Contents

What is Retail?............................................................................................................ 3
Who are Retailers?...................................................................................................... 3
What is Retail Management?...................................................................................... 3
Types of Products in Retail?........................................................................................ 4
What is Supply Chain?................................................................................................ 4
Retail Outlets Types?.................................................................................................. 5
What is Pricing?.......................................................................................................... 6
What is Margin?.......................................................................................................... 6
What is Unit?.............................................................................................................. 7
What is Base Down Pricing?....................................................................................... 7
What is Price Discrimination?..................................................................................... 7
What is Retail Price Discrimination?...........................................................................7
What are Coupons?.................................................................................................... 8
What is Demand Optimization?.................................................................................. 8
What are discounts and allowances?..........................................................................8
What are Cash Discounts and Trade Discounts?.........................................................9
What is Retail Pricing?................................................................................................ 9
What is Mark Down Price?.......................................................................................... 9
What is Mark Up Price?............................................................................................... 9
What is Pantry Loading?........................................................................................... 10
What is SKU?............................................................................................................ 10
What are INCOTERMS?............................................................................................. 10
What is FOB?............................................................................................................ 11
What is CIF?.............................................................................................................. 11
What is CFR?............................................................................................................ 11
What is DAF?............................................................................................................ 12
What is DAP?............................................................................................................ 12
What is FCA?............................................................................................................ 12
What are Promotions?.............................................................................................. 12
What are Discounts and allowances?.......................................................................13
What is Forecasting?................................................................................................ 13
What is Price Elasticity?............................................................................................ 14
What is Competitor Pricing?..................................................................................... 14
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What is Margin Analysis?.......................................................................................... 14

What is Price Per Unit?.............................................................................................. 15

What is Retail?

The sale of good and services to an end user

The sale of goods to the public in relatively small quantities for use
or consumption rather than for resale.

Who are Retailers?

Retailers are a part of an integrated system called the supply chain

A retailer purchases goods or products in large quantities
from manufacturers directly or through a wholesale, and then sells
smaller quantities to the consumer for a profit.
Retailing can be done in either fixed locations like stores or
markets, door-to-door or by delivery
The term "retailer" is also applied where a service provider services
the needs of a large number of individuals, such as for the public
Walmart, Tesco, Big Bazaar, Twenty Four Seven etc. are all retailers
A business or person that sells goods to the consumer, as opposed
to a wholesaler or supplier, who normally sell their goods to
another business.

What is Retail Management?

A process of promoting greater sales and customer satisfaction by

gaining a better understanding of the consumers of goods and
services produced by a company.
Retail management strategy for
a manufacturing business might research the retail process that
distributes the finished products created by the business to
consumers to determine and satisfy what buyers want and require.

Types of Products in Retail?

Food products: They require cold storage facilities.

Hard goods or durable goods:

automobiles, appliances, electronics, furniture, sporting goods,
lumber, etc., and parts for them are Hard Goods. Goods that do not
quickly wear out and provide utility over time.

Soft goods or consumables : Such as clothing

other fabrics, footwear, cosmetics, medicines and stationery. Goods
that are consumed after one use or have a limited period (typically
under three years) in which you may use them.

Arts: Contemporary art galleries, Bookstores, Handicrafts, Musical

instruments, Gift shops, and supplies for them.

What is Supply Chain?

It is the process or a sequence of processes involved in the

production and distribution of a commodity.

A supply chain is a system of organizations, people, activities,

information, and resources involved in moving a product or service
from supplier to customer

Retail Outlets Types?

