Retailing Exam 2

creating strategic advantage through supply chain management and information systems

-Activities ensure that customers are able to purchase merchandise in the desired quantities at a preferred location and approximate time Strategic Advantage: -Sustainable b/c it is hard to duplicate -Requires investment, size and scale economies, supply chain activities take place within the firm and are not easily known and copied, coordinated effort of employees and functional areas throughout the company is supported by the culture -Need to accurate forecast sales and needed inventory levels, replenish merchandise, monitor sales, place accurate timely orders with vendors, collect and process returned merchandise Improved Product Availability: -Fewer stockouts and tailored assortments-->greater sales, lower costs, higher inventory turnover, lower markdown for retailers --Fewer Stockouts 1. Stockout=when an SKU that a customer wants is not avalible 2. Rain check=when sale merchandise is out of stock, a written promise to customers to sell them that merchandise at the sale price when it arrives --Tailored assortments 1. Making sure that the right merchandise is avalible at the right store 2. Based on climate and each market Higher Return on Assets: -System increases sales and net profit margins without increasing inventory -Net sales increase because customers are offered more attractive, tailored assortments that are in stock -By effectively forecasting sales, retailers can reduce the overstock situations that result in markdowns, which also improves gross margins -Net profit margin is improved by increasing the gross margin and lowering expenses-->can get merchandise at lower cost

Control System for Managing Inventory

-An automated continuous replenishment control system is used to manage the flow of staple merchandise SKU's; monitors and automatically reorders when the inventory falls below a level -Flow of staple merchandise: cycle stock/base stock=inventory for which the level goes up and down due to the replenishment process; retailers hopes to reduce the cycle stock inventory and keep inventory investment low-->reorder smaller quantities more frequently-->increases costs -Determining level of backup stock: level depends on the product availability the retailer wants to provide; more backup stock is needed when the retailer wants to reduce the chances of a stock out and increase the availability of the SKU; the greater the fluctuation in demand, the more backup stock is needed; the amount of backup stock need is affected by the lead time from the vendor -Fluctuations in lead time also affect the amount of backup stock needed -The vendor's fill rate affects the retailer's backup stock requirements Automated continuous replenishment:Perpetual inventory=the level of inventory is determined at each point in time by comparing the sales made trough the POS terminals with the shipments received by the store -When the perpetual level falls below the predetermined level the system sends an EDI reorder to the retailers distribution center and the vendor; Not 100% accurate b/c errors in determining actual inventory-shoplifters -Inventory management report: provides info about the inventory management for a staple category; indicates the decision variables set by the buyer, such as product availability, backup stock needed to provide the product availability, the order points and quantities plus performance measures such as planned and actual inventory turnover Order point=the amount of inventory below which the quantity available shouldn't go or the item will be out of stock before the next order arrives Order quantity=when the inventory reaches the order point the buyer needs to order enough units to ensure product availability before the next order arrives Control System For Managing Inventory of Fashion Merchandise: -Merchandise budget plan=specifies the amount of merchandise in dollars that needs to be delivered during each month, based on the sales forecast, the planned discounts to employees and customers and the level of inventory needed to support the sales and achieve the desired GMROI objectives -Open to buy system=keeps track of actual merchandise flows

Customer Price Sensitivity

-As the price of a product increases, the sales for the product will decrease -Do price experiments to determine the best price -Price Elasticity: the percentage change in quantity sold divided by the percentage change in price; usually a negative number b/c quantity sold decreases when prices increase ---Inelastic=price insensitive --Factors that affect price sensitivity for a product: substitutes, necessities, products that are expensive relative to customers income --Profit maximizing price=(price elasticity* cost)/(price elasticity+1)

Zone Pricing

-Charging different prices in different stores, markets, regions or zones -Addresses different competitive situations in their various markets

communication gap

-Difference between the service promised by the retailer and the service actually delivered -Overstating the service offered raises consumer expectations and can lead to disappointment -Get rid of this gap by reducing realistic commitments and managing customer expectations -Realistic commitments: need to have communication between marketing and operation departments; poor communication can lead to a mismatch between what is actually possible -Managing customer expectations; tell wait time and be honest; tell accurate info if something is backordered

Number of Stores in an Area

-Economies of scale from multiple stores -Most retail chains open multiple stores in an area to lower promotion and distribution costs by realizing economies of scale -Cannibalization -Diminishing returns from offering too many store locations in an area -A primary retailing objective is to maximize profits for the entire chain, retailers should continue to open store only as long as profits continue to increase

merchandise planning process/types of merch mgmt planning systems

-Forecast category sales-->develop an assortment plan-->determine appropriate inventory level and product availability-->develop a plan for managing inventory-->allocate merchandise for stores-->buy merchandise-->monitor and evaluate performance and make adjustments Types of Merchandise Management Planning Systems: -Staple merchandise/ basic merchandise= categories with continuous demand over an extended time period --Easy to forecast, Continuous replenishment= continuously monitoring merchandise sales and generating placement orders, when inventory levels drop below predicted levels -Fashion merchandise=categories are in demand only for a relatively short period of time --More challenging to forecast, important to not over-predict b/c short selling season -Seasonal merchandise=items whose sales fluctuate dramatically depending on the time of year Ex=Halloween candy --Expensive to store and better to sell at high discount than pay to store it

Dynamic Pricing

-Individualized pricing -Charging different prices for goods or services based on the type of customer, time of day, week or season and level of demand -Hard to do in retail settings -Need to assess customers willingness to pay and cant change the posted prices in stores, customers may feel like they are being treated unfairly if they realize they are being charged a higher price

Distribution/Fufillment Center

-Manages inbound transportation, receiving and checking, storing and cross docking, getting merchandise floor ready, ticketing and marking, preparing to ship merchandise to stores, and shopping merchandise to stores -Fulfillment centers do the same functions except they do not have to get merchandise floor ready -Managing inbound transportation ---Buyers are responsible for purchase and profitability of merchandise, planners are responsible for the financial planning and analysis of merchandise and its allocation to stores ---Dispatcher=person who coordinates deliveries from the vendor to the distribution center or stores or from distribution center to stores

competitive pricing

-Need to compare to competitors prices -The pricing needs to be consistent with the retaielrs overall strategy and its relative market position -Pricing of Services: o Need to match supply and demand o Services are time sensitive and have limited capacity a. Ex=airplanes -Lower prices for less popular times to try to balance out supply and demand -If customers are not familiar with a service they may use price to make quality judgements -Higher risk-->want to pay more a. Haircut, lawyer

national brands vs. store brands

-Store brands enhance and expand assortments: make sure that they are providing what their customers want; innovative new store branded product that isn't being offered by their national brand vendors or a product that can be offered at a better value --Ex: small shredder for kitchens Best opportunity is for categories where there is no brand domination --Expand assortments by creating multiple price tiers-low cost, value, premium -Profitability: o Many customers like specific national brands and are very loyal o The avalibility of national brands can affect customers image of the retailer; if a retailer does not offer the national brands, customers might view its assortment as lower in quality o Consistency of national brands means that it is easy to compare the retailers prices for national brands; the same national brands offered by competing retailers can be differentiated only on price-->have to lower prices to get customers o Creating store brands reduces profitability b/c high starting costs; they assume the risk associated with uncertain sales-->no way to get rid of excess inventory o Profitability for exculisve store brands are higher; no price competition -Flexibility:national brands can limit flexibility-->vendors of strong brands dictate how their products are displayed, advertised and priced

