Retailing Chapter 1
Social Factors Influencing the Buying Process-FAMILY
When families make purchase decisions, the decision considers the needs of family members Appealing to kids is important
Multichannel Retailing
When retailers offer more than one channel to sell and deliver merchandise and services to consumers. I.e. A brick and mortar developing an online presence. Or limited Too having a brick-and-mortar AND a catalog.
Service Retailing
firms that primarily sell services rather than merchandise Future growth in service retailing
Social Factors Influencing the Buying Process
1. economy 2. family 3. reference groups 4. culture
General Merchandise Retailers
1. Department Stores 2. Full-Line Discount Stores
Demographic Segmentation
segmentation of potential customers based on easily measured, OBJECTIVE characteristics such as age, gender, income, and education.
Geodemographic segmentation
segmentation of potential customers based on geographic and demographic characteristics. I.e. Millennial's on the Upper east side. Or woman in large cities. "Birds of a feather flock together" Consumers in the same neighborhoods tend to buy the same types of products from same retailers.
Independent, Single-Store Establishments
- Owner managed - Flexible - Adaptive - Higher priced merchandise -Popular with retail startups
Vertical Integration
describes diversification by retailers into wholesaling or manufacturing I.e. A retailer going from designing private-label merchandise to owning factories that manufacture the merchandise.
Positioning
design and implementation of a retail mix to create an image of the retailer in the customer's mind relative to its competitors
Habitual Decision Making-types of buying decisions
habitual decision making- a purchase decision involving little or no conscious effort. "I'll buy the same thing I bought last time from the same store." When decisions aren't important/involve familiar merchandise Brand loyalty-customers like and consistently buy a specific brand in a product category. They are reluctant to switch to other brands when their favorite isn't available. Retailer loyalty-customers like and habituall bisit the same retailer to purhse a type of merchandise. Ways to do this: convenient location, complete assortment of national/private label brands/reducing number of stockouts/rewarding customers for frequent purchases/providing good customer service
Vertical Integration
Firm performs more than one set of activities in the channel. I.e. a retailer engages in wholesaling activities by operating its own distribution centers to supply its stores I.e. IKEA/Zara because they manufacture and distribute most of the products they sell in their stores.
Retailer
A business that sells products and/or services to consumers for their personal or family use. Retailers link manufacturers to consumers
Specialty Stores
A type of retailer that concentrates on a limited number of complementary merchandise categories in a relatively small store. I.e. Abercrombie, Forever 21, Urban Outfitters, Victoria's Secret, Apple, Brookstone, Radio Shack, Pottery Barn, Tiffany, Aveda, M.A.C., Sephora, Foot locker, Steve Madden DEEP ASSORTMENT, NARROW VARIETY sales associate expertise Grouped by category, rather than brand like department stores. Most profitable/fastest growing
Catalogs
Catalog Channel-a non store retailer that communicates directly with customers using catalogs sent through the mail. Advantages: -Consumers can view and purchase merchandise from anywhere, anytime. They don't need internet connectivity. -easy to refer to information. Just pick up the catalog and check it out -easy to browse through Cons: -unnecessary use of natural resources
Social Factors Influencing the Buying Process-ECONOMY
Recessions/economic struggle=more uncertainty and risk=less purchases/seeking affordable options Flourishing economy=willing to spend more on luxury or hedonic (pleasure) items=retailers don't have to use as many discounts When people have tight budgets, they spend a little more on small luxuries (cosmetics/wrapping paper)
Market segmentation
Retail market segment: a group of customers whose needs will be satisfied by the same retail offering because they have similar needs and go through similar buying processes. I.e. AC Hotels by Marriott for millenials and Marriott Hotels and confrence centers for business executives.