Department store: Department stores are very large stores offering

a huge assortment of "soft" and "hard goods often bear a
resemblance to a collection of specialty stores. A retailer of such
store carries variety of categories and has broad assortment at
average price. They offer considerable customer service.
Discount store: Discount stores tend to offer a wide array of
products and services, but they compete mainly on price offers
extensive assortment of merchandise at affordable and cut-rate
prices. Normally, retailers sell less fashion-oriented brands.
Warehouse store: Warehouses that offer low-cost, often highquantity goods piled on pallets or steel shelves; warehouse
clubs charge a membership fee.
Specialty store: A specialty store has a narrow marketing focus either specializing on specific merchandise, such as toys, shoes, or
clothing, or on a target audience, such as children, tourists, or
oversize women. Size of store varies - some specialty stores might
be retail giants such as Toys "R" Us, Foot Locker, and The Body
Shop, while others might be small.
Boutique or concept stores are similar to specialty stores. Concept
stores are very small in size, and only ever stock one brand. They
are run by the brand that controls them. An example of brand that
distributes largely through their own widely distributed concept
stores like Loccitane. The limited size and offering of L'OCCITANE's
stores are too small to be considered a specialty store proper.
General store: A general store is a rural store that supplies the main
needs for the local community
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Convenience store: A convenience store provides limited amount of

merchandise at more than average prices with a speedy checkout.
This store is ideal for emergency and immediate purchases as it
often works with extended hours, stocking everyday

What is Pricing?

Pricing is the process of determining what a company will

receive in exchange for its product or service.
Pricing factors are manufacturing cost, market place,
competition, market condition, brand, and quality of product.
Pricing is also a key variable in microeconomic price allocation
theory. Pricing is a fundamental aspect of financial
modeling and is one of the four Ps of the marketing mix.
The other three aspects are product, promotion, and place.
Price is the only revenue generating element amongst the four
Ps, the rest being cost centers.
However, the other Ps of marketing will contribute to
decreasing price elasticity and so enable price increases to
drive greater revenue and profits.

What is Margin?

Gross margin is the difference

between revenue and cost before accounting for certain other
costs.
It is calculated as the selling price of an item, less the cost of
goods sold
In economics, a margin is a set of constraints conceptualized as
a border.
A marginal change is the change associated with a relaxation
or tightening of constraints either change of the constraints, or
a change in response to this change of the constraints.

An extensive margin corresponds to the number of usable

inputs that are in some sense employed.

Ex: Hiring an additional worker would increase an extensive

margin.
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An intensive margin corresponds to the amount of use

extracted within a given extensive margin.

Ex: Reducing required production from a given set of workers

would decrease the intensive margin.

The purpose of margins is "to determine the value of incremental

sales, and to guide pricing and promotion decision

Gross Margin (%) = (Revenue Cost of goods sold) / Revenue

What is Unit?

Every business has its own notion of a 'unit,' ranging from a ton
of margarine, to 64 ounces of cola, to a bucket of plaster.

Many industries work with multiple units and calculate margin

accordingly.

Marketers must be prepared to shift between varying

perspectives with little effort because decisions can be rounded
in any of these perspectives.

What is Base Down Pricing?

It is typically for clearance at the end of a season, or to sell off

obsolete merchandise at the end of its life
Ex: Clearance Sales in certain stores
The timing and level of markdowns in a selling season is critical to
maximizing return on sales.

What is Price Discrimination?

Price discrimination or price differentiation is a pricing

strategy where identical or largely similar goods or services are
transacted at different prices by the same provider indifferent
markets or territories.
Price differentiation is distinguished from product
differentiation by the more substantial difference in production
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cost for the differently priced products involved in the latter

strategy.
Price differentiation essentially relies on the variation in the
buyers willingness to pay.

What is Retail Price Discrimination?

Price for which manufacturers of goods to sell their products to

similarly situated retailers at different prices based solely on the
volume of products purchased.

What are Coupons?

The use of coupons in retail is an attempt to distinguish

customers by their reserve price.
The assumption is that people who go through the trouble of
collecting coupons have greater price sensitivity than those who
do not.
Ex: Making coupons available enables, for instance breakfast
cereal makers to charge higher prices to price-insensitive
customers, while still making some profit off customers who are
more price-sensitive.

What is Demand Optimization?

Demand optimization is the application of processes and tools to

maximize return on sales.

It usually involves the application of mathematical modeling

techniques using computer software.

It has particular applications in retail, where merchants wish to

identify the best combination of price and promotion to achieve
desired sales, gross margin, inventory or market share objectives.

What are discounts and allowances?

Discounts and allowances are reductions to a basic price of goods or

services.