loss leader pricing

-The practice of pricing certain items lower than normal to increase customers traffic flow or boost sales of complementary products -Loss leaders are sold below cost and would therefore be considered predatory pricing -Ex: white bread, milk, eggs -Cherry pickers=go from one store to another buying only items that are on special

visual merchandising

-The presentation of a store and its merchandise in ways that will attract the attention of potential customers Fixtures: =Equipment used to display merchandise -Purpose is to do so efficiently and attractively -Straight rack=long pipe balanced between supports in the floor/wall; can hold a lot, cannot effectively feature specific styles or colors -Rounder= bulk fixture/capacity fixture; round fixture that sits on a pedestal; holds a lot of merchandise; easy to move, can't get frontal view of merchandise -Four way fixture=Feature fixture; two crossbars that sit perpendicular on a pedestal; holds a lot of merchandise and allows the customer to view the entire garment; hard to maintain, all merchandise must be of a similar style and color Gondola=island type of self service counter with tiers of shelves, bins, or pegs; versatile Presentation Techniques: -Idea oriented presentation= method of presenting merchandise based on a specific idea or the image of the store; individual items are grouped to show customers how the items could be used and combined; encourages the customer to make complimentary purchases -Item and size presentation= most common; finding all items in a category together -Color presentation -Price lining=When retailers offer a limited number of predetermined price points and/or price categories within another classification that are merchandised together -Vertical merchandising= Merchandise is presented vertically using walls and high gondolas; generates more sales -Tonnage merchandising= a display technique in which large quantities of merchandise are displayed together

site characteristics

-Traffic flow past the site and accessibility to the site, parking, visibility, adjacent tenants, restrictions and costs Traffic Flow: -The number of vehicles and pedestrians that pass by the site -When traffic is greater more consumers are likely to stop in and shop at the store; retailers use traffic count measures to assess a sites attractiveness -Traffic counts are important for retails offering merchandise and services bought on impulse or on frequent trips such as grocery and convenience stores -Accessibility=the ease with which customers can get into and out of the site; greater for sites located near major highways, uncongested highways, streets with traffic lights -Natural barriers=rivers or mountains -Artificial barriers=railroad tracks, divided or limited access highways or parks may also affect accessibility -Ask yourself if customers are willing to cross the barrier -More accurate measure of traffic=number of consumers entering shopping center Parking: -Amount and quality, Time of day, week, season -Availability of employee parking, number of shoppers using cars, parking, parking by non-shoppers, length of shopping trip -Congestion=an excess level of traffic that results in customer delays Visibility: -Visibility=a customer's ability to see the store from the street -Good visibility is less important for stores with a well-established and loyal customer base, but most retailers want a direct, unimpeded view of their store Adjacent Tenants: -Cumulative attraction=a cluster of similar and complementary retailing activities will generally drawing power than isolated stores that engage in the same retailing activities Restrictions and Costs: -Retailers may place restrictions on the type of tenants that are allowed in a shopping center in the lease agreement -Locations Within a shopping center- Better locations have higher occupancy costs, locations closer to supermarkets are more expensive

location of merchandise categories

-need to strategically place impulse and demand/destination merchandise throughout the store to get customers to go through the whole store Impulse Merchandise- near heavily trafficked areas Demand/Destination Merchandise- back left-hand corner of the store Special merchandise - lightly trafficked areas (glass pieces, women's lingerie) Adjacencies - cluster complimentary merchandise next to each other ex: beer and diapers

CRM Process

1. Collecting customer data 2. Analyzing the customer data and identifying target customers 3. Developing CRM programs 4. Implementing CRM programs objective=develop loyalty and repeat purchase behavior among the best customers

planning the retail communication program

1. Establish communication objectives 2. Establish budget 3. Allocate budget 4. Implement and evaluate programs Establish Objectives: -Provides direction and evaluates effectiveness -Generate long and short term sales and profits -Communication objectives=specific goals related to the retail communications mixes effect on the customer decision making process -Need to be stated in quantitative terms -Target audience needs to be defined and the degree of change expected and the time period -Clear and measurable -Points of conflicts between vendors and retailers *Long term vs. short term goals-->vendors want a long term image and retailers want short term revenue *Product vs location-->vendors don't care where customers buy their products, retailers only want them to buy their products from them *Breadth of merchandise--> vendors have a small number of products to promote and retailers have way more they have to advertise

Aquire and Retain Human Resources

1. Recruit Retail Employees -Developing the Job Description; retailers or employers brand or reputation has a large influence on the applicant pool; includes specific activities the employee needs to perform and the performance expectations expressed in quantitative terms; skill level for high involvement merchandise is higher than ones with limited interactions with customers 2. Locate Prospective Employees 3. Screen Applications to Interview; matches applicants qualifications with the job description 4. Test Applications 5. Preview the Job 6. Conduct a Personal Interview Train and Acculturate Employees:training new employees and introducing them to the firms policies, values and strategies -Blended approach=structured and informal on the job lessons -Provide a structured program; structured training program=helps new employees acquire the basic skills and knowledge that they need to be able to do their jobs; offer on the job training; use a blended approach; analyze successes and failures Motivate Employees: managers most important and challenging task -set goals to motivate employees -Need to provide feedback; employee performance improves when employees feel that their efforts will enable them to achieve the goals set for them by their managers, and they'll receive rewards they value if they achieve their goals; need goals to be realistic Evaluate Employees: identify the employees that are performing well and those who aren't; promote the good ones and train the poor ones or fire them -Who should do the evaluation? immediate supervisor -How often should evaluations be made?; annually or semi annually; feedback is the most effect method for improving employee skills; need to be done frequently—informal ones -What format should be used for evaluations?; Employees need to know what they are required to do, the expected level of performance and how they will be evaluated -How can managers avoid evaluation errors?; don't let opinion of employee's performance influence their ratings of each performance factor ;don't focus on recent events only and let other salespeople evaluations influence them ;subjective characteristics are biased; need to make specific evaluations, don't evaluate multiple salespeople at the same time, frequently and avoid biases o HRM Performance Measures -Productivity= sales generated per employee; net sales/number of FTE -Turnover=number of employees who leave their jobs/# of positions -Engagement:emotional commitment by an employee to the organization and its goals; care about work and company; work to improve retailer Reward and Compensate Employees o Extrinsic and intrinsic -Extrinsic rewards= rewards provided by either the employees manager or the firm; objective is to attract and keep good employees, motivate them to undertake activities consistent with the retailer's strategy and strike a balance between controlling labor costs and providing enough compensation straight salary compensation =fixed amount per hour or week worked; lack of immediate incentives to promote productivity; fixed cost even if sales decline Incentive compensation =rewards employees on the basis of their productivity; most effective when a salesperson's performance can be measured easily and precisely; don't want to perform non-selling activities such as stock shelves, tend to focus on expensive fast selling merchandise; salespeople don't develop loyalty to their employer; bad for promoting good customer service and inhibit learning for new employees Quota=target level used to motivate and evaluate performance:Quota bonus compensation *Quota bonus plan=provides sales associates with a bonus when their performance exceeds their quota=has to be reasonable and fair, which is hard to do -Need to be developed for each salesperson based on their experience and abilities Team incentives= encourages sales people to work together in non-selling activities and while handling customers so the department sales target will be achieved Intrinsic rewards= rewards that employees get personally from doing their job well; motivated to learn how to do their job better Contests= effective when everyone has a chance to win; should create excitement and make selling challenging for everyone Job enrichment= redesign of a job to include a greater range of tasks and responsibilities, including skill variety, task significance, autonomy and job feedback

