CTE3431 Product Development Exam 1

What does merchandiser analyze?

-Last year's sales -Planned sales increases as identified in the strategic plan -Anticipated reductions -Targeted first price, volume, and desired margin -Changes in economic conditions/competitive landscape/consumer markets -Requirements of the marketing plan

Merchandising

-Planning, development, and presentation of the product line from concept to delivery -product line: refers to assortment of product categories that a business offers for sale -responsible for line plan, assortment plan, and time and action calendar -determines: content and diversity of the line -fabrications, styling, pricing, timing of the product, development cycle

Product Positioning by Price Point

-determined by understanding the price range the intended target customer is willing to pay -women's wear found in the following price categories

Marketing and Sales

-environmental scan -target market research -competitive scan -sales forecasts -customer support -marketing plan -marketing calendar

Strategic Planning

-envisions a desired future and translates that vision into an action plan that informs decision-making and asset allocation -links concepts related to the target market and product line to the financial goals of the business -must be realistic and achievable, taking into consideration the firm's own core competencies as well as those of its supply chain partners

Licensing agreements used for:

-expand a brand's product mix -expand distribution into a global market -capitalize on the popularity of a proprietary character -partner with another brand to maximize the value of the combined brands -extend the life cycle of a brand -provide exclusive product to a particular retailer

Benefits of PLM

-faster time to market and higher inventory turns -improved cycle times -fewer errors -less scrap and rework -greater design efficiency and better product quality -decreased cost of new product introductions -insights into critical processes -better reporting and analytics -Standards and regulatory compliance -Improved design review and approval processes -Improved communication -Reduced product costs and greater net margin profitability -Better resource utilization -Improved integration and communication -Reduced markdowns

Differential Advantage=Competitive Edge

-lower price (Walmart) -superior quality (Wolford) -unique features/aesthetic (Burberry) -minimal carbon footprint (Patagonia) -unique fit (Wacoal) -Speed-to-marktet ( Zara

Finance

-manage and prioritize budget requests -approve all expenditures -receipt and deposit revenues -internal and external reporting -collaborate in setting sales and profit goals

Inputs of Strategic Plan

-market research -sales history -competitive analysis -environmental scan -profit and loss statements

Advantages of Private Brand Products

-prices usually lower than competing wholesale brands -provide retailers with control over quality and marketing -generally yield higher profit margins -provide retailers opportunity to enhance their brand image/differentiate -cultivates customer loyalty

Business Plan Identifies

-products and/or services that will be offered -analyzes the intended target market and competition -identifies required resources -defines goals for the new business -sets out a budget that identifies the operating capital required for the first few years of business

Information Technology

-select and manage information technology systems -manage interconnectivity -manage access -manage security

Outputs of a Strategic Plan

-the ongoing breadth and depth of product mix -market positioning and competitive advantage -Target Consumer -Channels of Distribution -Brand portfolio and image -Managing investments and growth opportunities -strategic partnerships -corporate culture -commitment to social responsibility -sales and profit goals

Supply Chain Management

-vendor vetting and compliance -manage purchasing of materials -production/delivery calendar -capacity reservation -assign production contracts -component garment testing -quality assurance -manage logistics

Basic Business Functions

1. Marketing and Sales 2. Merchandising 3. Supply Chain Management 4. Information Technology 5. Finance

Competitive Advantage

Attributes that allow an organization to out-perform its competitors -Lowest price -Superior quality -Superior product/product differentiation -Speed to market -Superior service -Selection

Values

a company's core values are what it holds to be important as a business

Branding

a competitive strategy used to distinguish the brand through the development of product, advertising, and promotions

Mission Statement

a part of the DNA of a successful company reflecting the company's heritage by articulating why it is in business, the customer it serves and what makes it special

Wear-testing:

a variation of style testing for which performance is a key criterion of purchasing decisions

Collaborative Supply Chain

an interactive network of manufacturing specialists who join forces operationally to integrate complementary resources to respond to a market opportunity through the creation of a particular product

Moderate

appeals to price-conscious women who prioritize functional, easy-to-care-for apparel

Bridge

between designer and better

Brand Umbrellas

brand portfolios that are transparent or obvious to the final consumer (Gap's divisions with Gap, Old Navy, and Banana Republic)

Seasonal Concept

business and marketing plans, concepts/mood, color palette, and materials/trims/silhouettes

Brand Image

defined by the consumer's assumptions and feelings about products and/or services provided under the brand name

Pull Systems

designers and product developers wait to commit until the last minute so they can collect data about consumer wants/needs

Push Systems

designers/product developers produced products they thought consumers would want and pushed them into the marketplace

Private Brand Products

developed and merchandised for exclusive distribution by a particular retailer -the Gap and Forever 21 sell only private labels

