Hnd Retail Management
Discuss how the objectives of the business influence the choice of stock management approaches.
INCREASED SALES AND PROFIT MARGINS
Explain the possible sources of information for stock management
PAST RETAIL SALES
These are appropriate for stock management as they can see which products are preferred and how well they are doing. It can also help by giving Veggie Rocks the data for what consumers may want next month, therefore helping to improve future sales.
Sales are a major objective for any company. Veggie Rocks needs to maximise its sales and by doing this will generate profit. Profit can help the company undergo new training and development to improve sales figures.
MINIMISING STOCK LEVELS AND COSTS
Holding stock can be expensive for any company, and by keeping levels low we can benefit from cheaper insurance, security and maximising warehouse space.
MAXIMUM CUSTOMER SATISFACTION
By performing surveys and questionnaires, Veggie Rocks can find out information from consumers about their visits to departments which have had negative feedback (if any).
EFFECTIVENESS OF SECURITY
Veggie Rocks needs to provide a high level of customer service and provide customers with what they want/need. If successful the customer will pass on their good experience and in turn may create extra customers for Veggie Rocks. .
This can help to prevent theft in store by customers and staff. We have to take certain measures to prevent this such as: – Installing CCTC in and around the premises – Don’t leave items from deliveries unattended – Perform regular stock checks – Train staff about security systems, disciplines and procedures.
Explain the possible approaches to forecasting customer demand The product life cycle is an important concept in marketing. It describes the stages a product goes through from when it was first thought of until it finally is removed from the market. Not all products reach this final stage. Some continue to grow and others rise and fall. The main stages of the product life cycle are: – researching, developing and then launching the product.
GROWTH – when sales are increasing at their fastest rate.
MATURITY – sales are near their highest, but the rate of growth is slowing down.
DECLINE – final stage of the cycle, when sales begin to fall.
Companies, find it extremely difficult to predict how quickly their revenues will grow. They often end up being over-optimistic and are often disappointed with actual sales results. Another limitation of forecasting is Unforeseen Events. When the unexpected happens, as it often does in business, a company’s revenues and profit are affected. A food manufacturer’s margins could be impacted by bad weather causing damage to the harvests, and this results in higher cost of ingredients. Spikes in the price of oil affect all companies that transport a high volume of goods or companies that consume enormous quantities of fuel. Companies can be hit with unforeseen investigations from members of the public. These factors are difficult if not impossible to plan for. Explain the trade-offs required in balancing stock with customer requirements One trade off used in balancing stock is, if we keep less stock in our shop, then we may find that we have a shortage for customer demand. If this was to happen we would therefore lose sales for that product and that sale would possibly go a competitor. Another trade off would be losing some of the profit for the product in demand. As by keeping the product at higher levels, this will incur more costs to the business, as to hold extra stock, the companies insurance premium will rise.
Time series analysis is a collection of observations (Data) obtained through repeated measurements over time. Measuring the value of retail sales each month of the year would comprise a time series. This is because sales revenue is well defined, and consistently measured at equally spaced intervals. Data collected irregularly or only once are not time series. Market research consists of testing the market to determine the acceptance of a particular product or service, especially amongst different demographics. It is used to establish which portion of the population will, or does purchase a product, based on age, gender, location, income level and many other variables. Market research allows companies to learn more about past, current and potential customers, including their specific likes and dislikes. A limitation of forecasting is that we may not have enough data. The accuracy of a forecast depends on the quality of the data we use. A company entering a new market space does not have any historical data on which to base their forecasting/information.