Marketing Merchandising

ADM4307 Apparel Manufacturing
By Dr. Shin, Ph.D. Associate Professor
 Marketing is a part of a firm’s strategic plan.
 To market product successfully;
 Positioning the firm relative to target markets and the competition.
 Identifying “Target markets” for their products Continually
monitoring markets.
 Market segmentation and Target markets
 Target markets
 1) Core customers (the foundation of their business)
 2) Fringe customers (potential for business growth)
 Market segmentation
 Mass market strategies
 Middle income class, large portion of the U.S. population (about 80%)
 Multiple-segment strategies
 Two or more marketing, Examples: men’s sport shirt + a line for women’s
shirts
 Niche marketing (or Micromarketing)
 Narrowly defined target market (gender, price range, size range, life style)
 A firm may change its conception of target market;
 1) Distribution changes among age groups (Example: Y Generation)
 2) Population shift to the south and west.
 3) Needs of special market segments: petite, plus, tall, and large size.
 Marketing strategy considers;
 Marketing objectives
 Analysis of the competition
 Market positioning and product differentiation
 Product sell-through
 Marketing objectives
 Market penetration
 Expends sales of current products in current markets
 Achieved through
 Price promotion/ Low pricing
 Brand/ Store loyalty
 Convenience/ Accessibility /Internet
 Market development
 Seek new markets or new uses for products (Example: Nylon)
 Diversification
 Develop new products aimed at new markets (Example: Liz Claiborne’s diversification Elizabeth
for large sizes, Liz sport for casual market, Claiborne for men’s wear)
 Analysis of the competition (see p. 37)
 Survey customers/ reading the trade press/ consulting industry
directories/ and participating in trade associations.
 Determining potential competition is difficult.
 Market analysis example (see Figure 2-1 p. 39)
 Market positioning and product differentiation
 To make positioning decisions, the firm must know
 1) purchase criteria of their target customers
 2) product performance expectations
 3) customers’ perceptions of competing product
 Product differentiation by:
 Labeling, price, quality, customer service, fit, fashion, styling.
 Market positioning example (see Table 2-2. p. 38)
 Product sell-through
 1) Push-through system
 2) Pull-through system (the essence of QR)
 Sale Forecasting
 “Outlines expected company sales for a specific good to a specific
consumer group over a specific period of time”
 Research method:
 Qualitative methods (Consulting)
 Quantitative methods (statistical analysis)
 Reflect market potential, NOT production capability.
 Relate to Channel distribution.
 Developing retail strategies
 Selling distressed merchandise in outlet store.
 Examples: VF Corp. using Dual-distribution system (own stores+
traditional discount, specialty, or department store), Lands’ End
(Internet + catalogue)
 Developing wholesale market strategies
 A place where a group of apparel manufacturers is showing their
product lines for sale at wholesale.
 MAGIC International trade show in Las Vegas (twice a year)
www.magiconline.com
 Target of the wholesale force-> Retailers ->target consumers.
 Sale reps (2 types)
 Inside sales rep.
 Outside sales rep.
 QR Partnering arrangements
 Marketing calendar
 Timing of product development, production, and presentation is critical.
 Selling periods:
 Factors: Seasonal, Holidays, fashion change.
 T-shirts (52 weeks), Seasonal items (8-12 weeks)
 6 selling periods a year and 5 lines a season.
 Marketing calendar
 See Table 2-3, p. 45
 Marketing dates
 Line review: Presentation of the line to the sales staff. (2wks prior to line
release)
 Line release: Line must be complete for showing.
 Start to ship: Line is ready for delivery to retail store.
 Ship complete: Date by which retailer orders are to be completely filled.
(within 3 wks).
 Global marketing
 Marketing on the Internet
 Labeling and Licensing
 Labels
 National brands and trademarks
 Private brands
 Legally required labels
 Merchandising license agreements
 Intellectual property
 Licensing (Example: Lauren by Ralph Lauren, Peerless International, a
licensee of RL)
 Licensing contracts
 Royalty (1~15 % of sales)
 Merchandising is:
 Planning
 Developing
 And, Presenting product lines for a target market involving pricing,
assortment, styling, and timing.
 Merchandising calendar:
 The timing required to develop, plan, and present for each selling
period.