Brand Extensions

expand a brands reach

Licensing Agreements

grant a business partner exclusive rights to produce or sell products under a proprietary brand name

Lifestyle

include additional apparel and accessory categories, perfumes, cosmetics, or home goods

Supply Chain

includes auxiliary business, such as design bureaus software providers, sourcing agents, factors (credit agents), pattern making services, testing labs, consultants, and advertising agencies that play indirect roles companies involved: -designing -supplying material components -manufacturing -distributing apparel

Definition

initial specification, adopted specification, and multichannel specification

Quantitative Research

involves objective methodology in which data are collected about a sample population and analyzed to generalize behavioral patterns (survey)

Business

is an enterprise engaged in commercial, industrial, or professional activities to achieve goals

Market Segmentation

is the process of dividing a market of potential customers into groups, or segments, based on different characteristics. The segments created are composed of consumers who will respond similarly to marketing strategies and who share traits such as similar interests, needs, or locations.

Product Development

is the strategic, creative, technical, production & distribution planning of goods

Haute Couture

legally-protected designation; can only be used by houses registered with French Ministry of Industry

The Line/Range Plan

links strategic planning objectives to creative, technical, and production planning, as well as to sales and marketing goals

Co-branding

links the names of two brand partners in a new, exclusive brand offering

Budget market

lowest possible pricing levels, tends to be available in volume

Brand Portfolios

management of multiple brands by a single company

Line Development

merchandising plans, line boards, material usage, market calendars, and product tracking

Market Research

merchandising team visits retail accounts, communicates with buyers, shops the competition, monitor sales reports and brands social media -works with trend team/creative design team to interpret trends for target customer

Designer Ready-to-Wear (RTW)

most expensive garments that can be bought off the rack

Contemporary

much trendier styling, often more junior fit. Includes tween market

Contemporary Design

offer clothes with a younger vibe and somewhat lower price point than designer RTW

Vision Statement

outlines the organization's goals for the future and how it wants the world to see its brand

Better

priced under contemporary/bridge; targeted to working women desiring well-made, classic apparel

Horizontal Supply Chains

prioritize acquisition or licensing of companies or brands that make or sell similar products -diversification

Wholesale Brands vs. Private Brands

private brand products may be developed by the retailer's in-house team, buyers may purchase a portion of their private brand merchandise from a wholesale product developer, or a large retailer may buy/license the rights to a wholesale brand

Growth Industries

produce products that have not yet saturated the marketplace -Industries for products like hybrid cars, mirrorless cameras, and 3D scanners

Mature Industries

produce products with relatively stable sales from year to year (ex: clothing), high competition

Product Lifecycle Management (PLM)

seasonal concept, line development, definition, sourcing/costing

Vertical Supply Chains

seek to control the processes previously handled by specialized firms so that one conglomerate can perform all steps of production/distribution/both

SKUs

stock-keeping units which identify individual products for individual products for inventory purposes by style, color, and size

Generational Marketing

studies how the values, motivations, and life experiences of a generational cohort shape its purchasing behavior, reach, and market influence

Exclusive Brands

the result of a licensing arrangement between a brand owner and a retail distribution partner, giving the retailer all rights to distribute product under that brand name in a particular product category or categories

Target Market

typically consists of consumers who exhibit similar characteristics (such as age, location, income or lifestyle) and are considered most likely to buy a business's market offerings or are likely to be the most profitable segments for the business to service.

Brand Equity

value that accrues to a brand

Sourcng/costing

vendor collaboration, vendor allocation, multi-sourcing, estimate costing, and quality

Wholesale Brands

wholesale product developers design, produce, and market products under a proprietary label and distribute to retailers or third parties -mass merchants, department stores, specialty stores, etc. frequently carry wholesale brands

Focus Groups

•A carefully-guided discussion between a skilled moderator and members of a select target market •Designed to capture a range of feelings and attitudes about a product or service •Tend to generate more reliable information with older customers as opposed to younger customers

Demographics

•Age •Gender •Family & marital status •Income •Consumer Price Index (CPI) •Religion •Ethnicity Regional Data

Website Engagement

•Alerts customers to a business' mission, vision, goals •Websites designed to sell merchandise - contributes to the democratization of fashion •Can offer a complete selection - more than can be found at any single store - and personalize the shopping experience

Style Testing

•Allows retail buyers, consumers, or both to view early product prototypes and offer opinions. Response will determine whether or not the styles will be produced in quantity for wider distribution

Ethical Fashion

•Apparel designed to be fashionable while respecting environmental and human resources •Consumers may be hesitant to pay more for green products, but are increasingly staying away from products and services with poor ethical reputations •Companies can expect to pay a price for their behavior