Stages in the buying process-Need recognition
Unsatisfied need-arises when customers' desired level of satisfaction differs from their present level of satisfaction Utilitarian needs-A need motivating a consumer to go shopping to accomplish a specific task (more of a must) Hedonic needs-a need motivating a consumer to go shopping for pleasure. Utilitarian needs are associated with work, hedonic needs are associated with pleasure Cross Shopping-a pattern of buying both AND low-priced merchandise A consumer will often buy products at a premium and a low cost. Just depends on how important needs are. Tradeoff
VALS
Values of lifestyle survey used to categorize customers into eight lifestyle segments
Variety
Variety (also called breadth) is the NUMBER of merchandise Categories a retailer offers. I.e. Shoes, shirts, accessories Does the department store have variety? Can woman, men, children, fashionistas, basics, etc. find stuff here? A toy store sells toys, and so does Costco, but Costco sells a lot more of other things in different categories. Therefore, Costco has more variety than toy store.
Retail format
the nature of the retailer's operations-its retail mix (type of merchandise and services offered, pricing policy, advertising and promotion programs, store design, and visual merchandising, typical locations
Retailing
the set of business activities that adds value to products and services sold to consumers for their personal or family use. Uncommon examples of retailing: -services like overnight lodging -a doctors exam -a haircut -delivery
Perceptual map
used to represent the customer's image and preferences for retailers. Along two dimensions. I.e. Fashion forward (or not) and Customer service (or not)
Single-Channel Retailing
when retailers sell and deliver merchandise and services to their customers through only one channel. I.e. Only a brick and mortar very uncommon
Customer Loyalty
customers are committed to buying merchandise and services from a particular retailer. Customer is relectuant to switch and support a competitive retailer. Ways to improve customer loyalty: -brand image -positioning -unique merchandise -customer service -customer relationship management programs -building a retail community with social media
To compete with other food retailers, conventional supermarkets are: Improving the shopping experience
"Food as theater" concepts: -in-store restaurants -open-air market designs -cooking and nutrition classes -baby sitting services -food/wine tastings Self-service checkout Coinstars/Redbox/Starbucks
SKU
(stock keeping unit) is the smallest unit available for keeping inventory control. I.e. A sku usually means a size, color and style I.e. An origianl scent, 33-ounce box of Tide laundry detergent with bleach I.e. A blue, oxford clothin, long-sleeve, button-down-collar Ralph Lauren shirt, size medium. Each different unit of merchandise is called a SKU. SKU's capture of every detail of a single unit.
Trends in Supermarket Retailing
- Competition (Supercenters, Warehouse clubs, Convenience stores, Extreme Price Retailers, Drug stores). These places are devoting more space to consumables. Basically, the trend is that consumers make way more trips a week for food and way less trips a wook for nonfood items. Therefore, more and more retailers are offering food as a way to increase traffic adn hopefully get consumers to buy nonfood products more often. Low cost/low prices. To compete with other food retailers, conventional supermarkets are: 1. emphasizing fresh perishables (i.e. offering fresh sushi) 2. Targeting green, ethnic, and Millenial consumers 3. Providing better value with private-label merchandise 4. Adding value-added services like online ordering 5. Providing a better shopping experience (restaurants at Wegmans and social events)
Social Retailing
-Conducting purchase transactions through a social media site. -Rapid growth -"buy" buttons -facebook is most popular source
Three Tiers of Department Stores
-First Tier: Upscale, high fashion chains with exclusive designer merchandise and excellent customer service. (Neiman's/Bloomingdales/Saks/Nordstrom) -Second Tier: Retailers sell more modestly priced merchandise with less customer service (Macy's/Dillards) -Third Tier: Value oriented, caters to more price conscious customer(Sears/JCPenney/Kohl's)
retail channel
-defines the way a retailer sells and delivers merchandise and services to its customer. Most common channel is brick and mortar. Mobile, social media, catalog are other examples.
Criteria for Evaluating Market Segments
1. Actionable -Retailer should know what to do to satisfy needs for the consumers in the segment. I.e. Banana Republic segmenting based on physical size is actionable, whereas this approach would NOT be actionable for a supermarket retailer because they wouldn't be able to develop unique mixes for large and small customers. A segmentation scheme based on demographic WOULD be actionable. 2. Identifiable -The retailer is able to determine which customers are in the market segment. When customers are identifiable, the retailer can determine the segments size and he consumers to whom the retailer needs to target 3. Substantial -A market needs to be substantial (be big enough and have enough buying power) so that it CAN generate sufficient profits to support the retailing mix activities. 4. Reachable -the retailer can target promotions to consumers in the segment. I.e. Autozone customers are reachable because they read car magazines, watch NASCAR, etc.
