CH13 Buying Merchandise

trust

A belief that a partner is honest (reliable, stands by its word, sincere, fulfills obligations) and benevolent (concerned about the other party's welfare).

exclusive brand

A brand developed by a national brand vendor, often in conjunction with a retailer, and sold exclusively by the retailer.

copycat branding

A branding strategy that imitates the manufacturer brand in appearance and trade dress but generally is perceived as lower quality and is offered at a lower price.

premium store brand

A branding strategy that offers the consumer a private label at a comparable manufacturer-brand quality, usually with a modest price savings.

wholesale market

A concentration of vendors within a specific geographic location, perhaps even under one roof or over the Internet.

manufacturer's brand/national brand

A line of products designed, produced, and marketed by a vendor. Also called a national brand.

green

A marketing strategy that promotes environmentally safe or beneficial products or services.

chargeback

A practice used by retailers in which they deduct money from the amount they owe a vendor.

family brand/umbrella brand

A product's brand name associated with the company's name.

co-op (cooperative) advertising

A program undertaken by a vendor in which the vendor agrees to pay all or part of a promotion for its products.

copyright

A regulation that protects original works of authors, painters, sculptors, musicians, and others who produce works of artistic or intellectual merit.

buyback/liftout/stocklift

A strategy vendors and retailers use to get products into retail stores, either when a retailer allows a vendor to create space for goods by "buying back" a competitor's inventory and removing it from a retailer's system or when the retailer forces a vendor to buy back slow-moving merchandise.

Tariff/duty

A tax placed by a government upon imports. Also known as duty.

tradeshow

A temporary concentration of vendors that provides retailers opportunities to place orders and view what is available in the marketplace; also known as a market week.

commercial bribery

A vendor's offer of money or gifts to a retailer's employee for the purpose of influencing purchasing decisions.

tying contract

An agreement between a vendor and a retailer requiring the retailer to take a product it does not necessarily desire (the tied product) to ensure that it can buy a product it does desire (the tying product).

resident buying office

An organization located in a major buying center that provides services to help retailers buy merchandise.

trademark

Any mark, work, picture, or design associated with a particular line of merchandise or product.

reverse auction

Auction conducted by retailer buyers. Known as a reverse auction because there is one buyer and many potential sellers. In reverse auctions, retail buyers provide a specification for what they want to a group of potential vendors. The competing vendors then bid down the price at which they are willing to sell until the buyer accepts a bid.

slotting allowance

Fee paid by a vendor for space in a retail store. Also called slotting fee.

markdown money

Funds provided by a vendor to a retailer to cover decreased gross margin from markdowns and other merchandising issues.

counterfeit merchandise

Goods that are made and sold without permission of the owner of a trademark, a copyright, or a patented invention that is legally protected in the country where it is marketed.

strategic relationship

Long-term relationship in which partners make significant investments to improve both parties' profitability.

diverted merchandise

Merchandise that is diverted from its legitimate channel of distribution; similar to gray-market goods except there need not be distribution across international boundaries

gray-market goods/parallel imports

Merchandise that possesses a valid U.S. registered trademark and is made by a foreign manufacturer but is imported into the United States without permission of the U.S. trademark owner.

subbrand

Part of a branding strategy in which a product's brand name is associated with the description of the product, such as Frosted Flakes, where the family brand is Kellogg's.

private-label brands/store brands

Products developed and marketed by a retailer and only available for sale by that retailer. Also called store brands.

intellectual property

Property that is intangible and created by intellectual (mental) effort as opposed to physical effort.

fair trade

Purchasing practices that require producers to pay workers a living wage, well more than the prevailing minimum wage, and offer other benefits, like onsite medical treatment.

exclusive dealing agreement

Restriction a manufacturer or wholesaler places on a retailer to carry only its products and no competing vendors' products.

blank market

The availability of merchandise at a high price when it is difficult or impossible to purchase under normal market circumstances; commonly involves illegal transactions.

green sheen/greenwashing

The disingenuous practice of marketing products or services as being environmentally friendly with the purpose of gaining public approval and sales rather than actually improving the environment.

generic brand/ house brand

Unbranded, unadvertised merchandise found mainly in drug, grocery, and discount stores.

corporate social responsibility (CSR)

Voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations and the concerns of its stakeholders.