Module 4: The Buying Process

Module 4: The Buying Process

Module 4: The Buying ProcessLesson 1Determine the needs and wants of retailersControlling the Flow of GoodsA retail business exists to make a profit for its ownerRetailers must determine the right time and the right price for purchasing goods to resellA balanced inventory of goods must be availableBuying GoodsIn a small, independently owned store, the buying function is performed by the ownerSometimes small independent stores unite to form a voluntary chain (like IGA or Home Hardware) in order to place large combined orders with suppliersIn large, independently owned or corporate chain stores, the individual department head usually does the buyingSometimes these stores assign specialized buyers to be responsible for goods sold in two or more related departmentsBuying GoodsWhen a corporate or franchised chain is closely controlled from a central office, merchandise is usually selected by a central buyer or buying departmentGoods are shipped to local stores directly from either a producer or wholesaler or from a central warehouse owned by the retail chainThe type of merchandise stocked by the store can determine who a buyer will beA high-priced fashion store might employ a resident buyerA resident buyer (usually located primarily in Montreal, Toronto and Vancouver) acts as an intermediary for the store and provides the retailer with regular market info on style trends and new colours or models

Duties of a BuyerOne of the most exciting and demanding jobs in merchandisingThe buyer must constantly share info and views with the person responsible for selling (usually the sales manager)

Product PlanningBegins with the choice of products to offer its targeted customer groupPricing, advertising and all other variables affecting sales are influenced by product planningA buyer:accurately forecasts the type and quantity of merchandise that a stores customers want, prepares a merchandising budget to determine how much the store can afford to spend to meet customers demands and makes merchandise mix decisionsMerchandise mix refers to the type, quality, assortment, and number of merchandise lines carried by the storeBuyers think in terms of product lines in terms of a series of related goodsPurchasing a buyer actually purchases on the stores behalfBuyers find and evaluate various merchandise sources;Decide which suppliers to buy from;Negotiate price, credit, shipping arrangements and return privileges; andSign the contracts outlining agreements with suppliersPricing buyers may be asked to establish prices of goods for resale and to identify the need for price adjustments on current stockA buyer continually monitors the speed at which items are sellingSlow-selling merchandise may be cleared through a sequence of price reductionsSale Promotion Planning buyers frequently select items to be featured in the retail businesss advertisements buyers work with advertising and sales promotion staff to plan displays and to carry out special sales eventsA buyer provides sales personnel with P.O. P. (Point of Purchase) advertising materials and literature received from suppliersRecord-keeping and Analysis all records related to merchandise, such as purchase orders, are the buyers responsibilityThe buyer continuously monitors merchandise sales and examines related records to be certain that merchandise mix and promotional goals are being metSupervising a buyer might be responsible for selecting, training and supervising various staff membersAssistant buyersStock clerksSales personnelA buyer might be responsible for periodic physical inventory counts and the presentation of new products or product lines to those involved in salesA buyer is usually involved in setting central policies for the storeSources of Buyer InformationCustomer profilesPast records and statementsInformation supplied by customersSurveys and pretesting new productsFocus groupsCustomer evaluation cardsSalespersons experience with customersWholesalers sales representatives and producers agentsResident buyers and other buyersSources of Buyer InformationAttendance at special eventsTrade showsSuppliers showroomsPreseason showingsTours of producers facilitiesComparison shoppingContinued formal educationConferences, seminars ,and coursesTrade journalsFocus on Retailing AssignmentCreate an organizer to identify the types of information provided to the store buyer from each of the sources listed.

Sources of Buyer InformationType of Information ProvidedCustomer profilePast records and statementsWholesaler and producerSales representativeTrade showsTours of producers facilitiesTrade journalsDetermining Merchandise Mix (text page 373provide a definition/examples for each bullet)Types of GoodsConvenience GoodsStaple GoodsImpulse GoodsShopping GoodsSpeciality Goods

Product Mix: includes research, product development, packaging and branding. To identify it as part of the McDonalds product mix, all products have Mc in the name.Promotion Mix: consists of advertising, sales promotion, and publicity.Pricing Mix: price charged for productPlace Mix: includes physical distribution, storage, inventory management, and channel selection.

Branding (text page 374provide a definition/example for each bulleted item)Brand nameNational BrandsPrivate (Store) BrandsGeneric Brands

Branding AssignmentsAssignment #1Assignment #2Assignment #3Assignment #4Product Style (text page 377-78provide a definition/example for the bulleted terms)FashionFad

Assignment