Omni-Channel

•Blurring distinctions between online and offline •Internet allows customers to shop brands 24/7, but they still like to touch, feel, and try on apparel before buying •Customers expect stronger and more varied collections from the brands they follow

Athleisure

•Clothes that are appropriate for both athletic and leisure pursuits •Grew from popularity of leggings and need to fit a workout into the activities of a highly scheduled day •Consumers prioritize comfort and buy more items rather than entire outfits

Defining Target consumer

•Companies/brands analyze all collected data about target customers and can use these insights to design products that meet customer expectations

Engaging the Consumer

•Consumers expect information and personalized service before making a purchase •Return to levels of service seen in the past, when shopkeepers knew a customer's name - but done through computer algorithms that greet you when you log into a site, etc. •Technology in brick-and-mortar stores mimicking social media platforms

Importance of Fit

•Consumers repeatedly cite poor/inconsistent fit as their biggest shopping frustration •Other consumers frustrated by the lack of consistency in a favorite brand or between different brands

Assortment Planning

•Defines assortment variety, volume, and distribution - how many fabrics, colors, styles, and sizes are required to meet customer demand •A well-assorted product presentation ensures providing enough product availability without overstocking

Data Mining

•Gathering, assembling, and collating of data about individuals in databases •Automatic replenishment programs predetermine an agreed-upon inventory level that triggers an automatic reorder of stock •Attribute replenishment replaces one item with a different item that has similar characteristics in terms of purpose silhouette, and price •Cookies allow websites to remember users and collect information as to what products they look at / put in their art and at what point they buy.

Surveys

•Involve systematic gathering of information from respondents by communicating with them in person, over telephone, by mail, or through the Internet •Marketers seek to learn more about shopping behaviors, shopping attitudes, product attributes, and demographics •The sample determines who should be studied

Merchandise Planning

•Market Research •The Line or Range Plan •The Time and Action Calendar •Assortment Planning •Line Review •Line Development •Costing •Line Presentation •Production Control

Line Presentation

•Merchandisers must meet with buyers and managers of retail accounts to understand patterns and shifts in consumer preferences •Merchandisers fine-tune the brand's niche in the market in comparison to the competition

Production Control

•Merchandisers work with supply chain management and marketing and sales to issue cut tickets that quantify how many garments to put into production •Production planning links merchandising, creative design, and technical design decisions to the actual construction of products

Costing

•Merchandisers work with supply chain management and marketing and sales to price garments in the line to meet gross margin targets •Bids are studied and production contracts are awarded to companies that can provide acceptable quality and reliable delivery at a fair price •If garment is determined too costly to make, design may be modified, or it may be dropped from the line

Line Review

•Once the line has been developed, it is presented to top-level executives, sales reps, buyers, and sometimes key customers for review •Evaluation ensures that styles with little sales appeal aren't further developed, identifies gaps in the line

Crowdsourcing

•Outsourcing a job once performed by employees through an open call to a large undefined group of people •A company may ask its online community member to vote on a new logo/ad or develop their own home videos advertising a product •Can be used as a means of style testing

Data Collection

•Point-of-sale data •Data mining •Website engagement •Video documentation •Crowdsourcing •Style-testing and wear-testing •Focus groups •Surveys

Psychographics

•Reference Groups •Life Stage •Activities •Personality •Attitudes •Class Consciousness •Motivation

Point-of-Sale Data

•Relies on use of software, scanners, and universal product codes (UPCs) to capture transactional data about individual purchases •Also tracks how purchases are paid for, average price at which a given product sells, key selling seasons, and returns •Can be aggregated by store, zip code, city, state, and region

Global Brand

•Specialty retailers have a physical global presence, while other global brands are available on curated websites •The brand pie at any given price point is being divided into smaller and smaller slices

Line Development

•Technical design team is responsible for the tech package, which specifies the colors, fabrics, notions and trims, garment construction, measurements, and material and garment testing required for each style •Technical designers provide technical sketches or flats that serve as a visual reference for the desired product

New-Era Marketing

•Television and print ads are expensive and have increasingly less impact on customers' purchasing decisions •Consumers have more control - fast-forwarding through television ads or using ad-blocking software on the computer •Most prefer informational sources - website content, Twitter feeds, engagement on social media, videos, blogs, and customer reviews

Benchmark Brands

•brands that are considered best of class at a particular level of competition

Aspirational brands

•higher-priced brands from which a firm takes inspiration because its target audience admires the label

Qualitative Research

•is more subjective and relies on methodologies such as observation and case studies in which experiences are recorded as a narrative to describe observed behaviors within the context of environmental factors (focus group)

Showrooming

•when a customer sees an item on a shopping trip but purchases it online •Customer may choose to return an item in-store, order online and pick up in-store, or shop at a store and have it delivered