TYPES AND IMPORTANCE OF RETAILING

A Retail store is owned by one person or a family. This is classified as single proprietorship.

Classification of Retail Stores

General store. Is a retail store that carries a wide variety of unrelated merchandise like hardware, groceries,
school supplies and even dry goods. It also offers simple medicine, adhesive, cosmetics, rice and dried fish. All of
these are consumer’s goods sold on retail. It is known as the sari-sari store.

Single line store. This store carried only one line of merchandise. The individual line store is identified by the line
of merchandise it sells such as school supplies, books, shoes, bags, drugs or food items.

Specialty store. This store sells only one line of merchandise. Items sold in this store are expensive.

Example: jewelry shops, Leather goods, Signature ladies wear, men, infants wear, etc…

IMPORTANCE OF RETAILING

Retailing plays an important role in economy for the following reasons:

a. It employs people
b. It is a source of income
c. It is a distribution center
d. It adds to the economic status of the community
e. Taxes paid add to the income of the national government

Retailing is the key to national development of the country.

TYPES OF SELLING

Wholesaling is the act of selling in large quantities. This caters both the retailers and the consumers. The
person performs this activity is known as wholesaler.

Retailing is the act of selling in small quantities. The person engage in retailing is called retailer. He/She caters
to consumers who are ultimate users of the goods and services.

CLASIIFICATION OF SELLING

1. According to Ownership

a. Independent Stores. These are owned and managed by a single individual or family.

b. Franchise. These are the retailers who entered into contract with the manufacturer or wholesaler referred to
as the franchiser.

c. Chain store. These stores are owned and managed by an individual or family or a corporation. These offer the
same line of business activity located in different places.

2. According to services rendered

a. Cash and Carry Store. This store sells good on strictly cash basis only
b. C.O.D. goods are paid upon delivery to the customer’s home

c. Supermarkets. This store is a self service store with wide variety of merchandise to choose from. Goods are
departmentalized.

d. Credit sale. The customers buys goods on a credit type. This customer is given a specific period of time to pay
his purchases.

e. Credit card. The customers buys on a credit. His purchases is guaranteed by the credit card company.
Payment are directed to the card company either in full or partial payment.

3. According to Selling method

a. Direct Selling. Sell goods directly from the producer to consumers.

b. Mail-order house. Sell goods through mail. Goods are ordered through a catalog and are delivered by mail or
by door-to-door.

c. Automated vending Machine. This is a self-service coin operated machine. Sell goods without the service of a
salesperson.

d. On-line Selling. This is where you choose the products from the pictures and videos uploaded by the seller.

4. According to Merchandise Line.

a. General Store. This is a retail store that sells variety of unrelated merchandise.

b. Specialty Store. This is a one-line specialty shop which offers quality merchandise plus good service.

c. Convenience Store. This is a self-service store with a variety of merchandise ready to be picked-up by the
customer and paid at the cashier’s counter.

Key Point. There are several kinds of selling, the choice is yours to make.

VALUE OF GOODS AND SERVICES

PRICE refers to value utility of the merchandise. It is

the amount or value in terms of money, paid for the goods or services obtained.

The prices of goods and services vary from time to time. It depends upon the cost of production of goods and
services.

In pricing your merchandise, consider the following:

1. Desirability of the goods and services

2. Season of the year
3. Competition of the other brands and stores
4. Attitude of the customers toward prices
5. Mark-up needs for profitability of the store.

The difference between the cost price and the selling price of a product is known as mark up.

Example: A product is sold at P100.00. the cost of the product is P80.00. the difference is P20.00, this means
that the mark up if P20.00 representing 20% of the selling price. If you are decided to earn a 20% profit on your
products, then you have a standard 20% mark up on your merchandise.
Mark Up is the price after the capital cost. It is determined for any commodity sold
in retail store, for reasonable mark up, you may use the formula: 100 X Estimated Expenses over Estimated
Gross Sales Minus Estimated Expenses = Percentage of Mark up.

Mark up percentage = 100 X Estimated Expenses

Estimated Gross Sales – Estimated Expenses

However, there are certain branded merchandise that have specific prices determined by the company or
producer.

Reasonable mark up on merchandise will raise the volume of sales of your store, therefore, your volume of profit
is also increased.

LABELS AND PRICE TAGS

Republic Act No. 71 known as Price Tag Law, requires the proper labeling and price tag be attached to each
merchandise.

There are several ways of making merchandise with the assigned prices such as:

1.

1. String tags
2. Price tickets
3. Hand rubber stamp making
4. Rubber stamps
5. Slot tickets
6. Soft special pencil marking
7. Gummed label

The latest in price marking of merchandise is the bar coding.

Bar code is attached to the products by the manufacturer or a producer. A special machine reads the bar code
attached to the products and interpreted as the price of merchandise.

Sales Promotion

2 popular methods of promotion to increase sales.

1. Advertising is a paid presentation of goods or product to the public through media, magazines, newspapers,
radio, television, billboard, mail catalog, and internet.

