CHAPTER 4

PRODUCT RANGE PLANNING AND SELECTION

LEARNING OBJECTIVES

Identify the dimensions of a retailers 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

Used to refer to total retail offer or a subset 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

By product similarity
e.g.

Yoghurts

By end use
e.g.

according to DIY project

budget range, premium range designer name

By price
e.g.

By brand
e.g.

Important Concept: Core and non-core

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

Table 4.1 Assortment Plan for Red Wine Price Level High Medium Low High Medium Low High Medium Type Beaujolais, Claret, Cabernet Sauvignon Cabernet Sauvignon, Cotes Du Rhone Vin de Table Rioja, other Tempanillo, Other Spanish Chianti, Other Valpolicella, Other SKUs 7 5 1 3 2 1 3 2

French

Spanish

Italian

Other Regions High Medium Litre Bottles

Australian Chilean French Spanish

4 2 2 1

Boxes

French Italian

1 1

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

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

Essential to keep customers interested and inspired in a competitive market Resource hungry, with high failure rates Retailers who have a highly developed ownbrand strategy usually have facilities for inhouse product innovation
fashion

design studio development kitchen research and development labs graphics departments (packaging)

Innovative suppliers can gain competitive advantage

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 products ability to satisfy consumer needs, Usually the job of the buyer, or category manager

PRODUCT SELECTION CRITERIA

Physical properties Packaging

aesthetics,

protection, function, brand identity, promotion, added value blending of shape, colour and materials, related to fashion and taste, abstract maintenance, durability, versatility, health, safety and environmental issues

Style
aesthetic

Utility
function,

Product Quality

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
Provides a link between buyers 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

A brand is an intangible product feature A brand can be the only attribute that counts for the consumer Represents a quality guarantee Manufacturers 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

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

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 retailers financial objectives (e.g. target margins or profit contributions)

reaching

See chapter 12

MONITORING THE PRODUCT RANGE

Continuous sales monitoring via EPOS reports

reports

tailored to needs of different types of retail managers on performance (e.g. sales and profits) in relation to resource input (e.g. space) in depth analysis of product assortment performance on a regular basis

Integrated information management:

reporting

Range reviews
formal,

THE RANGE REVIEW

Insert Figure 4.2

TRACKING PRODUCT / MARKET TRENDS

Formal or informal information gathering process

Consumer

trend analysis Product sector analysis Catchment area analysis Product range analysis