands bring control, improved profits, and the opportunity to target specific customer groups
  • Retailer brands can have different objectives:
    • exclusive brands
    • own brands / house brands
    • own label
    • retailer sub-brand
  • Manufacturer brands can bring:
    • prestige and positive consumer associations
    • product development and marketing support
price value as a product feature
PRICE / VALUE AS A PRODUCT FEATURE
  • The price of a product is subject to different value perceptions and interpretations of individual customers
  • Setting prices involves
    • an appreciation of what represents value to consumers
    • reaching retailer’s financial objectives (e.g.target margins or profit contributions)
  • See chapter 12
monitoring the product range
MONITORING THE PRODUCT RANGE
  • Continuous sales monitoring via EPOS reports
    • reports tailored to needs of different types of retail managers
  • Integrated information management:
    • reporting on performance (e.g. sales and profits) in relation to resource input (e.g. space)
  • Range reviews
    • formal, in depth analysis of product assortment performance on a regular basis
the range review
THE RANGE REVIEW
  • Insert Figure 4.2
tracking product market trends
TRACKING PRODUCT / MARKET TRENDS
  • Formal or informal information gathering process
    • Consumer trend analysis
    • Product sector analysis
    • Catchment area analysis
    • Product range analysis