Key Terms
Retailing
Selling goods and services to consumers; the final channel link. Intermediary: company acting as liaison between buyer a
Distribution channel
The set of businesses that move a product from manufacturer to end user.
Intermediaries
Companies that act as liaisons between buyer and seller. They add value by moving products efficiently through the chann
Omnichannel strategy
Manufacturer uses multiple distribution channels.
TWO MAIN CATEGORIES
Store and Non-Store
THREE CORE STRATEGY DECISIONS
Pricing, Location, Merchandise
Markup
The additional amount added to the purchase price. Formula:
Keystone pricing
Doubling the wholesale price. Common default; typical retail markup is around 50%.
Original markup
The markup set at the beginning, based on planned sales and overhead.
Maintained markup
The actual markup realized on goods sold. Lower than original markup because of markdowns and unsold inventory.
Markdown
A price reduction for end-of-life or end-of-season inventory. Goal is to at minimum recover the cost of goods.
Gross margin
Net sales minus cost of goods sold. Expressed as a percentage.
Merchandise
The goods offered for sale by a retailer.
Category management
Grouping similar products into categories based on consumer usage. Allows centralized buying across store locations; red
Wholesaling
Buying goods in bulk at a discount from a manufacturer or channel member and selling them to retailers at a higher price