Overly optimistic forecasts by retail store buyers can easily lead retailers to overorder, resulting in bloated inventories. When that happens, there is pressure on stores to cut prices in order to move the excess merchandise. Although customers delight in these markdowns, retailer profits generally suffer. Furthermore, retailers will naturally cut back on new orders while they work off their inventories, creating a ripple effect that hits the entire supply chain, from shippers to producers, to suppliers of raw materials. The message is clear: Overly optimistic forecasts can be bad news.
Overly optimistic forecasts by retail store buyers can easily lead retailers to overorder, resulting in bloated inventories. When that happens, there is pressure on stores to cut prices in order to move the excess merchandise. Although customers delight in these markdowns, retailer profits generally suffer. Furthermore, retailers will naturally cut back on new orders while they work off their inventories, creating a ripple effect that hits the entire supply chain, from shippers to producers, to suppliers of raw materials. The message is clear: Overly optimistic forecasts can be bad news.
Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
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Overly optimistic forecasts by retail store buyers can easily lead retailers to overorder, resulting in bloated inventories. When that happens, there is pressure on stores to cut prices in order to move the excess merchandise. Although customers delight in these markdowns, retailer profits generally suffer. Furthermore, retailers will naturally cut back on new orders while they work off their inventories, creating a ripple effect that hits the entire supply chain, from shippers to producers, to suppliers of raw materials. The message is clear: Overly optimistic forecasts can be bad news.
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