Harper Adams University College
Beijing University of Agriculture
Food Quality and Retail Management
Module Title: Retail Buying
Assignment Title: The application of modern management concepts to Retail Buying and their use in developing a Competitive Advantage.
Module Tutor: Richard Taylor
Date: 10th December 2013
Word Count: 2485 without references
In today’s highly competitive markets retailers evaluate all opportunities and possibilities to present the right product at the right price with the right promotional support in the right place. Category Management (CM), Efficient Consumer Response (ECR) and Consumer Relationship Management (CRM) are concepts that have been embraced by Retail Buyers and Retail Buying. To begin with, CM is a retailing concept to help retailers increased value to the end consumer and then increase customer loyalty, and it is also belong to ECR; ECR is managerial approach which helps retailers and suppliers to implement more efficiency, and CRM is a strategic concept used by retailers and suppliers to gain a mass of data about consumers. Even though they all have own benefits, they still have limitations. For instance, CM is difficult to apply only by retailers; ECR must grasp consumers’ expectation very accurately and CRM is a kind of investment with high costs and risks. Therefore, it is better to apply them three together. 1.0 Introduction
In recent years, business competition has been more serious and information exchange has become more significant. Modern management concepts play an important role for retail buying. The aim of this report is to introduce performance of Category Management (CM), Efficient Consumer Response (ECR) and Consumer Relationship Management (CRM) strategy. It is divided into two major sections. To begin with, section one will critically assess the strategic importance of these concepts for both large retailing organizations and their suppliers, such as benefits, development and barriers. Section two will use Tesco as an example to illustrate the use of these concepts and they development of competitive advantages, such as the successful use of Club card through CRM. 2.0 Category Management (CM)
2.1 The Developing Concepts of CM
In recent years, CM has become an important practice in enhancing business results by focusing on delivering increased value to the end consumer (Dupre and Gruen, 2004). CM forms a platform for developing sustainable competitive advantage based on the ability to market the right products in the right way to satisfy the fast-changing needs of a highly complex consumer market (Arto and Rami, 2006). Figure 1 illustrates the process of CM. Figure 1. Category Management Process
(Source: ECR Europe, 1997)
2.2 The Use of CM
In general, CM is widely used in situations where a number of suppliers are competing for the same shelf-space and category manager determine the layout in store; Moreover, it is also useful for retailers to decide on the margin structure for different categories and price segments based on the profitability goals. In addition, CM is useful for one category to achieve promotion schemes during different times of a year as well as deciding the advertising and merchandising display strategy (Chiplunkar, 2011). 2.3 The Importance of CM
2.3.1 Benefits of CM
The strategy of CM is very important and efficient. It aims not only to meet consumers’ needs, but also helps retailers and suppliers to occupy the market efficiently. To begin with, CM is not only concerned with the role of the whole product category in the retail outlet and the contribution a category makes to the strategic positioning of the retail brand identity, but also looks at the detail of the product’s stock keeping units (SKU) ‘members’ within the category (Varley, 2001). CM enables a retailer to micro manages its shelf space allocation to each SKU and space allocated to...
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