 Based on 52 week merchandising cycle
 Selling periods (3~52 wk) defined as weeks of sale for products.
 Merchandising calendar with Quick Response system
 Lead time:
 The time between placing an order and delivering merchandise.
 Customer-driven.
 The importance of level of inventory
 Enough inventory to minimize lost sales but not so much as to have lots of
excess at the end of the selling period.
In the past (56 weeks)
Retailers
Manufacturers
Quick Response
(Short time)
Customers
 Product line:
 The total merchandise mix presented for sale.
 Merchandisers/ Designers when planning lines think in groups rather than
individual styles.
 Categories for merchandisable groups:
 Separate:
 Tops/ bottoms or both items (see Figure 3-1, p.67)
 Coordinates:
 Groups of different products with common characteristics such as style, trim,
colors, etc. (see Figure 3-2, p.68).
 Multi-piece style
 Example: Suits
 Related separates:
 Displayed and sold like a separates line but has even more coordinating
potential because of common colors and materials.(See Figure 3-3, p.68)
 Merchandising responsibilities:
 Merchandising taxonomy detailing planning, developing,
and presenting a product line (see Figure 3-6, p.75)
Line planning
Line Development
Line presentation
 Line planning:
 guides, defines, and limits the line by evaluating merchandise mix
and forecasting.
 Look at last seasons sales at same selling period.
 Review current market information
 Brainstorm for new ideas
 World market shopping.
 Planning merchandise budgets by:
 Looking at last years sales and plan for sales increase/decreases.
 Take into consideration new accounts and current retail relationships.
 Talk with buyers on their projected buying % for the upcoming selling
period.
 Example: See Figure 3-7, p. 78.
 Planning merchandise assortments based on budgets:
 A balanced assortment matches the assortment plan to customer
demand.
 Assortment balance is based on the model stock plans that
identify SKU (number of Stock Keeping Units).
 SKU = Number of Styles x Number of Sizes x Number of Colors
Number
of
Styles
Number
of
Sizes
Number
of
Colors
 Assortment:
 Range of choices offered, usually defined by:
 Style + Size + Color
 Assortment variety:
 Total number of unique items that must be produced to satisfy the design plan
 Assortment volume:
 Number of units that must be sold to achieve planned sales
 Assortment diversity:
 Is measured by Volume per SKU (VSA) for the assortment.
 Example: 5 or less means losing sales.
 Assortment distribution:
 Allocation of volume broken down by style, size, and color.
 Analyze and update merchandise plans when conditions change in
the market, merchandising plans must be adjusted.
 Example: see Figure 3-9, p. 81
 Example (Assortment plans):
 p.77 Case 3-1 Cartwheels and Figure 3-9
 Assortment plan A, B, and C are suggested for different square feet: 150,
100, and 50.
 Given numbers:
 Average price for tops :$20
 Planned annual volume: $12,500
 Distribution of sales: Spring (15%), Summer (10%),BTS (60%), and
Holiday (15%).
 BTS volume: $12,500 x 60%= $7,500 ($7500/$20=375 units)
 BTS VSA (Volume per SKU for an assortment): 375 units /120 SKU = 3.13
 See Assortment plan C
 Variety (120 SKU) = 4 styles x 6 sizes x 5 colors.
 Number of styles, sizes, colors (factors) are based on last year record.
 4 Styles (%), 40% +30%+20%+10% =100%
 Table 3-1 volume per assortment factor
 Style1: 40% x 375 =150 units per style
 Size3 (Size 8, sold well last year): 36% x 375= 135 units per size
 Table 3-2 Volume per SKU, Style 1 (150 units)
 See column Color 1, Size 1:
 150 units (style 1) x 9% x 35% =4.725 = 5
 Line development:
 Includes all processes required to translate a line plan into real
merchandise.
 Line concept:
 First phase, determining the look and appeal that establishes identity and
salability.
 Current issues, fashion trends
 Inspiration/Concept board.
 Product development:
 The design and engineering required to make products salable and
producible.
 Apparel product development (2 phases)
 1) Creative design- focus on creativity and formation of merchandisable
groups
 2) Technical design- perfecting the style, fit, patterns, also including
specs and costing.
 Line presentation
 Wholesale level:
 Line preview- Sales reps see the line and become inspired with its sales
potential.
 Line release- must coincide with market dates, target date for showing to
buyers.