2. Personal selling or Direct selling is done by the salesperson or sales clerk.

 COURTESY AND EFFICIENCY IN CUSTOMER SERVICE

1. COURTESY. Dealing with customers is a tough job. This is the first time you meet the customer. He/She
deserves respect an courtesy. Smile attracts customers for he or she feels important. Courtesy arises from
your graciousness, politeness and consideration for the feeling of others. Listening to your customers is
one way of being courteous. It shows that you are interested in him by mere listening with a smile.
2. LOYALTY. As a seller you are entrusted with faithfulness to the company or product as well as to your
colleagues. If you do not believe in your company, goods or co-workers, then why stay? Look for another
job where you will be happy with your job.
3. TRUTHFULNESS. Being honest and open means that you are telling the truth. What you said is reliable
and true. This quality is very important to the customers. Once tested, the customers will come back for
another purchase and eventually increases the sales and profit of the store.
4. EFFICIENCY. An efficient worker, is an able, skillful, competent and energetic worker. Selling is both an
easy and tough job. Easy because you are able to close a sale. Tough because it is not merely making a sale
but a repeated sale. This calls for an efficient salesman.

A salesperson should posses not only an amount of loyalty, truthfulness, and other qualities but a large amount
of courtesy and efficiency.

ACCURATE ORDER FILLING

Small retailers (sari-sari stores, and other small enterprises) as well as large enterprise represented by the
sales person and are responsible for making a sale in order to generate income in terms of profits. Making a
single sale is not enough. It is not an end but a means. There should be repeated sale from the same buyers or
customers to establish good relationship.

Accuracy in filling customers’ order is imperative. If the buyer does not received the exact amount of what he
purchased, he either files a complaint for short orders, and/or does coma back to repeat his purchase. Correct
filling of orders should be given an important consideration specially the wholesalers.

Satisfied customers come back and make a repeat purchase.

 Repeated purchase means repeated sale.
Repeated sale means repeated profit.
Repeated profit means repeated income.

This cycle when repeated means increase in volume of sales, and increase of customers in return increase in
employment and increase in taxes for the government

BUSINESS PLAN

It is a very important and strategic tool for entrepreneurs. A good business plan not only helps entrepreneurs
focus on the specific steps necessary for them to make business ideas succeed, but it also helps them to
achieve short-term and long-term objectives.

A. The Benefits that can be derived from Planning a Business

Making a Business Plan can minimize or eliminate risks. It involves a careful study of the competence,
interest and resources of an entrepreneur against the needs of the consumers.
A Business Plan can also minimize the costs of production. This includes how each of the resources of
production such as manpower, money, materials and machines are used.
A Business Plan can also identify the defects of the business operations. Goals and objectives are
formulated. Procedure, strategies and techniques are planned.

B. The Basic Principles in Running a Small Enterprise

Planning must be realistic. it must be based on available human, financial and physical resources.
Planning must be based on the needs of the community. It shoud fit the need of the people in a community
which can be known through observations, personal interviews and questionaires.
Planning must be flexible. As an entrepreneur should be able to adjust and plan if development changes
occur or changes in government laws or policies happen.
Planning must start with simple projects. This requires simple management and technology.

THE IMPORTANCE OF A BUSINESS PLAN

WORDS TO STUDY:

Micro means very small/ limited in quantity.

Types of enterprise based on categories

Micro enterprise less than 5 workers & the capital is ranging to a maximum of P50, 000

Cottage enterprise is 6-9 workers & the capital is from P51,000 to P199,000

Small enterprise is 10 to 99 workers & the capital P200,000 to P500,000

Medium enterprise is 100 to 199 workers& the capital is P500,000 to P20 Million
Large enterprise is over 200 workers & the capital over 20Million

Business Planning is the process of setting up goals for a particular business.

Endeavor an effort to do a task.

Business Plan any plan that works for a business to look ahead.

Component is a constituent part of the business plan

Feasibility Study an analysis and evaluation of a proposed project to determine its profitability.

Marketing deals with selling and buying activities of the business.

Project summary deals with the introduction statement of the problem.

FEASIBILITY STUDY

is created in order to minimize risk and to ascertain the viability of the project. it is not merely an
investigation but a frame work on how the operation of a business project shall be accomplished.
it is used to determine the potential success of a propsed business venture.

A Feasibility study has a project summary which deals with the introduction statement of the problem, the
business name, the business logo, the business location, descriptive definition of the project and objectives.

5 MAJOR COMPONENTS OF FEASIBILITY STUDY

A. Marketing Study. The sufficient demands for the products as well as the competitive position of the firm in
the industry must be determined.

B. Technical Study. In this study, you must consider the manufacturing process, plant size, production schedule,
machinery, plant location and layout structure, raw materials, utilities and waste disposal.

C. Management study. This involves on how the project shall be managed such as the business or organization
including the chart and function of each management unit, management personnel, skills and numbers of labor
required.

D. Financial Study. You should include the assessment of total capital requirements, break even outputs,
sales and prices, amount of sales required to earn a certain amount of profit and the cash payback period.

E. Social desirability. This is measured by economic benefits to the people living in the community and

its vicinities.