customer pyramid

80-20 rule: 80% of their sales come from 20% of the customers -One group is the 20% the other is the rest Platinum Segment -Customers within the top 25% CLV's -Most profitable and not concerned with prices, care mpore about customer service Gold Segment -Buy significant amount of merchandise, not as loyal as platinum and may go to competitors, price plays a greater role in decision making Iron Segment -Not substantial enough for special treatment -May not be worth it Load Segment -Can make a negative contribution; demand a lot of attention but do not buy much from the retailer -Should not pay attention to

evaluation of communication programs

Advertising Campaign: communication objectives=awareness, knowledge, attitude, visit Google AdWords Campaign:Search engine marketing -Impressions=number of times the ad appears in front of the user -Click through rate -Return on advertising investment

traditional media benefits

Advertising: entails the placement of announcements and persuasive messages purchased by retailers and other organizations that seek to inform and/or persuade members of a particular target market or audience about their products, services or ideas; used to generate awareness in the need recognition stage of the buying process b/c of its low cost per exposure and the control retailers have over content and the timing of the communication; hard to search for info, not personalized, cost effective Newspapers: freestanding insert/preprint=readers can get overwhelmed with the number of free standing inserts; effective for targeting specific retail markets; aren't effective for showing merchandise; low cost to develop Magazines: print and online version; good image advertising online Direct Mail: brochure, catalog, advertisement, or other printed marketing material delivered directly to the consume through the mail or a private delivery company; personalized; expensive, people respond well to personalized messages Television: national or local; image advertising, high production quality; can demonstrate product usage; high production costs; spots=ads in local markets, small audiences, economical Radio: messages cant be easily targeted to a specific segment of the market; highly loyal, low cost; back-ground noise Billboards:outdoor advertisements that are generally large and appear adjacent to and above roads or highways; attract customers to a specific store location; high exposure, but not all are in target market-->inefficient

Developing An Assortment Plan

Assortment plan=the set of SKU's that a retailer will offer in a merchandise category in each of its stores and from its website Category Variety and Assortment: variety=number of different merchandising subcategories offered;Assortment=the number of SKU's within a subcategory Determining Variety and Assortment: editing the assortment=process of determining the variety and assortment for a category; consider these factors:retail strategy, effect of assortments on GMROI, complementaries among categories, effects of assortments on buying behavior, physical characteristics of the store -Retail Strategy- number of SKU's offered in a merchandise category is a strategic decision a. Ex: Costco offers few SKU's b/c customers don't care about brands-->can increase inventory turnover, lower costs, charge lower prices b. Ex: Best Buy customers care about alternativesàoffer more SKU's -Breadth and depth of assortment in a merchandise category can effect the retailer's brand image Assortments and GMROI: trade off between increasing sales by offering more variety but reducing inventory turnover and GMROI b/c of increase investment; breaking sizes=stocking out of a specific size or color SKU -Increasing # of SKU's that customers can consider increases the chance they will find the product that best satisfies their need -Large assortments are valued by customers because they provide a more informative and stimulating shopping experience due to the complexity associated with numerous products and the novelty associated with unique items -Large assortments are particularly appealing to customers who seek variety, too much can also overwhelm people and reduce sales -Customers perceptions are also influenced by similarity of SKU's, size of category's display, and availability of customer's favorite SKU -SKU rationalization programs=an analysis of the potential benefits a retailer could achieve by adding or deleting specific items from its assortments · Physical characteristics of stores: space needed for each category, more space is needed to display categories with large assortments, space limitations-->more assortment online and in catalogs

store atmosphere

Atmospherics=the design of an environment by stimulation of the 5 senses Lighting= can highlight merchandise and capture a mood/feeling that enhances the stores image; creates a sense of excitement; needs to provide an accurate color rendition of the merchandise; spotlight on featured items; mood creation Color= can enhance a retailers image and help create a mood; warm colors produce emotional, vibrant, hot and active responses ; cool colors have a peaceful, gentle, calming effect and appear to induce abstract thinking, leading customers to view products more favorably Music= can either add or detract from a retailers total atmospheric package; can be easily changed throughout the day; can affect customers behavior, creates an image, attracts attention Scent: can increase excitement and satisfaction; makes people more patient; different scents in different departments Taste:Offering cafes inside stores -Stores as theatrical scenes -Floor and walls have stage and scenery elements-lighting, fixtures, and displays -Impact of a stores environment depends on customers shopping goals; task completion or recreation; shoppers who want fun like this but ones who want to be efficient may not

leadership decision making styles

Autocratic leaders=make all decisions on their own and announce them to employees Democratic employees=seek information and opinions from employees and base their decisions on this information Transformational leaders=get people to transcend their personal needs for the sake of the group or organization -Generate excitement -Self-confident and have open communication

ethical issues in pricing

Deceptive Referance Prices:the price against which buyers compare the actual selling price of the product and thus it facilitates their evaluation process -If the reference price is accurate it is informative, if the reference price is inflated the advertisement is deception;50% of sales should have occurred at threat price Predatory Pricing: -When a dominant retailer sets prices below its costs to drive competitive retailers out of business; going to raise prices when competition is eliminated Resale Price Merchandise: vendors have a manufacturers suggested retailing price ;it is meant to reduce retail price competition among retailers and stimulate retailers to provide complimentary services Horizontal Price Fixing -Agreements between retailers that are in direct competition with each other to set the same prices; reduces competition, is illegal Bait and Switch Tactics: -Unlawful, deceptive practice that lures customers into a store by advertising a product at a lower than normal price and then once they are in the store induces them to purchase a higher priced model -Have inadequate inventory for the advertised product or pushing salespeople to disparage the quality of the advertised model and emphasize the superior performance of the higher priced model -Rain check=a promise to customers to sell currently out of stock merchandise at the advertised price when it arrives

strategic relationships

Defining Strategic Relationships:when a retailer and vendor are committed to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial to both parties -Win win relationships; profit pie increases -Develop and exploit joint opportunities, trust, share goals, share confidential info; like a marriage Building Partnering Relationships: awareness, exploration, expansion, commitment -Awareness=Buyer sees merchandise they like -Exploration=Buyer and vendor explore potential benefits and costs of partnership; small purchases and info -Expansion=Consider develop building a long term relationship; begin to discuss partnership -Commitment:make investments in the relationship and make it long term Managing Strategic Relationships: mutual trust, common goals, open communication, credible commitments -Mutual trust=belief that a partner is honest and benevolent -Common goals: incentives to pool strengths and create opportunities

