Page 221 - DMGT554_RETAIL_BUYING

Retail Buying

Notes (effect of the dissemination). Although buyers and merchandiser, and the fashion directors in
stores that deal primarily with fashion merchandise, are totally knowledgeable in terms of the
products they buy, those who interface with consumers do not necessarily have the same
understanding. In the various retail outlets all over the world, while those at the store level, in
particular, are concerned with managing their outlets or departments, or selling to consumers,
their product knowledge is often at a minimum.

Example: If you have ever gone shopping and asked a sales associate for information
about a product, it is possible that the experience has been less than enlightening. Sales associates
are sometimes few in number, and when they are there to serve the shoppers, they often are less
knowledgeable than those making the inquiries, not only do the salespeople lack this information,
but often so do the store manager and department managers. These managers are more concerned
with setting employee schedules, handling customer complaints, helping reassign floor space,
and generally managing their particular units. It is the buyer’s job to help the sales personnel
understand the products on the selling floor.

Information is of utmost importance in the operation of every market, including, recently
emerged, online markets for products and services. Market participants utilize available and
relevant information to decide upon their actions and improve their welfare by trading and
consuming resources. An important component of all information that market participants
utilize, is information that pertains directly to the products and services that are traded. Indeed,
it has been claimed that the real economic impact of the Internet goes well beyond online sales.
The World Wide Web offers an unprecedented opportunity to product manufacturers and service
providers to thoroughly and to cost-effectively inform consumers about the details of new
service and product offerings, regardless of whether the sales take place over physical or electronic
channels.
Buyers of products and services require comprehensive and timely information to decide between
multiple options and sellers disseminate product information to attract those buyers that are
willing to pay more for their products. Often, market intermediaries exist, whose function is to
coordinate the bidirectional transfer of information between sellers and buyers.
The second finding is that today’s higher consumer information endowment does not impact all
classes of consumers and all types of products in the same way. We shall see that higher consumer
information endowment asymmetrically favors consumers that are very “sensitive” about their
ideal product or service, over consumers who tend to be more price sensitive.

Notes Higher consumer information endowment asymmetrically favors differentiated
and “premium” product offerings over their mass-market counterparts.
The latter fact will likely have profound implications for the types of products that will dominate
tomorrow’s markets. Product information is separated, conceptually, into a horizontal and
vertical component. The horizontal component of product information pertains to the product
and service features that are especially sensitive to consumer tastes and preferences. The vertical
component of product information is related to product and service features on which most
buyers would easily agree on what is good and what is not.

Example: The departure time of an air-flight is a horizontal product attribute, since a
flight that leaves in the afternoon is no better or worse than a flight that leaves in the morning,
based only on this attribute; different travellers would prefer the one that better fits their own
schedule. The information that airlines disseminate about this attribute is thus characterized as
“horizontal”.

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