CONCEPT PAPER

It is a written plan for a business on how it will be managed. It is a tool to represent a certain venture
anticipating its future.

PARTS OF THE CONCEPT PAPER

A. Introduction. This is the part that discusses the significant details of the product/service and why the
product/service is needed in the community.

B. Objectives. This part gives the details of the business both specific and general.

C. Rationale. This part focuses on the advantages of putting a certain business.

D. Terms and conditions. In this part, specific agreement from general things are clarified.

E. Recommendations. This part is very important because it helps to improve the project in the future.

BUSINESS PLAN

A business plan describes the nature of the business, the sales and marketing strategy, the financial
background, containing a projected profit and loss statement.

COMPONENTS OF BUSINESS PLAN

The Environment. The needs of the people in the community should be identified.
Behavior of the product. You should know the market trends, product demand in the community, the resources,
quantity and quality goods in buying.
Location of the business. You should consider the place where customers prefer to buy.
Organizational plan. The needed workers in the business must be listed in the organizational chart.
Production plan. This involves the manpower, money, machinery, materials and methods to be able to
produce the desired output based o anticipated profit.
Financial plan. You as an entrepreneur need to determine the fiscal needs and the sources of needed
funds.

PROJECT PROPOSAL

This is the initial document that converts an idea or policy into the details of the potential project.

ESSENTIAL PARTS OF A BUSINESS PROPOSAL

A. Executive Summary. The overview of the proposal from the beginning to end should be stated in the project
proposal.

B. Justification. This emphasizes the needs of the proposal.

C. Procedure. The steps are being explained where to start and to end.

D. Objectives. The goals or targets of the business are defined

E. Project organization and management. The manpower and function of each are clearly stated.

F. Budget. You should determine the source for the input and output, the profits and the loss of the business.
 ORGANIZE AND CONSTRUCT THE MAIN PARTS OF A BUSINESS PLAN

This lesson presents concepts on how to organize the man parts of the business plan

Words to study:

Sustainability - It is the support for a business on environmental issues.

Addendum - is a document attached or added to clarify, modify or support the information in the original
document or written work.

Target market - refers to a group of persons who use and patronize the products/services that specifically fit
their needs/wants.

Market trends - are use to provide strategic information and leads that will aid and sustain business
development.

Market size - is the number of buyers and sellers in a particular market.

Business risk - is the probability inherent in a firm’s operations and environment (such as competition and
adverse economic conditions) that may impair its ability t provide returns on investment

In organizing the main parts of a business plan, one must consider the survey instruments to gather data
and the results to analyze and interpret the business plan.

MAIN PARTS OF A BUSINESS PLAN

SECTION 4

Business Plan Proper

The Problem/Need
This pertains to the description of the problem/need being addressed to, a well as the reasons/ rationale why
the problem/need must be addressed by the business and the descriptions on how the business has solved the
problem/need.

II. Statement of VISION, MISSION & VALUES

VISION - It is a description or statement of what the proponent sees if the problem/need is solved.

MISSION - It is a clear description of goals and objectives that presents practical steps to achieve the vision.

VALUES - It is a clear statement of values critical to the culture, integrity and activities of the business.

III. THE MARKETING PLAN

Research and Analysis

It is a description of the target market, market size, competition, market share and market trends.

Marketing Strategies

This includes the Four P’s – Price, Promotion, Product and Place. The Four P’s all work together to reinforce the
positioning strategy which is based upon what your target customer wants or needs.

V. ORGANIZATIONAL/MANAGEMENT PLAN

This plan includes the members of the team’s contribution to the business.

Here is an example of an organization/management plan chart:

SECTION V
Sustainability

Financial Plan

“Where the money comes from and where it goes.”

This section of the business plan is the key area, where people will judge how competent you are as an
entrepreneur.
It must be well written., concise and sufficiently documented.

Total Revenue (TR) = Fixed Cost (FC) + Variable Cost (VC)

When TR is greater than FC and VC means the business is earning profit.

When TR is less than the FC + VC means the business is losing.

When TR = then FC + VC, the business is break-even.

 SOCIAL IMPACT

This part should enumerate the impact of the business activity to its employees, consumer and the community
as well. Social impact should also emphasize social responsibility to sound environment and sanitation
practices. The impact should be stated in a clear and concise statement that is anchored on the mission, vision
and values of the business.

Social Impact Sample Form

1. Anong Sarap Bakery aspires to be the most admired cooperative bakeshop amarikin a co, fra unique featurites the
cooperative spirit among its incorporators. years to come we want this bakery to be operative inside tHe ERVHS
Campus, where students can have their on-the-job-training (OJT) and they can invest in the future.

2. Anong Sarap Bakery will conduct activities that would promote spirit of entrepreneurship through active
participation in community and school activities since they are the number one clientele of the bakeshop.

3. Our target is to have a bakeshop where students through their on-the-job-training (OJT) program can work with.
It vows to support the training needs of the school in terms of baking, marketing, back office operations and food
service. Anong Sarap Bakery considers itself as partner in progress of the community and school.

PROFIT

SALEINCOME

PURCHASE

CYCLE OF REPEAT PURCHASE