Retailing and E-Commerce (Exam One - Study Guide)
What is the relationship between price, variety, and assortment
- Carrying a wide variety and deep assortments of products costs money - Offering high levels of service is costly. - Most retailers have to make a decision between the three. - Those that offer all three charge higher prices.
Retail Channel
the way a retailer sells and delivers merchandise and services to its customers.
What is the retailers goals in the information search:
to limit the customer's information search to their store, website, app.
What is e-commerce?
use of the internet and web to transact business
Culture is learned through
values, norms, and rituals
Social Retailing
via social media (Facebook, Twitter, Pinterest, Instagram, etc.)
Cross-Shopping
when shoppers display inconsistent shopping behavior
Hedonic needs
satisfied when purchases accomplish a need for entertainment, emotional, and recreational experience as in department stores or specialty stores.
utilitarian needs
satisfied when purchases accomplish a specific task
Single Channel Retailing
selling/delivering through only one channel.
extreme value retailers
small discount stores that offer a limited merchandise assortment at very low prices
Culture
the collection of learned meanings, beliefs, values and customs that direct the behavior of a particular society o Sense of identity o Model for acceptable behavior
Success in the information search is measured on
conversion rates. the percentage of customers visiting the store/website that make a purchase.
Franchisee
Help with market research, site selection, design/layout, operations, hiring/training programs, equipment, etc.
Category Specialist
Big-box stores that offer a narrow but deep assortment of merchandise
Retailers Strategies after the purchase
- Follow-up communication - Request customer reviews - Social media strategies - Customer Support - Return/Exchange policies - Loyalty Programs - Referral Programs
Reference Groups
- People used by an individual as a basis of comparison o Greatly influence perceptions and purchases by § Serving as a source of information § Reinforcing/discouraging purchase behavior § Enhancing image/esteem
What are the different options for retail ownership?
1. Independent, Single-Store Establishments 2. Corporate Retail Chains 3. Contractual Vertical Marketing Systems
What are the eight unique features of e-commerce technology?
1. Ubiquity 2. Global Reach 3. Universal Standards 4. Richness 5. Interactivity 6. Information Density 7. Personalization/Customization 8. Social Technology
wholesale-sponsored voluntary cooperative group
A group of retailers organized by a wholesaler. The wholesaler aids in buying, merchandising, inventory management, site location, store design/layout, human resources, insurance, etc.
retailer cooperative
A group of retailers that join together to organize a new business (wholesale). Retailers MUST purchase products from the new business and use a common name. Advantages include buying in bulk and joint advertising & promotion
What is the supply chain?
A set of firms that make and deliver goods and services to consumers. Raw Material Suppliers > Manufacturer > Wholesaler > Retailer > Consumer
Department
Carry a wide variety & deep assortment, offer customer services, and organize stores into distinct departments for displaying merchandise
Characteristics for Need Recognition
Changed circumstances, time since last purchase, current product underperforming, running out of a product, another product seems superior to current product, previous purchase requires something new.
Which factors are having the greatest effect on the future of retailing?
Changing demographics, Technology, Consumers trade up and trade down, smaller store formats, E-commerce challenges the brick and mortar model, urbanization in America, Four Giants... Amazon, Google, Facebook, Apple
specialty
Concentrate on a limited number of complementary merchandise categories and provide a high level of service
What is affecting the market?
Consumer confidence levels, showrooming, shifting foot traffic patterns, major discounting.
benefits of catalog channel
Convenience 24/7 shopping, Product information readily available, no technology needed, easier to browse.
Which social factors influence the buying process?
Family, Reference Groups, Culture
What are the benefits of each non-store channel?
Haptic touch, personal service, risk reduction, immediate gratification, entertainment and social experience, browsing, cash payment.
What is the relationship between information search and conversion rates?
High conversion rates are desirable, Retailers successful in limiting their customers information search to their store/website/app, will have higher conversion rates.
How to help the decline of the department store?
Increase exclusive merchandise, increase private-label merchandise (Store Brands), Expand multichannel and social media presence, hire for excellence/expertise, think showrooms, store-within-a-store and popup collaborations.
Which non-store channels are available to retailers?
Internet (Electronic and Mobile), Catalog, Television Home Shopping Channel, Direct Selling, Automated Retailing (Vending Machines)
Supermarkets
Large, self-service stores that carry a complete line of food products, along with some nonfood products
second tier department store
Modestly-Priced merchandise, less customer service
Full-Line Discount
Offer a wide variety of merchandise, limited service, and low prices
Benefits of mobile channel
Portability and convenience, location technology, software applications (Apps)
Convenience
Provide a limited variety & assortment of merchandise at a convenient location in 3,000 - 5,000 ft2 stores with speedy checkout
Warehouse Clubs (Wholesale Clubs)
Retailers that offer a limited & irregular assortment of food & general merchandise with little service at low prices for ultimate consumers & small businesses.
