Week 8.2 - Product Assortment & Pricing

Week 8.2 - Product Assortment & Pricing

1. Assortment considerations

   • margins pr. m2
   • store traffic
   • enhance store brand + differentiation
   • stimulate targeted shopping motives + impulse buying

2. Financial evaluation

   • Gross margin ROI: Gross profit / avg. inventory costs
   • Direct product profit (DPP) + trafic building
     • 1. Dead wood: rethink/reject
     • 2. Profit builders: promote but space contraint
     • 3. Star lines: best location + space increase
     • 4. traffic builders: increase margin + constrain space

3. Macro & Micro

   • Micro: Categories -> product lines
   • Macro: store level/departments/width

4. assortment within/across categories

   • across categories: assortment profile, retail concepts etc.
   • within categories: mix+promotion, space allocation etc.

5. Private label

   • From no-frills to premium label
   • Can differentiate, build loyalty, improve brand, increase margins, reduce bargaining power etc.
   • Strategy implication
     • defensive/offensive application
     • price/quality application

6. Pricing decision:

   • consumer search + price sensitivity
   • firm characteristics and strategy
   • Market characteristics
   • HILO pricing
   • EDLP