Fashion Pricing and Technology. Back to Table of Contents

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1 Fashion Pricing and Technology Back to Table of Contents

2 Chapter 11 Fashion Pricing and Technology Fashion Pricing and Technology Pricing and Credit Using Technology 2

3 Chapter Objectives Describe the five price levels of fashion apparel. Identify the considerations used by fashion makers to determine prices. Explain how manufacturers use credit. List types of credit offered by retail stores. Explain computer-integrated manufacturing. Describe inventory control and systems used in retail stores. 3

4 The Price of Fashion The retailer establishes the selling price. selling price retail price, or the amount the consumer pays Section

5 The Price of Fashion Garments are priced at five levels that are associated with the quality of a fashion products: better garments more reasonably priced garments that maintain high quality Couture Bridge lines Better garments Section 11.1 continued 5

6 The Price of Fashion Garments are priced at five levels that are associated with the quality of a fashion products: Section 11.1 moderate lines mediumpriced garments with wellknown brand names, such as Levi Strauss, and private brands seen in department stores Moderate lines budget lines the least Budget lines expensive category of garments that are knockoffs or downscaled duplications of designer styles, which are massmarketed 6

7 The Price of Fashion Price Considerations Achieving the most profit Obtaining the most sales volume Being competitive Presenting an image Section

8 The Price of Fashion Cost of product is the largest component of calculating price. cost of product the cost of the merchandise from the manufacturer Operating expenses is another important component of calculating price. operating price all costs associated with the actual business operations: cost of building or rents, salaries, and taxes Section

9 The Price of Fashion The markup amount must be enough to cover the cost of the product, expenses associated with doing business, and a profit. markup the difference between the cost of the product and the retail price Section

10 The Price of Fashion Pricing at Each Stage Adds markup to get selling price Adds markup to get wholesale price Retailer Adds markup Garment Producer Textile Manufacturer Section

11 The Price of Fashion Garment Producer s Markup Sales Commission Terms Overhead Profit Section

12 The Price of Fashion Retailer s Markup Salaries Advertising Profit Overhead Allowances for marking down prices Section

13 The Price of Fashion A retailer must consider the prices set by competitors. A retailer might use the odd/even pricing strategy to increase sales. High-end retailers might use even pricing. Section

14 Credit in the Fashion Industry Consumer credit enables consumers to receive merchandise immediately and pay for it later. Fashion businesses may also offer credit to industry customers. Section

15 Credit in the Fashion Industry Designers and Credit Designers might establish credit as a source of funds to purchase new fabrics or to pay for market information. Manufacturers and Credit A manufacturer purchases materials from a supplier. The supplier invoices, or bills, the manufacturer for the materials with specific terms. Retailers and Credit Many retailers rely on credit to make purchases for their businesses. Consumers and Credit There are three types of credit cards accepted by retail stores: third-party, proprietary, and private label. Section

16 What are the five price levels of women s garments? What are the four main considerations when establishing the price of a fashion product? What are three types of consumer credit cards accepted by retailers? Section

17 Computer-integrated manufacturing (CIM) is an example of how technology has had a major impact on the apparel industry. Fashion Pricing and Technology Technology in the Fashion Industry computer-integrated manufacturing (CIM) the production process that implements various technological systems: computer-aided design (CAD) and computer-aided manufacturing (CAM) Section

18 Communication and Technology Each segment in the fashion industry has computer-related equipment developed specifically for the particular area of the industry. Various forms of technology have allowed the fashion industry to adapt quickly to change. Section

19 Textiles and Technology The fiber/textile/apparel (FTA) industry is considered one of the most productive in the world due to its applications of sophisticated technology. One of the most recent innovations in textiles is high-performance fabrics. Section

20 Design Technology Designers use CAD to incorporate style, sizing, and component details about a collection and to communicate this information to the production staff and retail buyers. Section

21 Design Technology CAD Features Electronic graphics interchange 3D imaging Enhances creative process Reduces costly mistakes Shortens production time Section