What is the retailers role in the supply chain?
Retailers typically buy products from wholesalers and/or manufacturers and resell them to consumers. Retailers add value and are more efficient at adding this value than manufacturers or wholesalers.
What are the different type of buying decisions?
Routine Response, Limited Decision Making, Extensive decision making, impulsive decision making
Drugstores
Specialty stores that concentrate on health & personal grooming merchandise
What are the challenges of multichannel retailing?
Supply chains and information systems, providing a consistent brand image across channels, merchandise assortment, pricing, reduction of channel migration (showrooming).
What is NAICS
The United States, Canada, and Mexico have developed a classification scheme to collect data on business activity in each country. Every business is assigned a hierarchical, six-digit code based on the type of products and services it sells. The first two digits identify the firm's business sector, and the remaining four digits identify various subsectors.
How can retailers provide an omni channel experience
The customer can be shopping online from a desktop or mobile device or by telephone, or in a bricks and mortar store and the experience would be seamless. Ex. Starbucks - Loyalty Program.
Assortment (Depth of Merchandise)
The number of items a retailer carries in a category. From deep to shallow.
Variety (Breadth of Merchandise)
The number of merchandise categories a retailer offers. From Wide to Narrow.
What is the primary objective of a retail channel?
Transaction
first tier department store
Upscale, high fashion chains, exclusive designer merchandise and excellent customer service
alternative evaluation
Utilizing the information collected to make comparisons: o Select evaluate criteria o Comparing retailers/channels/products o Developing perceptions
third tier department store
Value-oriented retailer catering to more price conscious customers.
Need Recognition
When individuals perceive a difference between their actual state vs. their desired state, need recognition occurs
Benefits of the internet channel
Wider variety; deeper assortments, more information for evaluation, personalization, expanded market presence, collect
What is a retailer?
a business that sells products and services to consumers for Grocery stores, General merchandise stores, Specialty stores, Non-store retailers, and Restaurants.
customer satisfaction
a comparison of customer expectations and the performance of the product/channel/retailer
Franchising
a contractual agreement where the franchisor (the company) sells the rights to use the business brand name (trademark, service mark, etc.) to the franchisee. Franchisee pays a one-time franchise fee plus an ongoing percentage of sales. Franchisee must implement the franchisor's program.
Omni Channel Retailing
a coordination multichannel retail offering that provides a seamless and synchronized customer experience, using all of the retailer's shopping channels.
Market Segment
a group of customers with similar wants and needs.
What is forward integration?
a manufacturer performs wholesaling and/or retailing activities.
multi-attribute model
a model that constructs an attitude score based on the multiplicative sum of beliefs about an option times the evaluation of those belief characteristics. - It helps collect data on: product availability, variety of merchandise, assortment, product description, visuals/videos, user reviews, customer service, wait time, retailer brand, price, free shipping, returns
What is backward integration?
a retailer also performs wholesaling and/or manufacturing activities.
What is retailing?
a set of business activities that adds value to the products and services sold to consumers for their personal or family use
internal information search
always occurs first, customer searches for information stored in memory.
The Franchisors
are motivated and already members of communities. They lose out on a portion of profits Selling franchises helps ______________ grow the business more quickly
How do retailers create value?
by providing an assortment of products and services, breaking bulk, holding inventory, and providing services.
external information search
customers required additional information from an external source.
What are the most common segmentation bases?
geographic, demographic, geodemographic, psychographic/lifestyle, buying situation, benefit
What makes a variable market segment?
identifiable, substantantial, accessible, actionable
Segmentation
is the process of breaking down a heterogenous market (different needs/wants) in to smaller homogenous groups.
Supercenters
large stores that combine a supermarket with a full-line discount store
Stages of the buying process
need recognition, information search, alternative evaluation, choice, purchase, post purchase evaluation
What are the stages in the buying process?
o Assumes that customers think rationally about the process o Customers may or may not experience all stages o Occurs on two levels in retail... Retailer/format and merchandise
How to minimize the number of real and virtual shopping carts abandoned?
o Make it easy to purchase o Provide information to reinforce positive evaluation o Reduce the risk of making a mistake o Create a sense of urgency or scarcity
Family Roles in purchase decisions:
o initiators o Informational gatherers o Influencers o Decision makers o Purchasers o Users
What is vertical integration?
occurs when a firm performs more than one set of channel activities.
Off-Price Retailers
offer an inconsistent assortment of brand name merchandise at low prices
multichannel retailing
offering more than one channel to sell/deliver products and services.
Buying Process
the steps or stages that customers go through when buying a product or service.
Define Buying Process
the steps or stages that customers go through when buying a product or service.
Factors that affect the degree of information search
· Product Characteristics - Complexity, Cost · Customer Characteristics - Past Experience, involvement · Market Characteristics - number of options · Risk Associated with marking the wrong decision · Buying Situation
