Thursday 22 August 2013

ML0011–Buying and Merchandising


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Summer-2013
Master of Business Administration- MBA Semester 1
ML0011–Buying and Merchandising-4 Credits
(Book ID: B1762)
Assignment (60 Marks)
Note: Answer all questions (with 300 to 400 words each) must be written within 6-8 pages. Each Question carries 10 marks 6 X 10=60
Q1. Explain the various principles of an ideal merchandising giving suitable examples for each?
Ans. Merchandising
Merchandising is a term used in marketing to denote all those sales- promotion activities that aim to generate the customer’s interest in the product or service other than conventional press and television advertising, direct mail or the use of PR. The purpose of merchandising is to bring product and customer into the closest possible proximity in order that the attributes of the merchandise may become fully apparent and, in effect, sell them.

Q2. Enumerate the category management strategies that are used by retailers to ensure a smooth category management process.
Ans. Category management
Marketing strategy in which a full line of products (instead of the individual products or brands) is managed as a strategic business unit (SBU). It is based on the concept that a marketing manager is better able to judge consumer buying patterns and market trends by focusing on the entire product category.

Q3. Discuss the concept of open-to-buy system. How do you calculate open-to-buy for the past and current period?
Ans. Good inventory control is critical to ensuring an adequate level of stock is on hand for the amount of sales being generated. Having too much inventory (or the wrong type) during certain periods can slow your cash flow and reduce profits with too many markdowns. On the other hand, if you under buy and miss sales opportunities then you are not making your potential profit. A retailer can be sure to stock the right amount of the right products at the right time by using an Open-To-Buy (OTB) plan.

Q4. Enumerate some merits and demerits of Formal Buying Organization, Informal Buying Organization, Centralized Buying & Decentralized Buying along with diagrammatic representation of functions and attributes of the buying department.
Ans. Both types of structures exist within most companies. The advantages and disadvantages of each will only really become apparent if there isn't a good balance between them.
Informal structures sometimes arise because the formal structure does not meet the business requirements - also, where the two conflict problems can arise. e.g. the leader of the informal organization may not lead the formal organization.

Q5. Enumerate the first 5 steps in Merchandise Buying and Handling Process.
Ans. The first step in the merchandise purchasing process deals with determining the type of channel to be used for purchasing each line of merchandise. The retailer can consider different sources of supply: raw-resource producers, manufacturers, wholesalers and resident purchasing offices.
The second step in the merchandise purchasing process involves contacting the various sources of supply. Both the vendor and the retailer can initiate the contact process.

Q6. ‘Selecting an appropriate vendor is the key step in the success of an enterprise’.
Ans. 1. Analyze the Business Requirements
The first task that the vendor selection team needs accomplish is to define, in writing, the product, material or service that you are searching for a vendor. Next define the technical and business requirements. Also, define the vendor requirements. Finally, publish your document to the areas relevant to this vendor selection process and seek their input. Have the team analyze the comments and create a final document. In summary:
Ø  Assemble an Evaluation Team
Ø  Define the Product, Material or Service
Ø  Define the Technical and Business Requirements
Ø  Define the Vendor Requirements
Ø  Publish a Requirements Document for Approval

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