22 Manufacturing and Technology In addition to CAD systems, garment producers use CAM systems. CAM systems include: Patternmaking equipment Computerized, programmable sewing machines Automated workstation units to perform multiple sewing tasks Robotics, or machinery programmed to do mechanical tasks Section

23 Trade Shows and Technology The fashion industry introduces new equipment and technology at trade shows, such as the American Apparel and Footwear Association Conference. Section

24 Retailers and Technology As a result of management software, retailers can more accurately record sales and maintain merchandise stock levels. Section

25 Retailers and Technology Bar codes are used throughout the fashion industry on raw materials, parts going through production, shipping containers, and finished products for consumers. bar codes standardized symbols made up of dark vertical bars and white spaces that carry information such as vendor, style, size, and color Section

26 Retailers and Technology The Universal Product Code (UPC) is endorsed by retailers as the marketing standard bar code of the industry. Section

27 Retailers and Technology The Enterprise Resource Planning (ERP) system extracts data from sales transactions in the retail store and enables the retailer to reorder merchandise on a timely basis. Section

28 Retailers and Technology Inventory control systems track when merchandise is received at the store. inventory control the process used to track the buying and storing of products for sale as well as costs for ordering, shipping, handling, and storage Section

29 Retailers and Technology Some retailers require manufacturers to use Radio Frequency Identification (RFID) Systems. RFID systems help the retailer to identify, track, and manage large quantities of goods as they move through the supply chain. RFID systems reduce warehousing and distribution costs. Section

30 Retailers and Technology As retailers began developing Web sites, they had to develop software that could respond to customer orders. Many customers look to the Internet to find options, and then go to retail stores to make purchases. Section

31 The Importance of Technology New technological advances continue to improve the efficiency of the industry in order to meet consumer demand. Section

32 Price Power Online Operating shopping an e-tail allows business customers on an to eliminate electronic channel the middleman and, Web can in some cases, be costly, to avoid due to the design, retail markup delivery, on returns, many and fashion operating and apparel expenses. items. Price-comparison services allow even greater savings because a customer can get a price quote Though from Many several larger different dot-com vendors. companies crashed in the 1990 s, small stores like Harris Cyclery of West Newton, Massachusetts, actually increase sales using a basic Web Low prices and consumer confidence in price-comparison site. Today, a third of Harris s bicycle business rides in on services the Web have to get led hard-to-find to a rise in spending parts and online personal by using service. credit cards. Marketers predicted that the average online shopper would Describe spend an $ e-business s per transaction. home page to your class after viewing one through marketingseries.glencoe.com. For more information, go to marketingseries.glencoe.com. Section

33 What does 3-D imaging software do? 2. What bar code is endorsed by retailers as the marking standard of the industry? 3. What are some advantages of RFID systems? Section

34 Checking Concepts 1. List the price levels of fashion apparel. 2. Name the price level of apparel sold in discount department stores. 3. Identify considerations for pricing. 4. Explain how textile makers use credit. continued couture, budget Considerations They use lines bridge credit to lines, include purchase better achieving materials garments, the from most suppliers. profit, moderate obtaining They may the lines, offer most and sales credit budget volume, to retailers lines and being who buy competitive, from and them. presenting an image. 34

35 Checking Concepts 5. Identify the type of credit that stores offer that is handled by a bank. 6. Describe the technology used in retailing. 7. List types of information included in a bar code private-label Technology Information includes credit includes vendor, (CAD), for designing style, size, and textiles, apparel, and color. computer-aided design other products and computer-aided manufacturing (CAM), which is electronically controlled production, bar codes, EPR, inventory-control systems, and RFID systems. continued 35

36 Checking Concepts Critical Thinking 8. Explain the advantages of RFID technology. 8. RFID advantages may include giving the retailer ability to identify, track, and manage large quantities of goods as they move through the supply chain. Results may be reduction of warehousing and distribution costs. 36

37 End of Fashion Pricing and Technology Back to Table of Contents

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