Distribution Centers vs. Direct Store Delivery

Direct store delivery=manufacturers ship merchandise directly to a retailers stores -Decision is up to the retailer and depends on the characteristics of the merchandise and the nature of demand -When choosing retailers consider the total cost associated with each alternative and the customer service criterion of having the right merchandise at the store when the customer wants to buy it Advantage:more accurate sales forecasts are possible when retailers combine forecasts for many stores serviced by one DC than doing a forecast for each store, distribution centers enable the retailer to carry less merchandise in the individual stores, which results in lower inventory investments systemwide, easier to avoid running out of stock/having too much stock, cost effective to store merchandise at DC -Direct store delivery is better for perishable goods and new products that are time sensitive

Analyzing Merchandise Management Performance

Evaluating the Merchandise Plan Using Sell Through Analysis: -Sell through analysis=compares actual and planned sales to determine whether more merchandise is needed to satisfy demand or whether price reductions are required -Markdown money=funds that a vendor gives a retailer to cover lost gross margin dollars that result from markdowns Evaluating the Assortment Plan Using ABC Analysis: -Abc analysis=identifies the performance of individual SKU's in the assortment plan -Determines which SKU's should be in the plan and how much backup stock and resulting product availability are provided for each SKU in the plan -Rank ordered by sales, gross margin, inventory turnover, GMROI -80-20=80% of the retailers sales come from 20% of the products-->retailers should concentrate on products that provide the biggest returns -After ranking the items, classify them and decide which ones should get the most backup stock Evaluating Vendors Using the Multi-attribute Model: Multi-attribute analysis=evaluate vendors using a weighted average score; based on the importance of various issues and vendor's performance on those issues

The Flow of Information Through a Supply Chain

Flow 1=customer to store -Point of sale terminal=associate scans the universal product code tag on the item Flow 2=store to buyer -POS terminal records the purchase information and electronically sends it to the buyer at target's corporate office; this sales info is incorporated into an inventory management system and used to monitor and analyze sales and decide to reorder more items, change a price or place a promotion Flow 3= buyer to manufacturer -The purchase information from each store and its online operation is aggregated by the retailer as a whole; which creates an order for new merchandise and sends it to the item manufacturer Flow 4=store to manufacturer -Sales transaction data is sent directly from the store to the manufacturer, and the manufacturer decides when to ship more merchandise to the DCs,FC,s and their stores Flow 5=store to distribution center -Stores communicate with the distribution centers to coordinate deliveries and check inventory status-->when the store inventory drops to a specified level, more items are shipped to the store, and the shipment information is sent to the store computer system Flow 6=manufacturer to distribution center and buyer -When the manufacturer ships the item to the store it sends an advanced shopping notice to them *Advanced shipping notice=an electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what the expect in the shipment a. Data Warehouse - Data warehouse=data collected at the point of sale-->learn how corporation is doing and can look at the data for a merchandise division, a region of the country, or the total corporation Electronic data interchange=the computer to computer exchange of business documents from a retailer to a vendor and back: Sales data, purchase orders, invoices-->Allows them to communicate quickly and with fewer errors,Vendor Managed Inventory and Collaborative Planning, Forecasting, and Replenishment Vendor managed inventory=an approach for improving marketing channel efficiency in which the manufacturer is responsible for maintaining the retailer's inventory levels in each of its stores-->Manufacturer automatically sends merchandise to the retailer store, dC, or FC when the inventory at the store reaches a pre-specified level The manufacturer replenished inventories in quantities that meet the retailers immediate demand, reducing stock-outs with minimal inventory, can also reduce vendors and retailers costs Collaborative planning, forecasting, and replenishment=relies on shared forecasts and related business information and collaborative planning between retailers and vendors to improve supply chain efficiency and product replenishment Share proprietary information such as business strategies, promotion plans, new product developments and introductions, production schedules, lead time information

forecasting sales

Forecasting Staple Merchandise: -project past sales trends into the future, and make adjustments for anticipated factors such as promotions and weather, use of historical sales (sales of staple merchandise is constant from year to year) -Adjustments for controllable and uncontrollable factors --Controllable=opening and closing of stores, price set for the merchandise in the category, special promotion, placement of merchandise in stores --Uncontrollable= economic conditions, weather, special promos by vendors, new products and pricing by competitors Forecasting Fashion Merchandise Categories:difficult b/c buyers need to place orders and commit to buying specific quantities 3-6 months in advance; no opportunity to change the quantity ordered before the selling season has ended; difficult b/c a lot of the items are new and different from units offered in previous seasons **Sources of info=previous sales data, market research, fashion trend services, vendors · Market research- surveys, notice trends and what people want, social media sites are important, in-depth interview=an unstructured personal interview in which the retailer uses extensive probing to get an individual to talk in detail about a subject, focus group=small group of respondents submits to be interviewed by a moderator who uses a loosely structured format, experiments to see if new products sell in selected stores · Fashion trend services: lots of resources to predict trends,colors -Vendors: Vendors have lots of information about their marketing plans, new product launches and special promotions that can impact retail sales for their products and the entire merchandise category Sales Forecasting For Service Retailers-their offering perishes at the end of the day, not at the end of the season ,try to match supply and demand with reservations ex: Physicians overbook

pricing strategies and advantages

High/low pricing and everyday pricing High/Low Pricing=discount the initial prices for merchandise through sales promotions Everyday Low Pricing= Emphasizes prices at a level between regular non-sale price and deep discount sale price of sale price of high/low retailers(Aren't always lowest prices in the market);low price guarantee policy=guarantees customers that the retailer will have the lowest price in a market for the product it sells Advantages of the Pricing Strategies: -High/Low Pricing o Increases profits o Creates excitementàsales o Sells slow moving merchandise -EDLP o Assures customers of low prices o Reduces advertising and operating expenses o Reduces stockouts and improves inventory management

analyzing data and identifying target customers

Identifying the retailers best customers: -Customer lifetime value=expected contribution from the customer to the retailers profits over the entire relationship with the retailer; based on sales, not profitability of the customers -Retail Analytics: applications of statistical techniques and models that seek to improve retail decisions through analyses of customer data -Data mining=information processing method that relies on search techniques to discover new insights into the buying patterns of customers, using large databases --Market basket analysis-data mining tools determine which products appear in the market basket that a customer purchases during a single shopping trip to know where to place merchandise together a. Ex: placing flashlights and Halloween costumes together --Targeting promotions --Assortment planning-->Wants to ensure most valued customers have the brand they want