Strategic retail planning process
1. Define the business mission 2. SWOT 3. Identify strategic opportunities 4. Evaluate strategic alternatives -potential to develop competitive advantage 5. Establish specific objectives and allocate resources 6. Develop a retail mix to implement strategy 7. Evaluate performance and make adjustments
How Retailers deal with eroding market share
1. Increase exclusive merchandise -exclusive brands: A brand developed by a national brand vendor, often in conjunction with a retailer, and sold exclusively by the retailer. I.e. Think of Zadig Bloomingdales exclusive. I.e. Ralph Lauren opened a line at JCPenney called American Living I.e. Martha Stewart and Rachel Ray collection at Macy's and Sears 2.Increase private-label merchandise. -Department stores are placing an emphasis on developing their own private-label brands/store brands. These are items developed/marketed by the retailer and is available on at their stores. 3. Expand omnichannel and social media presence -retailers are allowing consumers to buy and reserve products online and pick them up at the store. Also, customers can return online purchases to stores. Nordstrom has integrated its online flash sale site, Hautelook to increase its customer base. Also, nordstrom rack. These are nice because what you buy at one you can return at another. all integrated.
Types of Ownership
1. Independent, single store establishments 2. Corporate Retail Chains 3. Franchising
Differences between Service and Merchandise Retailers
1. Intangibility -services are less tangible than products 2. Simultaneous production and consumption -Service providers create and deliver the service as the customer is consuming it. On the other hand, products are made in a factory, sold by a retailer and then consumed by consumers in their homes. 3. Perishability -services are perishable, meaning they cannot be saved, stored, or resold. Once a plane takes off with an empty seat, the sale si lost forever. However, with merchandise, it can be held in inventory. 4. Inconsistency of offerings -products can be produced identically (all boxes of Cheerios taste the same) however service can differ constantly.
Stages in the buying process
1. Need recognition 2. Information Search about Channels, Stores, Merchandise, and Services 3. Evaluation of Alternative channels, stores, merchandise and services 4. Purchase the merchandise or service 5. Postpurchase 1. Need 2. Information 3. Evaluation 4. Purchase 5. Postpurchase
Types of Off-Price Retailers
1. Outlet stores -Off-price retailer owned by a manufacturer (factory outlets) or department or specialty store chain (NIKE)f 3. Flash sale sites -an online off-price retailer than sends e-mails to registered members, announcing the unique deals available for a limited, specific amount of time. Gilt, Hautelook, Rue la la
What are the 4 activities performed by retailers during the value-creation process
1. Providing an assortment of products/services 2. Breaking bulk 3. Holding inventory 4. Providing services
Ways retailers satisfy consumers hedonic needs
1. Stimulation 2. Status and power 3.Adventure
Central concepts in retail market strategy
1. Target Market and Retail Format -retail market segment-a group of consumers with similar needs and a group of retailers that satisfy those needs using similar retail channels and format 2.Sustainable competitive advantage
Types of Buying Decisions
1. extended problem solving No experience/High risk 2. limited problem solving Some experience/Mild risk 3. habitual decision making Tons of experience/ No risk
Approaches for Segmenting Markets
1. geographic 2. demographic 3. geodemographic 4. psychographics/lifestyle 5. buying situations 6. benefit segmentation
Food Retailers
1.supermarkets 2.supercenters 3.warehouse clubs 4.convenience stores 5.online grocery retailers SSWCO
Stages in the buying process-Purchase the merchandise or service
3 ways retailers try to increase the chances that customers will convert their positive evaluations into purchases (because people don't always buy from the place with the highest evaluation, ironically). 1. Making it easy to purchase merchandise by aking it readily available on mobile devices. More checkout lanes, reminders about things in carts people have abandoned. 2.Providing sufficient information that reinforces the customer's positive evaluation. Salesperson, friends, and customer all provide positive feedback to support purchase decision 3. Reducing the risk of making a purchase mistake. I.e. return policies, refunds, price-matching etc. 4. Creating a sense of urgency or scarcity. Saying oh this item is about to sell out! They will be more enticed to get it now
