Week 2 Discussion

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Bellevue University *

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210

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Marketing

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Feb 20, 2024

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This week's case study will review the Pricing Strategy concepts you learned and practiced last week. Calculating sell-thru allows businesses and managers to determine the percentage of units sold compared to the total amount originally on hand. Calculating penetration of product styles, product types, vendors, etc., allows managers to identify and reorder best sellers, and to take action to address slow- selling, less-profitable products. What ultimately influences results are the actions that businesses take based on analysis of the information gathered from the data and the thought processes used to make decisions. Instructions Use the information below to answer the questions that follow:  The buyer ordered 1,200 units of sweaters and planned for a 35% sell-thru in the first month  All 1,200 units were received in the stores 4 weeks ago  The current inventory report shows 400 units of the sweater on-hand  Of the 1,200 units, the sell-thru on cardigans was the highest, and the stores in colder climates sold more sweaters during the first four weeks  The buyer purchased the sweaters from several different vendors; total sales in the sweater category for the month were $48,000 o Vendor A - $19,650 o Vendor B - $18,900 o Vendor C - $9,450 In 250-350 words, answer the following in your discussion post: 1. 1. Calculate the sell-thru of the sweater and show your work 2. Calculate the penetration rate for each of the vendors 3. Analyze the above scenario to explain the following:  How does the sell-thru compare to the buyer's plan?  What can the sell-thru data tell the buyer?  What can the penetration rate tell the buyer?  Why is it important to know which stores are trending up/down in sales?  How should the buyer respond to the sell-thru and penetration data?  What other information would the buyer want to know in order to make wise business decisions in responding to this sales report? 1) To calculate the sell-through percentage, we need to divide the units sold by the beginning inventory and multiply by 100% to make it a percentage. Sell-Through % = (Number of units sold/beginning inventory) * 100% Beginning inventory = 1,200 units Current inventory on-hand = 400 units 1,200 (beginning inventory) – 400 (current inventory) = 800 units sold Sell-Through% = (800 units / 1200 units) * 100%

Sell-Through% = 66.67% The sell-through percentage is 66.67%. 2 ) To calculate the penetration rate for each vendor, we need to divide the sales from each vendor by the total sales and then multiply by 100 to make it a percentage. For Vendor A: Penetration rate = (Vendor A sales / Total sales) * 100 = ($19,650 / $48,000) * 100 = 40.94% For Vendor B: Penetration rate = (Vendor B sales / Total sales) * 100 = ($18,900 / $48,000) * 100 = 39.38% For Vendor C: Penetration rate = (Vendor C sales / Total sales) * 100 = ($9,450 / $48,000) * 100 = 19.69% Therefore, the penetration rates for each vendor are: Vendor A: 40.94% Vendor B: 39.38% Vendor C: 19.69% 1. The sell-through rate of 66.67% shows a better-than-planned performance, which is higher than the buyer's plan of 35%. 2. The sell-through data helps the buyer learn what customers want and make smart decisions by showing the most popular designs and how quickly the sweaters sell. 3. The buyer may find the most successful vendors and maybe negotiate for greater deals with them by using the penetration rate. 4. Being aware of which stores are seeing an increase or decrease in sales allows the buyer to appropriately distribute inventory, identify areas for growth, and take the steps needed to improve sales. 5. To meet demand, the buyer should think about increasing inventory for popular styles and high- penetration vendors based on the sell-through and penetration numbers. Also, they can figure out how well different areas are doing in terms of sales and put in place strategies to boost dropping areas.

6. To better understand the market and make informed decisions, the buyer would want to know the sales numbers by area, customer feedback, turnover in inventory, return rates, and information on demographics.

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