store design objectives

Implement the retailer's strategy, build loyalty by providing a rewarding shopping experience, increase sales on a visit, control costs, meet legal requirements Implement the Retail Strategy:Primary objective; Design must be consistent with and reinforce the retailer's strategy by meeting the needs of the target market and building a sustainable competitive advantage Build Loyalty:Have to give customers a rewarding experience so they want to go back; Customers seek 2 types of benefits=utilitarian and hedonic *Utilitarian benefits=when it enables customers to locate and purchase products in an efficient and timely manner with minimum hassle *Hedonic benefits=offering customers an entertaining and enjoyable shopping experience *Most stores offer both kinds of benefits to ensure loyalty Increase Sales on Visits: Store design affects how long customers stay in the store, how much they spend; What they see is affected by store layout and how merchandise is presented-->want to motivate unplanned purchases-->Impulse buys at checkouts Control costs to increase profits:Need to maintain store appearance; Design can impact how many store employees you need per sections if departments are isolated; Space allocated to merchandise needs to be flexible ex:Textbooks at beginning of semester vs. end Meet Legal Considerations-Americans with Disabilities Act: Law protects people with disabilities from discrimination in employment, transportation, public accommodations, telecommunications; Reasonable access to merchandise and services; Retailers should not have to incur undue burdens to comply with ADA requirements ex: 32-inch-wide pathways in the main aisle to bathrooms, dressing rooms, elevators; Lower most checkout stations so they can be reached by a person in a wheelchair; Create disability accessible checkout aisles; Provide bathrooms with handrails or grab bars; Make dressing rooms fully assessable;Number of parking spaces Design Tradeoffs:Hard to achieve all of these objectives Ex: home depot is ugly and not many female shoppers want to go there -Tradeoffs between stimulating impulse purchases and easy to buy products o Ex: milk at front or back of store -Tradeoff between making it easy to find merchandise and providing an interesting shopping experience is determined by the customers shopping needs -Tradeoff between giving customers adequate space in which to shop and productively use this scarce resource for merchandise-->Don't like cramped stores, but spacious design reduces the amount of merchandise available, reduces impulse purchases

KPI

Key performance indicator - a statistical measure of how well a company is doing in a certain area

controlling costs

Labor Scheduling: determining the employees assigned to each area of the store during each hour is difficult b/c customer traffic varies during the day and week; can use computer system to make sure there isn't too many employees but enough; complement full time employees with part time ones Store Maintenance: the activities involved with managing the exterior and interior physical facilities associated with the store; parking lot, entrances to the store, signs on the outside of the store; walls, floors, ceiling, bathrooms, AC; Cleanliness-->good for image Inventory Shrinkage: the inventory loss due to employee theft, shoplifting, mistakes, inaccurate records, and vendor errors; loss prevention specialists; determine the most effective way to protect merchandise while preserving an open attractive store atmosphere; create a trusting, supportive work environment

store design elements

Layout: Grid-Parallel aisles with merchandise on shelves on both sides of aisles; Cash registers at entrances/exits; Good for customers that are interested in utilitarian benefits, not interested in hedonic benefits; Want to easily locate products and get out quickly; Cost efficient—less wasted space, aisles are all same width and just wide enough for carts; Customers aren't exposed to a lot of merchandise in the center store, which limits unplanned purchases Racetrack layout: major aisle with loops around the store to guide customer traffic around different departments; Gets customer to see merchandise available in multiple departments and encourages unplanned purchasing Free form layout: fixtures and aisles in an asymmetric pattern; Facilitates shopping and browsing; Common in specialty stores; Costly; No well-defined traffic pattern, personal selling is more important; Limit on amount of merchandise displayed Signage and Graphics: helps customers locate specific products and departments, provide product info, suggest items o Call to action signage=Conveys how, where and why to engage with the retailer via QR codes, email, messages o Category signage=Used within a particular department to identify the types of products offered o Promotional signage=Describes special offers found within the store or displayed in windows to get people to enter o Point of sale signage=Placed near the merchandise they refer to so that customers know its price and other detailed info o Digital signage=Signs whose visual content is delivered electronically through a centrally managed and controlled network, distributed to servers in the stores and displayed on screens; More effective in grabbing consumers attention; Displays complex graphics and creates an appealing atmosphere; Consistent in every store; Can change content at a low cost and frequently

Legal, Ethical, and Social Responsibility Issues for Buying Merchandise

Legal and Ethical Issues: -Counterfeit merchandise= goods made and sold w/o the permission of the owner of a trademark or copyright -Intellectual property= intangible and created by intellectual effort as opposed to physical effort -Trademark=any mark, word, picture, device or non functional deisgn associated with certain merchandise -Copyright=protects the original work of authors, painters, musicians -Gray market, diverted and black market merchandise -----Gray market goods/parallel imports=involve the flow of merchandise through distribution channels other than those authorized or intended by the manufacturer or the producer ----Diverted merchandise=merchandise that is diverted from its legitimate channel of distribution—doesn't have to be international ----Black market=availability of merchandise at a high pricer when it is difficult or impossible to purchase under normal market circumstances -Terms and conditions of purchase ---Restrictions on prices and terms vendors can offer to retailers-can't offer different terms and conditions to different retailers for the same merchandise and quantity; anti Chain Store Act -Commercial bribery=when a vendor or its agent offers or a buyer asks for something of value to influence purchase decisions -Chargeback=retailers deduct money from the amount they owe a vendor-->When vendor did not meet the agreed terms - Buybacks= stocklifts/lifeout=activities engaged in by vendors and retailers to get old products out of retail stores and new products in their place; Retailer allows a vendor to create space for its merchandise by buying back a competitor's inventory and removing it from the retailers system -Exclusive dealing agreements= when a vendor restricts a retailer to carrying only its products and nothing from competing vendors -Tying contract=when a vendor requires that a retailer take a product it doesn't necessarily desire to ensure that it can buy a product it does desire Corporate Social Responsibility=describes the voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations

Metropolitan Statistical Area

MSA=a core urban area containing a population of more than 50k inhabitants, together with adjacent communities that have a high degree of economic and social integration with the core community Micropolitan statistical area=removed from larger US cities, often up to 100 miles-Lack economic significance, substantial production capabilities and provide reasonable housing for residents

types of communication budgets

Marginal analysis=number of locations, allocation fo merchandise to stores, staffing of stores, floor and shelf space dedicated to merchandise categories Coop advertising=a promotional program undertaken by a vendor and retailer working together *vendor pays for part of the retailers promotion but dictates some conditions Marginal Analysis Method =Based on the economic principle that firms should increase communication expenditures as long as each additional dollar spent generates more than a dollar of additional contribution; hard to do Objective and Task Method: determines the budget required to undertake specific tasks to accomplish communication objectives; establishes a set of communication objectives and then determines the necessary tasks and their costs Rule of Thumb Methods= use past sales and communication activities to determine the present communication budget; affordable budgeting model=sets the communication budget by determining what money is avalible after operating costs and profits are subtracted *Percentage sales method=sets the communication budget as a fixed percentage of forecast sales *Competitive parity method=communication budget is set so that it is equal to communication expenditure of the firms most significant competitor *Relative advantages and problems with rule of thumb methods= they don't assume that communication expenses stimulate sales and profit; methods ignore the differential abilities of different retailers to create and implement their communication strategies; percentage of sales and competitive parity method assumes that the copied competitor has an equally appealing format; advantage of affordable method and percentage of sales method is that the retailer wont spend beyond its means