Extended problem solving-types of buying decisions
A buying process in which customers spend considerable tie at each stage of the decision-making process because the decision is important and they have LIMITED knowledge of alternatives. They take an EXTENDED time thinking about the purchase People engage in extended problem solving when the decision involves a lot fo risk and uncertainty. Financial risks arise when customers purchase expensive products/services Physical risks arise when customers feel that a product or service may affect their health or sfety Social risks arise when customers believe a product will affect how others view them. Lasik eye surgery involves all three People visit several retailers, consult tons of people, take a lot of time. Best way to sell to these people is to offer them a ton of information in an accessible, easy to understand way. Also, salespeople
Franchising
A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor. The franchisee then owes a one-time franchise fee and an ongoing royalty fee, (typically a percentage of gross monthly sales) I.e. Mcdonalds High success rate
Holding Inventory
A major value-providing activity performed by retailers whereby products will be available when consumers want them. I knowI only need to buy one bottle of shampoo right now because drugstore will have it later when I need it. Important to consumers with limited storage space
Buying Situation Segmentation
A method of segmentation based on customer needs in a SPECIFIC buying situation. I.e. fill in shopping trip versus weekly shopping trip
Benefit Segmentation
A method of segmentation on the basis of similar benefits sought in merchandise or services Group customers who have similar importance weights for attributes of a product. Style low important on price
Composite Segmentation Approaches
A method of segmenting a retail market using multiple variables, including benefits sought, lifestyles, and demographics.
Supply Chain
A set of firms that make and deliver goods and services to consumers. I.e. Manufacturer-->wholesaler --> retailer
Drugstores
A specialty store that concentrates on health and personal grooming merchandise, though pharmaceuticals may represent more than 60 percent of its sales. Sources of competition: -discount stores with pharmacies -food retailers -pressure to reduce health care costs. Response to competition: -offering a wider assortment of merchandise, more food, drive-through, in-store medical clinics, makeovers/spa treatments Cons: Food costs so much more at drugstores thans supermarkets
Retail marketing strategy
A statement identifying: 1. The retailer's target market 2. The format and resources the retailer plans to use to satisfy the target market's needs 3. the basis on which the retailer plans to build a sustainable competitive advantage
market expansion growth opportunity
A strategic investment opportunity that employs the existing retailing format in new market segments. SAME format, NEW markets
Diversification Growth Opportunity
A strategic investment opportunity that involves an entirely new retail format directed toward a market segment not being served. NEW format, NEW market
Supermarkets- limited-assortment/extreme-value food retailers
A supermarketing offering a limited number of SKU's These markets carry around 1 or 2 types of detergent rather than 20. Usually, one of these types is a store brand. Maximize efficiency and reduce costs. Free bags and credit cards aren't always provided. Also, merchandise is shipped on crates. The store does not unload these products, rather uses the crates for display. Very unpolished. Because the stores reduce costs, they are able to offer merchandise for up to 40% lower prices. Usually in 2nd or 3rd tier shopping centers with LOW rent. These markets appeal MOST to people who want to spend less and are not loyal to national brands Very few SKu's (1,500) I.e. Save-A-lot, ALDI
Off-price Retailers
A type of retailer that offers an inconsistent assortment of merchandise at relatively low prices. I.e. Tj Maxx, MArshalls, Homegoods, Ross, Etc. Sell brand-name/designer merchandise WAY lower than suggested retail price because they buy from manufacturers that have overruns, canceled ordered, excess inventory, closeouts and irregulars. Closeouts-end-of-season merchandise that will NOT be used in next season Irregulars-merchandise with minor mistakes in construction. Think defects. Inconsistency and hunting for hidden treasures is its appeal.