They can occur anywhere in the distribution channel, modifying

either the manufacturer's list price (determined by the
manufacturer and often printed on the package), the retail price (set
by the retailer and often attached to the product with a sticker), or
the list price (which is quoted to a potential buyer, usually in written
form).

There are many purposes for discounting:

Some of these include: to increase short-term sales, to move out-ofdate stock, to reward valuable customers, to encourage distribution
channel members to perform a function, or to otherwise reward
behaviors that benefit the discount issuer.

Some discounts and allowances are forms of sales promotion.

What are Cash Discounts and Trade Discounts?

Trade Discounts:
These are deductions in price given by the
wholesaler or manufacturer to the retailer at the list price or
catalogue price.

Cash Discounts:
These are reductions in price given by the creditor to the
debtor. These discounts are intended to speed payment and
thereby provide liquidity to the firm.

What is Retail Pricing?

The pricing technique used by most retailers is cost-plus pricing.

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Cost plus pricing involves adding a markup amount (or percentage)

to the retailer's cost.

Another common technique is suggested retail pricing. This simply
involves charging the amount suggested by the manufacturer and
usually printed on the product by the manufacturer.

What is Mark Down Price?

Temporary reduction in the selling price of an item to stimulate

its demand or to drive a competitor out of the market. Permanent

markdowns are created to remove a slow-selling item from the inventory.

A reduction in price, usually to encourage buying.

The amount by which a price is reduced.

Ex: Seasonal Discounts, Year- end Sales and also sometimes clearance
sales in certain stores

What is Mark Up Price?

Markup is the difference between the cost of a good or service and its selling

price
A markup is added onto the total cost incurred by the producer of a good or

service in order to create a profit

The total cost reflects the total amount of both fixed and variable expenses to
produce and distribute a product. Markup can be expressed as a fixed amount
or as a percentage of the total cost or selling price.
Markup = Sale price Cost

1. What is Cost Plus Pricing?

Cost-plus pricing pricing strategy is the application of absolute or percentage

mark-up on the cost price of a product to determine the selling price.

Firms may achieve profit maximization by increasing their production until
their marginal revenue equals their marginal cost, then charging a price
determined by the demand curve on the cost

Cost-plus pricing is also known as mark-up pricing where

Cost + mark-up = selling price.

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What is Pantry Loading?

When a product is bought in bulk and sold in different phases

Each phase cycle could be dependent on several factors such

as the market strategies

The supplier sells the product at a much reduced price than is

expected

The promotional activities related to the product are carried out

in different phases called as stage promotions

What is SKU?

SKU: Stock Keeping Unit

The measure of the quantity or stock of a product is called as

SKU

What are INCOTERMS?

The INCOTERMS are the International Commercial Terms

International

These are a series of pre-defined commercial terms published

by the International Chamber of Commerce (ICC)

The Incoterms rules are intended primarily to clearly

communicate the tasks, costs, and risks associated with the
transportation and delivery of goods.

Ex: Governments, legal authorities, and practitioners worldwide

accept these rules for the interpretation of most commonly
used terms in international trade.

These are intended to reduce or remove altogether

uncertainties arising from different interpretation of the rules in
different countries. As such they are regularly incorporated into
sales contracts worldwide.
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What is FOB?

FOB: Free On Board(Named port of Shipment)

The seller pays for transportation of goods to the port of

shipment, loading cost.

The buyer pays cost of marine freight transportation, insurance,

unloading and transportation cost from the arrival port to
destination

The passing of risk occurs when the goods are in buyer

account. The buyer arranges for the vessel and the shipper has
to load the goods and the named vessel at the named port of
shipment with the dates stipulated in the contract of sale as
informed by the buyer.

What is CIF?

CIF: Cost, Insurance and Freight

Seller must pay the costs and freight to bring the goods to the
port of destination.

Risk is transferred to the buyer once the goods are loaded on

the vessel. Insurance for the goods is included

What is CFR?

CFR: Cost and Freight

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Seller must pay the costs and freight to bring the goods to the
port of destination.

This is similar to CIF but the Insurance is not included

Risk is transferred to the buyer once the goods are loaded on

the vessel. Insurance for the goods is included

What is DAF?

DAF: Delivered at Frontier

This term can be used when the goods are transported by rail
and road.