MOA

Marketing Opportunity Analysis part of business planning, before undertaking a new product you analyze the market to analyze potential profit from it and what the demand would be -industry outlook, competitors, target customer profiles, sales projections

brand alternatives

National Brands -Products designed, produced and marketed by a vendor and sold to many different retailers -Vendor develops the merchandise, produces it with consistent quantity and undertakes a marketing program to establish an appealing brand image -Umbrella/family brand=a product's brand name associated with the company's name o Ex: Kellogs · Subbrand=part of a branding strategy in which a product's brand name is associated with description of the product o Ex: Raisin Brain Store Brands: -Store brands/private label brands/house brands/own brands=products developed by retailers; they develop and design the specifications for their store brand products, then contract with manufacturers to produce those products -Premium store brands=offer the customer a product that is comparable to a manufacturer's brand quality, sometimes with modest price savings -Exclusive brands=a brand that is developed by a national brand vendor, often in conjunction with a retailer, and sold exclusively by the retailer; when a national brand manufacturer assigns different model numbers and has different exterior features for the same basic product sold by different retailers, but the product is still marketed under the manufacturers brand; When a retailer develops a store brand with its own unique identity -Copy cat brands=imitate the manufacturer's brand in appearance and packing, generally are perceived as lower quality and are offered at lower prices Generic Brands: -Unbranded, unadvertised merchandise found mainly in drug, grocery and discount stores -No frills product at a discount price -Ex: eggs or prescription drugs

organizational structure for retail company

Organization Structure for a Retail Firm: =Identifies the activities to be performed by specific employees and determines the lines of authority and responsibility in the firm -4 major categories=strategic management, administrative management, merchandise management, store management Organization of a Single Store Retailer:Easier to manage than large stores; owner assigns tasks to each employee and watches to see that these tasks are performed correctly; little specialization, employees perform many tasks; as sales increase owner many higher more people and lead to specialization Organization of a National Retail Chain: -CEO=oversees entire organization -President of global operations, internet channels, private label management and senior VP's of merchandising, stores and administration -Merchandising=SVP works with buyers and planners to develop and coordinate the management of the retailer's merchandise offering and ensure it is consistent with firm strategy; buyers determine merchandise assortment, pricing and managing relationships and negotiating with vendors; merchandise planners=responsible for allocating merchandise and tailoring the assortment of several categories for specific stores in a geographic area; general merchandise managers, divisional merchandise managers and buyers -Stores: SVP of stores handles all activities related to stores including working with regional managers, who supervise direct managers, who supervise individual store managers; store managers in large stores have several assistant managers who report to them; one is responsible for admin and restocking and presenting merchandise, HR, operations (store maintenance and security); each region has regional planners who work as liaisons between stores in their region and the corporate planners to ensure that the stores have the right merchandise at the right time in the right quantities -Operations: EVP of operations oversees managers in charge of MIS, supply chain, HR, visual merchandising; shrinkage and loss prevention and maintenance of physical assets of firm such as stores, offices, distribution centers, trucks -Marketing: CMO works with staff to develop advertising, promotion and social media programs -Finance: Works with CEO on financial issues; assist real estate division, legal -Private Label: responsible for conceptualization, design, sourcing, quality control, and marketing of private label and exclusive merchandise; private label is considered as its own brand separate from the store -Direct Channels: selection and pricing of merchandise assortment offered through the internet, mobile, social and catalog and other non-store channels, maintenance and design of retailer's website, customer call centers, fulfillment centers -Global:oversees retailing operations outside the home country; has all same divisions

System Design Issues and Trends

Outsourcing Supply Chain Functions:Retailers can use public warehouses that are owned and operated by an independent company, can use freight forwarders to arrange for the storage and shipping of their merchandise -Advantages and Disadvantages of Outsourcing Supply Chain Activities:Independent firms can perform the activity at a lower cost and/or more efficiently than the retailer, scale economies, backhaul=trips that trucks make to return to distribution centers after delivering merchandise to stores, retailers can no longer develop a competitive advantage based on the performance of this activity Pull and Push Supply Chains -Pull supply chain=a supply chain in which requests for merchandise are generated at the store level on the basis of sales data captured by POS terminals; demand for an item pulls it through the supply chain -Push supply chain=merchandise is allocated to stores on the basis of forecasted demand -Pull supply chain has less chance of being overstocked or out of stock b/c store requests for merchandise are based on customer demand; increases inventory turnover and is more responsive to changes in customer demand, and becomes more efficient than push approach when demand is uncertain and difficult to forecast -Pull approach is more costly and needs more sophisticated technology, retailers sometimes don't have the flexibility to adjust inventory levels on the basis of demand Radio Frequency Identification Devices -Provides accurate, affordable, real time measure of item inventory levels, can hold more data and update the data stored, can reduce inventory levels and stock-outs, the data on these devices can be acquired without a visual line of sight, enables the accurate real time tracking of every single product, reduces theft, high cost Supply Chain For Fulfilling Catalog and Internet Orders -Different warehouse design than for retail stores-->if a retailer has multiple channels it has to outsource fulfillment of non-store sales, designate separate areas within the present DCs for shipments to individual consumers, build different FCs for the new channels or fulfill orders by picking and packing merchandise in their stores -Drop Shipping 1. A system in which retailers receive orders from customers and relay these orders to vendors; the vendors then ship the merchandise ordered directly to the customer, reduces supply chain costs and investment, can lengthen delivery times and increases costs Customer Store Pickup-drives additional sales, need to invest in technology that enables order allocation systems to locate every item in stock to fulfill the order in a timely manner, need consistency, products showing available online need to be available and in stock ready for pickup-->accuracy, mobile task management=wireless network and a mobile device that receives demand notification and enables a speedy response Reverse Supply Chain:the process of capturing value from and/or properly disposing of merchandise returned by customers and/or stores , merchandise returned bc it is damaged, recalled, lo longer sold bc season, discontinued, excessive inventory in stores or Dcs, record info when items are returned and need to decide what to do with product, goods come from all over and and must be consolidated in or or a few receiving centers ,the goal of forward processing is consistent quality, the reverse process is due to the lack of consistency of products involved, A distribution plan in a forward process is designed carefully and in advance, for a reverse process the distribution pattern can take a variety of unpredictable patterns, The forward process constantly seeks more cost transparency in its standardized cost structures, but such goal is not important in the reverse process ,Growth of sales through internet and increasing interest in environmental sustainability-->the percentage of returned merchandise is much greater for purchases made through the internet compared to the store;