Extreme Value Retailers
Also called "dollar stores" • Small, discount stores that offer a BROAD VARIETY but SHALLOW ASSORTMENT of household goods, health and beauty care (HBC) products and groceries • Manufacturers often develop lower-cost packaging or products for these retailers in order to help them keep the retailers unit prices low. • Primarily target low-income consumers and thus have retail locations in lower income neighborhoods • Ex: Dollar General, Dollar Store
Retail Format Development Growth Opportunity
An investment opportunity strategy in which a retailer offers a new retail format (new retail mix) to the same target NEW format, SAME market
market penetration growth opportunity
An investment opportunity strategy that focuses on increasing sales to present customers using the present retailing format. SAME format, SAME markets
Assortment
Assortment (also called depth) is the NUMBER of different ITEMS offered in a single MERCHANDISE CATEGORY. If a toy store sells more toys than Costco does, then toy store have more SKU's and therefore for assortment. A lot of stuff under one category. I.e. how many shoes do they offer in their shoe department. Do they have a large assortment of options?
Category specialists
Big-box stores that offer a DEEP ASSORTMENT but NARROW VARIETY I.e. DSW, Best Buy, Michaels, IKEA, Home Depot, REI, Petco, Staples, etc. Self service approach however sometimes in depth customer service. Category Killers-a discount retailer that offers a narrow but deep assortment of merchandise in a category and thus dominates the category from the customers' perspective. Also called category specialists. Competition between similar category specialists (Lowe's and Home Depot. Trying to differentiate themselves. Offering more in store services.
Stakeholders
Broad set of people who might be affected by a firm's actions. Current/future customers -supply chain partners -employees -shareholders -government agencies -members of the community
Wholesalers
Buy and store merchandise in large quantities from manufacturers and then resell the merchandise to retailers Costco and Home depot are examples of retailers that function as both retailers AND wholesalers. Retail because they sell to consumers, wholesale because sell to other business/contractors
Base of the pyramid/Bottom of the pyramid (BoP)
Consumers in the low income consumer segment
To compete with other food retailers, conventional supermarkets are: 4. Offering private label merchandise
Conventional supermarkets are improving their reputation by offering more private-label merchandise. Private-label brands benefit: 1. Customers-they have more choices and can find the same ingredients and quality as in national brands at lower price or higher quality at a similar price. 2. Retailers-increased store loyalty, competitive advantage, lower promotional costs, higher gross margins
To compete with other food retailers, conventional supermarkets are: 3. Offering Ethnic Merchandise
Conventional supermarkets offer: -More ethnic merchandise -Opening supermarkets targeting hispanic consumers (this is because their shopping and eating patterns differ)
To compete with other food retailers, conventional supermarkets are: 2. Offering green merchandise
Conventional supermarkets offer: -fair trade: the practice of purchasing from suppliers that pay workers a living wage, considerably more than minimum wage, and offer benefits. -Organic -locally grown, locavore movement: focuses on reducing the carbon footprint caused by the transportation of food throughout the world. (However this is tricky because its difficult to maintain balance of offering local products while simultaneously having a lot of variety.
omnichannel retailing
Coordinated multichannel retail offering that ensures a seamless customer experience across all the retailer's channels Various channels collaborate and speak to one another to make sure that the customer (and all their data) is the center of the retail management processes.
Social Factors Influencing the Buying Process-CULTURE
Culture is the meaning, beliefs, moral and values shared by most members of a society. I.e. Eva knew the culture at her school was high fashion so she was inclined to buy nice shoes A lot of retailers have begun appealing to hispanics
Unrelated Diversification Growth Opportunity
Diversification (new format, new market) i which there is NO commonality between the present business and the new business. I.e. Coffee to cars.
Unique Merchandise
I.e. Private label brands (store brands/own brands) are brands that mare created and marketed by retailers and are only available there. This keeps customers loyal. I.e. Kirkland.
Reference Groups
Includes one or more people whom a person uses as a basis of comparison for beliefs, feelings, and behaviors. A consumer might have a number of different reference groups, such as family, friends, celebrities, and option leaders. Reference groups affect buying decisions by: 1. Offering information 2. Providing rewards for specific behavior 3. Enhancing a consumer's self-image (i.e. customers who want ot be seen as members of an elite social class may shop a prestige retailers like Neiman Marcus) I.e. When considering athletic apparel, Eva turns to reference group member Serena Williams. Retailers benefit from reaching out to people in reference groups who act as store advocates and actively influence others in the group. Store advocates-customers who like a store so much that they actively share their positive experience with friends and family. We rely more heavily on the opinions/beliefs/statements of our social network than on advertisements.
