TITLE:
Out of stocks disappoint customers and cost retailers money
INTRODUTION:
Out-of-stock (OOS) is an unavailability of stock keeping unit on the retail store shelf temporarily (i.e., the customer expects to find the item but it is not available). Managerial researchers measure five primary responses that consumers will make when they encounter an OOS for a stock keeping unit that they had intended to purchase. These are:
1. Buy item at another store (Switch store)
2. Delay purchase
3. Substitute same brand (Switch size)
4. Substitute different brand (Switch brand)
5. Do not purchase the item
All five of the responses include negative consequences and result in losses to retailers. OOS cause loss to retailers, manufacturer and as
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If consumers do not purchase the item will cause a loss to the retailers.
Manufacturers:
1. If consumers buy item at another store because of OOS situation consumers will switch the store that will not cause loss to manufacturers.
2. If consumers delay the purchase manufacturer bear negative affects to cash flows and exaggerate demand fluctuation.
3. If consumers substitute same brand there is a partial loss when consumers substitute to smaller or cheaper brand.
4. If consumers substitute with different brand there is a partial loss when consumers substitute to smaller or cheaper brand. This is the most problematic situation for manufacturers.
5. If consumers do not purchase the item will cause a loss to the
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1. Sales loss risk
2. Shopper loss risk
Sales loss risk:
When consumers not find the desired item because of OOS will switch the store. This will also increase the competition when consumers move to another store.
Shopper loss risk:
Consumers switch the shopping to another retail store because of frequent OOS. This will also increase the competition when consumers move to another store.
According to National Association of Convenience Stores study ( 1999. U.S.) shopper loss risk occurs when consumers face OOS higher in planned purchase items while sales loss risk occurs when consumer face OOS lower in planned purchase items. Planned purchase items are those which consumer planned to buy from retail store.
Causes of
In addition, the bargaining power of the sources of inputs is high. The switching costs from one supplier to another are high because there are not many substitutes for the particular input for metal products. Besides, the number of suppliers who produce raw metals is small. The threat of substitute is high. There are many different kinds of substitutes for metal product company. These companies may also produce a large variety of product like Slade Company. Therefore, the substitute is low for this market. Only companies that produce high quality are able to not be substituted by the others.
The ability of customers finding a proxy to a particular service or product is always a threat in business. The result is often a weakened business position for a particular company. For CMG, it is no different. However, the brand that the company has built over the years offers protection to the company because of loyalty. The fact that CMG offers a healthy menu for its foods also offers little option in reason for the customer to substitute its products.
of product with the rest of the retailers may not be good idea. This kind of business most likely
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