customer retention

Personalization-Need to provide high quality, personalized customer service to build and maintain loyalty, - 1 to 1 retailing=retail programs for small groups or individual customers **Know customers by name, greet them, recommend merchandise they know they will like -Involve the best customers in retailer's business decisions-->Focus group participants -Community **Retail brand community=a group of customers who are bound together by their loyalty to a retailer and the activities the retailer sponsors and undertakes

negotiating with vendors - issues

Prices and gross margin, additional markup opportunities, terms of purchase, exclusivity, advertisng allowances, transportation Prices and gross margin: Factors affecting it=margin guarantees and slotting allowances --Margin guarantees by providing markdown money: If merchandise does not sell as expected items may have to go on sale and the margin goal is not met-->might make a guarantee with wholesaler that markdown money will be given to make up the lost margin --Slotting fees:Charges imposed by a retailer to stock a new item, Products with low brand loyalty have higher slotting allowances, Useful method for retailers to determine which new products merit inclusion in their assortment Additional markdown opportunities:only markdown more if it preserves their current image Terms of purchase:have to balance different financial objectives Exclusivity:Retailers often negotiate with vendors for an exclusive arrangement so that no other retailer can sell the same item or band, allows the retailer to differentiate themselves from competitors and realize higher margins due to reduced price competition, Having an item first=differential advantage Advertising allowances:Cooperative advertising=vendor agrees to pay for all or part of a pricing promotion Transportation: Who is going to pay?

markdown reasons and options

Reasons for Taking Markdowns: -Clearance(to dispose merchandise) or promotional( to generate sales) -When merchandise is selling at a slower rate than planned and will become obsolete at the end of its season it is marked down for clearance -Slow selling merchandise decreases inventory turnover, prevents buyers from acquiring new, better selling merchandise and can diminish the retailers image for selling the most current styles and trends -Merchandisers plan for markdowns b/c they over-order b/c they don't want to stockout -Buyer's objective isn't to minimize markdowns Optimizing markdown decisions: -Rule based approach is limiting b/c it does not consider the demand for the merchandise at different price points or in different locations and thus produces less than optimal profits -Software can determine when to take markdowns and for how much and where Reducing the amount of markdowns: -Can work closely with vendors to choose merchandise and coordinate deliveries to help reduce the financial burden of taking markdowns, can buy smaller quantities to make it easier to forecast demand for a shorter period of time and create a feeling of scarcity -Markdown money -Make customer think it is a good value Liquidation strategies: -Selling the unsold merchandise to another retailer -Consolidate unsold merchandise: expensive, consolidation can be made into one or a few of the retailers regular locations, markdown merchandise can be consolidated into another retail chain or an outlet store under the same ownership, unsold merchandise can be shipped to a distribution center or rented space for final sale -Sell on the internet -Return to vendor -Donate to charity -Carry over the merchandise to the next season

gaps model for improving retail customer service quality

Service gap=the difference between consumers expectations and perceptions of customer service to improve customers' satisfaction with their service Knowledge gap: Reflects the difference between customers' expectations and the retailers' perceptions of those customer expectations; Can close this gap by developing a better understanding of customer expectations and perceptions Standards gap: The difference between the retailer's knowledge of customers perceptions and expectations and the service standards it sets; Close this gap by setting appropriate service standards and measuring service performance Delivery gap: Difference between the retailer's service standards and the actual service it provides to customers; Gap can be reduced by getting employees to meet/exceed service standards through training and/ or appropriate incentives Communication gap: Difference between actual service provided to consumers and the service that the retailers promotion program promises; Gap can be managed by retailers being realistic about the services they can provide Knowledge gap: Need to know what customers want, need, and expect and then using this information to improve customer service -Ex: customers placing more importance on quick checkout lines than stocked shelves -Need to undertake customer research, increase interaction between retail managers and customers, and improve communication between managers and employees -Social media ex:Sentiment analysis=assess the favorableness in their customers sentiments by monitoring these social media-->provides new insights into what consumers really think -Surveys, panels, and contests:Retailers offer surveys immediately after sales transaction; Interview panels have 10 to 15 customers interviewed to gain insights into expectations and perceptions oInteract with customers, either directly or through observation; Owner managers of small retail firms typically have daily contact with their customers and get accurate, firsthand information about them; In large retail firms managers often learn about customers through reports, so they may miss the rich info provided by direct contact with customers Customer complaints= Complaints allow retailers to interact with their customers and acquire detailed info about their service and merchandise;Handling complaints is an inexpensive way to isolate and correct service problems; Some complaints are biased and have to do more with the employee than the merchandise o Feedback from store employees o Using customer research in a timely manner

space management

Space productivity: Allocate on the basis of merchandise's sales; two measures=sales per square foot and sale per linear foot; need to allocate space to maximize the profitability of the store, not just a particular merchandise category or department Inventory turnover: Merchandise categories with higher inventory turnover merit more space than merchandise categories with lower inventory turnover; Merchandise displayed on the shelf is depleted more quickly for items with high inventory turnover, thus more space needs to be allocated to this fast selling merchandise to minimize the need to restock the shelf frequently and reduce stock-outs · display considerations: Displays take up space buy help enhance the image and promote a specific product

store exteriors

Store Exteriors:Need to draw consumers in ;physical store, signage, parking, landscaping Windows= window displays draw consumers in and provide a visual message about the type of merchandise offered in the store and type of image they want to portray; takes time, creativity and have to coordinate with merchandise; should tell a story Entrances: draws customers in and reinforces image; decompression zone=first 10 feet allows consumers to adjust to the new environment, escaping from noise, developing visual impression of store Parking=need a cleared entrance to the store; parking locations and sufficient amount

Promotional Markdowns

To increase sales and promote merchandise To increase traffic flow and sale of complementary products generate excitement through a sale

Defining Trade Areas

Trade area=a continuous geographic area that accounts for the majority of a stores sales and customers Three zones=5-minute zone, 10 minute zone, 15 zone -Primary trading area=the geographic area from which the shopping center or store derives 50 to 70% of its customers -Secondary trading area=the geographic area of secondary importance in terms of customer sales, generating 20-30% of sites customers -Tertiary trading area/fringe trading area=includes the remaining customers who shop at the site but come from widely dispersed areas Factors Affecting the Size of the Trade Area: -Determined by stores accessibility, natural and physical barriers, level of competition, nature of merchandise sold. Assortment offered, location of alternative sources for the merchandise Measuring the Trade Area for a Retail Site: -Customer spotting=the process of locating the residences of customers for a store on a map and displaying their positions relative to the store location Sources of Information about Trade Areas: -Consumers and competitors -Demographic data from the us census bureau: census=takes demographic information from every household in the US · Geographic information system suppliers: A system of hardware and software used to store, retrieve, map and analyze geographic data · Identified with a coordinate system that references a particular place on earth · Tapestry segmentation-Census and survey data about people's lifestyles and purchasing behavior with the mapping capabilities of GIS · People who live in similar neighborhoods tend to have similar lifestyles and consumer behavior patterns · Spending potential index · Compares the average expenditure in a particular area for a product to the amount spent on that product nationally o Competition in the trade area · Amount and type of competition in the area