Strengths of Retail Channel
Instore REtilaing -touch and smell of products -personal service -risk reduction -immediate gratification -entertainment and social experience -cash payment Internet retailing -deeper and broader selection -more information for evaluating merchandise -personalization (live chats) -expanded market presence -information to improve shopping experience across channels -can gather customer data from online sales to make shopping experience more personalized Risks: prviacy violations/credit cards
Stages in the buying process- Information Search
Internal sources-information in a customer's memory, such as names, images, and past experiences with different stores. Main source of internal information is the customer's past shopping experience. External sources-Information provided by the media and other people Information Search-the stage in the buying process where a customer seeks additional information to satisfy a need. Retailers want to limit the customer's search to its store or website. A way to measure this is conversion rate: the percentage of customers who enter a store or access a website and then buy a product from that same store or website. Showrooming- a practice in which consumers visit stores to gather information about the product. Enables consumers to find the best prices fro any product quickly.
Big-box stores
Large, limited service retailers (Supercenters/Hypermarkets) Issue is that it is hard to find locations for these stores. A lot of people feel as though big-box stores drive local retailers out of business, offer low wages, provide nonunion jobs, have unfair labor practices, threaten US Workers with their purchase of imported merchandise, and cause a TON of traffic (Delivery trucks)
Limited problem solving-types of buying decisions)
Limited problem solving is a purchase decision process involving a moderate amount of effort and time. Customers engage in this type of buying process when they have had some prior experience with the product or service and their risk is moderate. Customers rely more on personal knowledge than on external information Majority of customer purchase decisions Usually go with retailers they know and products they have selected. Issues: Impulse buying-buying without thinking Unplanned purchasing-buying when you didn't expect to
Forward Integration
Manufacturer undertakes retailing and wholesaling activities. I.e. Apple. Manufacturers products and then operates its own retail store
Mobile Retailing
Mobile Internet channel offers the same benefits as computer-based electronic Internet Channels. Benefits: Customers can carry the device anywhere and access retail sites from anywhere anytime customer-retailer interactions can be location-sensitive Disadvantage: mobile device screen is small-interface is different shopping experience isnt as good Tablet is ideal in-between of phones and computers
Opportunities Facing Multichannel And OmniChannel retailers
More personalized URL of a stores website cna be advertised on shopping bags, receipts, etc. They can use printa nd braodcast advertising Online store can use the store and contact store to fufill orders. Corcoprate and online Online retailers cna use stores as warehouses. Using eachother Challenges: issues providing integrated shopping experience. Someone running an ecommerce has different skills thans omeone managing store. Seperate management techniques. OFten not integrated. Need to provide consistent brand image. Different merchandise-deeper and broader assortment online Channel migration-customer cna go online and gther information, but then they buy a product sold by comeptitor. Showrooming Using one chanell of ur company and then use a different channel of competitor.
Cross-Channel Retailing
Multiple channels allows for cross channel retailing Cross-channel retailing is when customers actually use multiple channels to make purchased. For example, cross-channel retailing would be if I received an urban outfitters coupon via e-mail, downloaded it on my phone, and then went to the store to redeem the coupon and buy the product.
Why are retailers needed? Wouldn't it be easier and cheaper for consumers to cut out the intermediaries and buy directly from manufacturers?
No, because retailers add value to the goods and are more efficient at adding this value than manufacturers or wholesalers.
NAICS
North American Industry Classification System. This is a classification scheme that collects data on business activity in each country Business are assigned a hierarchical, 6 digit . code based on the type of products/services it offers. The first 2 digits are the firms business sector, and the last 4 are its various sub-sectors 71 (arts/entertainment/recreation) 72 (accommodation and food services) US/Canada/Mexico
Corporate Social Responsibility (CSR)
Organization voluntarily engaging in business practices that meet/exceed the ethical and legal expectations of its stakeholders
Resale Stores
Part of the specialty store sector Retailers that sell secondhand merchandise. I.e. Thrift store/consignment shop. SUPER low prices. Very attractive in that way Moving to higher-end locations.
