FM 206 STRATEGIES IN MERCHANDISING EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2026

FM 206 STRATEGIES IN MERCHANDISING EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2026 Retailing - Answers The selling of goods and services to the ultimate consumers. It does not always require a store. Wholesale - Answers Organization that purchases merchandise from a manufacturer in large quantities and resells the goods in smaller amounts to retailers. Direct to Consumer (D2C) - Answers The marketing and selling of products directly to consumers from the brand manufacturer. Buying/ Merchandising - Answers Selecting, purchasing and pricing products to satisfy the wants and needs of the consumers. Buying involves complex decision making in: - Answers Forecasting, Planning merchandise assortments, Selecting vendors and negotiations, Pricing merchandise, and Analyze data Goal and Mission of Retail Buying: - Answers Buy, Price, & Sell for a Profit A market - Answers A group of people with the ability, desire & willingness to buy. Market segmentation - Answers A group of customers with similar characteristics: demographic data, geographic data, behavioristic data, and psychographic data Advantages to E-commerce & Online Retailing - Answers - 24/7 (endless variety) - Compare prices - Avoid the expense of storefront - Increased speed and efficiency - Can make "real time" adjustments to prices and product mix Disadvantages to E-commerce & Online Retailing - Answers - Can't touch the product (fit issues) - Returns - Waste - Privacy/Identity theft - Reliability of "last-mile" - Customer expectations Online Shopper Expectations - Answers - Quality online product descriptions and pictures - Quick load times - Online pages must be optimized for variety of media, i.e. smartphones, tablets, etc. - Only one-click or a few clicks needed to finalize online sale Omni-channel - Answers Digital, mobile, social media and brick & mortar. A seamless and consistent customer experience for the customer to interact with the retailer throughout all channels or touchpoints. What do you expect as a customer? - Answers - Instant gratification - Seek quality and selection - Best price - An engaging experience - Transparency and sustainable practices Successful merchandise assortments begin with buyers who understand: - Answers - The customers to whom they sell - The products they buy and sell - The value of new technologies - The risks that form part of successful retailing Buying - Answers Selecting and pricing products to satisfy the target consumers Strategy - Answers The plan on how to obtain your goal The 5 R's of Merchandising - Answers - Right Product - Right Price - Right Time - Right Place - Right Quantity Basic Merchandise - Answers Products that a business wants to always have in stock. Tend to have consistent consumer demand, so inventory and sales vary little from year to year Fashion Merchandise - Answers - Relies on forecasting consumer demand and market trends, since a fashion that sold well last year may not sell at all this year - Turns quicker but goes "out of style" next season - Fashion is accepted by a group at a certain time Retail buying by store format - Answers Department stores, Specialty stores, Discount stores, Off-price retailers, Warehouse clubs, Category killers, Boutiques, Online, and Direct-to-Customer Soft lines - Answers - Apparel - Accessory products for the home (towels, sheets, bedspreads, etc.) Hard lines - Answers - Sporting goods - Appliances - Furniture - Toys - Lawn and garden products Buyer - Answers Selects and prices merchandise for resale and create assortments that will appeal to the brand's target customer. Pricing goods low enough to be competitive with other retailers but also high enough to meet profit goals Planner - Answers Projects sales and inventories based on an analysis of sales history, current market trends Product Developer - Answers Determines which products to develop for the store's private label, establishes specifications for the design, production and packaging, and are responsible for contacting producers to manufacture the goods Three ways to improve performance: - Answers 1. Increase sales 2. Decrease cost of goods 3. Decrease operating expenses Impact of technologies on the buyer's job - Answers - Forecasting analytics - Business intelligence - Interpret the data to anticipate future behavior - Insight analytics Net sales - Answers the actual dollar amounts received by a firm for the goods and services it has sold after adjustment for returns, allowances, and discounts Initial markup percentage - Answers (expenses + profit + reductions - cash discounts) / (sales + reductions) Cumulative Markup Percent - Answers = Cumulative Markup / Cumulative Retail Markdown Percentage - Answers total dollar markdown as a percentage of net sales Gross Margin Percentage - Answers gross margin/net sales Open-to-Buy (OTB) - Answers The amount of money a retailer has left for buying goods after considering all purchases received, on order, and in transit. Stock Turnover - Answers Cost of sales/average stock Profit percentage - Answers Profit/selling price x 100