The seller pays for transportation to the named place of

delivery at the frontier.

The buyer arranges for customs clearance and pays for

transportation from the frontier to his factory. The passing of
risk occurs at the frontier.

What is DAP?

DAP: Delivered At Place

Used for any transport mode or where there is more than one
transport mode involved.

The seller is responsible for arranging carriage and for

delivering the goods, ready for unloading from the arriving
conveyance, at the named place.

Duties are not paid by the seller under this term

What is FCA?

FCA: Free Carrier

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The seller delivers the goods, cleared for export, at a named

place. This can be to a carrier nominated by the buyer, or to
another person nominated by the buyer.

If delivery occurs at the seller's premises, the seller is

responsible for loading the goods on to the buyer's carrier

If delivery occurs at any other place, the seller is deemed to

have delivered the goods once their transport has arrived at
the named place; the buyer is responsible for both unloading
the goods and loading them on to their own carrier.

What are Promotions?

Promotion is one of the market mix elements or features, and a term

used frequently in marketing.

The marketing mix includes the four P's: price, product, promotion, and
place.

Promotion refers to raising customer awareness of a product or brand,

generating sales, and creating brand loyalty.

Promotion is also found in the specification of five promotional mix or

promotional plan. These elements are personal selling, advertising,
sales promotion, direct marketing, and publicity.

A promotional mix specifies how much attention to pay to each of the

five subcategories, and how much money to budget for each.

A promotional plan can have a wide range of objectives, including:

sales increases, new product acceptance, creation of brand
equity, positioning, competitive retaliations, or creation of a corporate
image. Fundamentally, there are three basic objectives of promotion.
These are:

1. To present information to consumers as well as others.

2. To increase demand.

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3. To differentiate a product.
Many times with the purchase of a product there is an incentive like
discounts (i.e., coupons), free items, or a contest. This method is used to
increase the sales of a given product.

What are Discounts and allowances?

Discounts and allowances are reductions to a basic price of

goods or services

Discounting is a form of Promotion

Discounting purpose is to increase short-term sales, to move

out-of-date stock, to reward valuable customers, to
encourage distribution channel members to perform a function,
or to otherwise reward behaviors that benefit the discount
issuer.

What is Forecasting?

Forecasting is the process of making statements about events whose

actual outcomes have not yet been observed.

Ex: Estimation of some variable of interest at some specified future

date. Prediction is a similar, but more general term. Both might refer to
formal statistical methods employing time series, crosssectional or longitudinal data, or alternatively to less formal judgmental
methods.

Usage can differ between areas of application

Ex: In hydrology, the terms "forecast" and "forecasting" are sometimes

reserved for estimates of values at certain specific future times, while
the term "prediction" is used for more general estimates, such as the
number of times floods will occur over a long period.
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Risk and uncertainty are central to forecasting and prediction

Generally considered good practice to indicate the degree of

uncertainty attaching to forecasts.

The data must be up to date in order for the forecast to be as accurate

as possible.

What is Price Elasticity?

Elasticity is a measure of customer sensitivity to changes in

price.

The measure of elasticity comes from modeling the historical

sales data for a product at different price points.

Demand responses to price changes (base and promotion) are

analyzed for every product in every store over time and
sophisticated techniques, such as multi-level aggregation and
multivariate Bayesian regression, are used to interpolate
expected demand at all price levels

What is Competitor Pricing?

A price lower than that offered by the competitors, or a price

made more attractive because of added incentives, such as
longer payment terms.

Competitive Pricing occurs when a company sets a price for a

product based on what its competitors are selling for similar
product.

What is Margin Analysis?

A margin target can be specified for a category or subcategory.

This module responds to cost changes by finding the best items

for price changes and then making recommendations that hit
the specified target with maximum profit

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The contribution margin analysis is also applicable when the tax

authority performs tax investigations, by identifying target
interviewees who have unusually high contribution margin
ratios compared to other companies in the same industry

What is Price Per Unit?

Enforces relational pricing on a per-unit basis so that large

package sizes are appropriately priced relative to small
package sizes.

Includes the ability to configure up-purchase incentives to drive

larger baskets or to improve profitability

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