Online Grocery Retailers
People with little time will pay MORE to have shit delivered. Huge increase in online sales of groceries. Delivery services-add value Online retailers have more purchases of nonfood items than do traditional brick-and-mortar stores. Low profit (high delivery costs, limited availability(easier to deliver fresh perishables to people in densely populated cities than in far rural area) Struggling
Backward Integration
Retailer performs some wholesaling and manufacturing activities such as operating warehouses or designing private-label merchandise
Growth Opportunities and competitive Advantage
Retailers have the greatest competitive advantage and most success when they engage in opportunities that are similar to their present retail operations and markets. Therefore, MARKET PENETRATION has the greatest chance of succeeding.
Providing Services
Retailers provide services that make it easier for customers to buy and use products. I.e. -offering credit-get now, pay later -testers -customer service
Stages in the buying process-Postpurchase Evaluation
Satisfaction-a post consumption evaluation of the degree to which a store or product meets or exceeds customer expectations. Post purchase evaluation-the evaluation of merchandise or services after the customer has purchased and consumed them. Ways retailer can improve post purchase evaluation: 1. Build realistic customer expectations 2.Provide information about proper use and care of the items purchased 3. Emphasize guarantees and warranties to reduce a negative feeling of risk. 4. Make contact periodically with their customers to make sure they are satisfied.
Hypermarkets
Similar to supercenters: -size -carry grocery and general merchandise -warehouse type-structures Main difference: Hypermarkets carry much more food items and emphasize perishables. Supercenters carry more nonfood items and focus on DRY groceries (I.e. boxed cereal) Less SKU's than supercenters
Progression from single-channel to omnichannel retailing
Single-multichannel-cross-channel-omni-channel
Supermarkets 1. Conventional supermarket 2. Limited-assortment supermarkets/Extreme-value food retailers
Supermarkets- Conventional Supermarkets
Conscious Marketing
The idea of a firm having more of a purpose than simply making a profit by selling products/services
Stages in the buying process-Evaluation of Alternative channels, stores, merchandise and services
The multi-attribute attitude model-a model of customer decision making based on the notion that customers see a retailer or a product as a collection of attributes or characteristics. The model uses a weighted average score based on the importance of various issues and performance on those issues. Multiple importance weights by performance beliefs Retailers need to be included in the customer's consideration set-set of alternatives the customer evaluates when making a choice of a retailer to become loyal to.
Breaking Bulk
The process in which retailers receive large quantities of merchandise and sell them in smaller quantities
Mission statement
a broad description of a retailer's objectives and the scope of activities it plans to undertake What type of business are we? What do we need to do to accomplish our goals/objectives?
Corporate Retail Chains
a company that operates multiple retail units under common ownership and usually has centralized decision making for defining and implementing its strategy. I.e. Kroger, Walmart, Best Buy Some retail chains are divisions of larger corporations or holding companies. I.e. Williams-Sonoma consists of five brands.
Retail Community
a group of consumers who have shared involvement with a retailer. #mystarbucks
Automated Retailing
a retail channel in which merchandise or services are stored in a machine and dispensed to customers when they deposit cash or use a credit card I.e. Vending machines Located at convenient, high-traffic locations
Direct Selling
a retail channel in which salespeople interact with customers face-to-face in a convenient location I.e. Cutco, Avon -costly independent agents
Sustainable competitive advantage
an advantage a retailer has over its competition that is not easily copied by competitors and can last over a long period of time. Sources: -customer loyalty -location -human resource management -distribution/information systems -unique merchandise -vendor relations -customer service 1. Build strong relationship with customer (customer service loyalty) 2. Vendors / suppliers 3. Effficient internal operations-cost advantage, more beenfits Invest in employees, increase efficiency
SWOT Analysis
an analysis of an organization's strengths and weaknesses in its internal enviroment and the opportunities and threats in its external environment
To compete with other food retailers, conventional supermarkets are: 1. emphasizing fresh perishables (i.e. offering fresh sushi)
conventional supermarkets are offering more space to fresh merchandise. Power-perimeter-the areas around the outside walls of a supermarket that have fresh merchandise categories Conventional supermarkets are offering fresh meal solutions to time-pressured consumers. This is because most people buy heat and eat meals.