Developing CRM Through Frequent Shopper Programs

Two objectives of loyalty programs=build a data warehouse that links customer data to their transactions and encourages repeat purchase behavior and loyalty -Effectiveness of Frequent Shopper Programs: not effective for building customer loyalty b/c customers don't feel they are unique programs, competitive advantages based on frequent shopper programs are not sustainable; easy to be copied by competitors; expensive ,difficult to revise and correct -Making Frequent Shopper Programs More Effective,offer tiered rewards, treat frequent shoppers as VIPs, incprorate charitable activities, offer choices, reward all transactions, make the program transparent and simple,offer tiered rewards --Higher the tier better the rewards --Incentive for customers to consolidate their purchases with one retailer to reach the higher tiers --Need to design tiers that consumers perceives as attainable

new media benefits

Websites=used to build their brand images, inform customers of store locations, special events, and the availability of merchandise in local stores and sell merchandise and services; community building; questions and reviews; editorial content and fashion advice; personalized and interactive experience; search engine marketing=improves visibility of their websites in searches; search engine optimization=creating and adjusting website content to show up closer to the top of a search engine result page Email=sending messages over the internet to specific individuals; inform customers of new merchandise and special promotions, confirm the receipt of an order, and indicate when an order has been shipped; highly personal and messages are controlled Mobile marketing= marketing through wireless handheld devices such as cell phones; fun apps; do it based on location; deliver free coupons and promos Social Media: -Various forms of electronic communication which users can employ to create online communities in which they share ideas, information and their interpersonal messages and other content -Youtube, facebook and twitter -Online forrums help build communities -Encourage proactive dialogue -Sentiment analysis=process of analyzing data posted on social media sites to assess customers overall valence and their intensity of their sentiments and can be used to understand overall attitudes and preferences for products and advertising campaigns -Youtube:expressive medium, helps foster identity -Facebook= can interact with fans; can post company updates, photos, videos, participate in a discussion board; targeted ads; can target local groups Blogs= word of mouth=communication among people about an entity such as a retailer or a product or service; help form a community, allow a retailer to respond directly to customers comments, and facilitate long term relationships between customers and the retailer; transparent Twitter: microblog=shot version of a blog:fast changing info to excite customers; sense of urgency; lets you stay in personal touch with customers; changed the way customers get product and service info and register praise and complaints

delivery gap

a type of service gap; the difference between the firm's service standards and the actual service it provides to customers o Give information and training: Service providers need to know about the retailer service standards and the merchandise it offers, as well as the customers needs so they can answer questions and suggest products-->instills confidence to resolve problems; Need specific training in interpersonal skills to be able to deal with upset customers o Empower service employees; Empowerment=allowing employees at the firm's lowest levels to make important decisions regarding how service will be provided to customers; This can be difficult-some employees do not want to be in charge of decision making; The benefits of empowering service providers may not justify the costs o Provide instrumental and emotional support;Instrumental support=appropriate systems and equipments; Emotional support=demonstrating a concern for the well being of others; Need to reduce stress of store employees so they work well with customers o Provide incentives; Commissions on sales; If service personnel feel incentivized and satisfied with their rewards, they likely offer improved productivity; Commissions on sales also can decrease customer service and job satisfaction while motivating high pressure selling, which leads to customer dissatisfaction o Improve internal communications; Sales associates may be conflicted between meeting corporate and customer goals; Retailers can reduce these conflicts by issuing clear guidelines and policies concerning service and explaining the rationale for these policies; Conflicts can arise when retailers set goals that are inconsistent with the other behaviors expected from store employees;Conflicts can arise between different areas of the firm o Use technology; Self-scan checkouts, web linked kiosks, apps, QR codes;Technology helps customers find and learn more about products and services offered; enable faster and more efficient payment; Up to date info about items in stock and price

Flow of Merchandise Through a Supply Chain

a. Manufacturers to distribution centers or b. Manufacturer directly to stores c. If the merchandise goes through distribution centers, it is then shopped to stores, d. And then the customer buys it

Integrated Marketing Communications

carefully integrating and coordinating the company's many communications channels to deliver a clear, consistent, and compelling message about the organization and its products

Evaluating Specific Sites

characteristics of site, characteristics of the trading area for a store at the site, estimated potential sales that can be generated by a store at the site

motivational based segmentation

dividing people based on their motivations for doing something -consciousness, creative, fulfilled, influential, knowledgable, secure, sociable -people of all different ages could have the same motivation

Considerations in Evaluating Store Locations

economic conditions, competition, strategic fit of the area's population with the retailer's target market, operating costs -Want to generate highest long-term profits · Economic conditions: -Population and employment growth -How long growth will continue and how it will affect demand -City growth · Strategic Fit: -Area needs to have consumers who are in retailer's target market; right demographic and lifestyle profile; size and composition of households · Operating Costs: -Depend on area, affected by proximity of area being considered to other areas in which the retailer operates stores, local and state legal and regulatory environment

MAU

monthly active users -someone who uses an app over 30 days

feature areas

o Areas within a store that are designed to get customers attention o Freestanding displays o Mannequin o End caps=displays located at the end of an aisle in stores using a grid layout, high visibility, disorganized are better than organized, use end caps for high margin, impulse and sale merchandise o Promotional aisle=space used to display merchandise that is being promoted Ex: Halloween candy o Walls= merchandise can be stored on shelving, and racks with graphics and photographs, efficient and aesthetic o Dressing rooms=critical spaces ;should be large, clean, comfortable o Cash wraps=point of purchase counters/checkout areas

Estimating Potential Sales for a Store Site

o Regression Analysis -Based on the assumption that factors that affect the sales of existing stores in a chain will have the same impact on stores located at new sites being considered o Analog Approach -Retailer simply describes the site and trade area characteristics for its most successful stores and attempts to find a site with similar characteristics o Illustration of Site Selection -Conduct a competitive analysis -Define the present trade area -Analyze the trade area characteristics -Match characteristics of the present trade area with potential sites

Balancing customer service

personalization vs. standardization Standardized service=based on establishing a set of rules and procedures for providing high quality service and ensuring that they get implemented consistently--Relies on quality of retailer's policy, procedures and store, website design and layout; Level of customer service and personalized information desired from sales associates varies for different buying situations -Automated services improve the speed and reliability of the retail interaction for customers -Impersonal -Hard to differentiate their store -Consistency Personalized Service: -requires that service providers tailor their services to meet each customers personal needs -Less consistent than standardized service -Delivery depends on the judgement and capabilities of each service provider -Another version relies on the combination of recommendation engines with a database of customer transactions ex:Amazon

golden circle

why, how, what people don't buy what you do, they buy why you do it buy with our emotions and justify it with logic