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CHAPTER 1

CHAPTER 1. INTRODUCTION TO RETAIL PRODUCT MANAGEMENT: SCOPE AND CONCEPTS. LEARNING OBJECTIVES. To define retail product management To explore what retail product management includes and entails (scope)

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CHAPTER 1

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  1. CHAPTER 1 INTRODUCTION TO RETAIL PRODUCT MANAGEMENT: SCOPE AND CONCEPTS

  2. LEARNING OBJECTIVES • To define retail product management • To explore what retail product management includes and entails (scope) • To understand what aspects of product management take place where within a retail organisation • To understand the role of product management within an overall retail strategy

  3. BASIC CONCEPT: The Product • Types of Product • complex tangible • convenience tangible • information based • service • The retailer’s product offer (usually): physical goods, with services • Different types of products require specific product management approaches

  4. BASIC CONCEPT: The Retailer • The entity at the penultimate position in a distribution/marketing channel, that sells to the final consumer • Functions: • breaks bulk (distributor of small quantities) • editor of product range • provides goods in convenient location • finances stock • The term retail sector has been used to refer to a type of retailer, based principally on the product offer.

  5. Figure 1.1 • To Add

  6. THE STRATEGIC ROLE OF PRODUCT MANAGEMENT • Retailers are close to consumers so they are in the best position to understand their changing needs • product and shopping needs and preferences • short term and long term changes • Retailers add value to the product (e.g. display, information, after sales service) • Retailers form close relationships with customers (generate loyalty) • analysis of information (gathered electronically) provides insight into customer purchasing habits • retailers develop a ‘retail brand identity’

  7. THE STRATEGIC ROLE OF THE PRODUCT RANGE • Captures customers’ interest • Communicates what a retailer’s business is all about • Provides the reason for a shopper to choose one outlet over another in a crowded market (differentiates) • Positions a retailer relative to competitors

  8. RETAIL POSITIONING • A retailer’s place in the market relative to competition (or ‘ideal’) • The basis upon which a retail offer is ‘measured’ by customers • Positioning attributes: • price • product assortment • convenient to use / visit • service quality • The product range has a strong influence on customer perception and retail outlet choice

  9. Provides solution or near solution to mass needs Wide range (large number of product categories) Limited assortment (shallow) Well known brands and product varieties Provides solutions to specific needs Smaller number of product categories More choice within the category (depth) Extensive choice of brands and/or product variations GENERALIST VS SPECIALIST

  10. Figure 1.2 Different product assortment strategies • To Add

  11. PRICE POSITIONING • Price is a very effective positioning attribute • premium prices / added value (e.g. product quality or service) • low price / little added value (e.g. basic selling environment and service) • Variable price positioning within a general offer: • use of tiered pricing and sub-brands to pitch specific product ranges to customer groups • e.g. Tesco Value, Regular, Finest

  12. THE SCOPE OF RETAIL PRODUCT MANAGEMENT • Making products available • Presenting products appropriately and attractively • Small retailer: all carried out by owner manager • Large retailer: central buying office • strategic product management (directors and vice presidents) • operational product management (buyers, merchandisers) • outlet level product management (store personnel)

  13. STRATEGIC PRODUCT MANAGEMENT • Provides the planning guidelines • Direction of growth (e.g. introduction of new product ranges, extending successful ranges, rationalising less popular products) • Positioning in market (e.g. which customers to target and how) • Setting financial objectives: sales, profits, productivity and control of costs • Assessing and managing risks associated with new product ranges

  14. OPERATIONAL PRODUCT MANAGEMENT • Translate ideas into feasible plans • Select and manage suppliers • Select products and brands • Make products available (forecast, order, arrange delivery) • Communicate the product offer (promotions, advertising) • Set prices • Decide where and how to display products

  15. PRODUCT MANAGEMENT WITHIN THE OUTLET • Implement operational plans • Allocate display space and arrange products • Organise in-store marketing • Match product features and benefits to customer needs and desires (personal selling)

  16. FIGURE 1.5 BALANCING BENEFITS AND COSTS TO CREATE VALUE

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