Supercenters
large stores that combine a supermarket with a full-line discount store. Supercenters competitive edge is that they offer broad assortments (depth) of grocery/general merchandise under ONE roof. ONE-STOP shop Pros: People buy nonfood items (general merchandise) on impulse when buying groceries. General merchandise has higher margins, which allows supercenters to price food items more aggressively. Cons: very large, difficult to find what you want I.e. Walmart
Convenience Stores
limited variety and assortment of merchandise at a convenient location with speedy checkout Large portion of items bought are consumed within 30 minutes of purchasing. Charge higher prices than supermarkets for milk, eggs, bread. Increased competition because other retailers are now offering gasoline.Also, more retailers are offering accessible store spaces for convenience store merchandise. Therefore, convenience stores are decreasing their dependency on gasoline sales. They are tailoring assortments to local markets. Offering more fresh options. Making stores more convenient to shop. Gift cards, theater tickets, financial service kiosks. Made to Order kiosks. Opening more stores closer to where people work. I always need shit conveniently and quickly while at work.
Customer Relationship Management Programs (CRM)
loyalty/frequent shopper programs A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty with a retailer's most valued customers.
Growth Opportunities
market penetration, market expansion, retail format development, diversification
Target market
market segment toward which the retailer plans to focus its resources and retail mix
External enviroment
opportunities threats market factors competitive factors -Barriers to entry-conditions in a market that make it difficult to enter. I.e. Scale economies which are cost advantages due to retailers size. I.e big corps can offer lower prices because they are bigger. -Bargaining power of vendors-characteristic of a market in which retailers are so dependent on large, important vendors that their profits are adversely affected. Vendors have control over them
Department Stores
retailers that carry a broad variety and deep assortment, offer customer services, and organize their stores into distinct departments for displaying merchandise I.e. Sears, Macy's, Nordstrom Pleasing ambience, service, wide varity under one roof. Offer: soft goods-nondurable/consumable goods that have a shorter life span (cosmetics, clothing, bedding). Soft goods make up MAJORITY of department stores. Sears are kind of out and bloomingdales are in. hard goods-durable goods that are expected to last several years (appliances, furniture, electronics) Think of department store as a collection of specialty shops.
full-line discount stores
retailers that offer a broad variety of merchandise, limited service, and low prices. I.e. Target, Walmart, Kmart Competition comes from single category merchandisers such as Staples, BB&B, Lowe's etc.
Warehouse Clubs
retailers that offer a limited and irregular assortment of food and general merchandise with little service at low prices for ultimate consumers and small businesses The main appeal is that customers can stock up on bulk items. Fun unpredictable assortment of upscale merchandise (technology, jewelry, etc) at LOW prices. Also, FOOD SAMPLING IS SO FAB Offer low prices because low-cost locations, inexpensive store designs, little customer service, carry limited assortment of selling items (this keeps inventory holding costs LOW).Also they buy older models at a discount and offer them for sale until inventory depletes. TWO types of members 1. wholesale members who own small businesses 2. individual members who purchase for their own use I.e. Costco and Sams
Psychographics /Lifestyle
segmentation of potential customers based on how people live, how they spend their time and money, what activities they pursue, and their attitudes and opinions about the world they live in. Self-values-goals for life. I.e. Self-improvement. Self-values help retailers determine the benefits the target market is looking to receive from a product or service. Self-image/self-concept is the image people have of themselves. A person who has a goal of being athletically fit, based on their self-value of self-improvement, may seek products and store that are consistent with this self-concept.
Geographic segmentation
segmentation of potential customers by where they live. A retail market can be segmented by countries, states, cities, and neighborhoods.