CTE3862 Exam 2 Study Guide
Ways to integrate e-tailing and brick and mortar:
- Develop the e-tail operation with the end in mind; begin with an understanding of your customer base and consumer behaviors - Bridge the gap between physical store and online store - Make sure you factor in the value of your product and service offerings, not just for the customer, but also for your business operation - Make sure your value proposition meets consumer expectations - Balance, and then integrate your knowledge of customers, your channels of distribution, and your product and service mix - Integrate all of your knowledge throughout the organization
site types: Freestanding
- Individual stores, aka isolated location - Located off a main road, highway or street - Limited competition
Target Market Characteristics
- Need or desire for the product/service - The ability to purchase the product or service from the retailer - The willingness to purchase the product or service - A sufficient number of people in the market to generate profits
retail tactics include
- Pricing - Integrated marketing communication (IMC) - Customer service
Vision statement benefits
- Promotes alignment of everyone in the organization - Encourages inspiration and motivation for employees and stakeholders - Serves as an articulation of retailer values - Motivation for all stakeholders to perform
what is the purpose of planning
- Provides direction for expenditures - Provides an opportunity for integration - Assists decision-makers in effective plans for their specialized areas
situational analysis: assessment of the retail environment
- The history of the retailer - The current position in the marketplace - The product and sales history - Target market information
classification by merchandise type: general merchandise retailers
-Department Stores -Discount Stores (Extreme Value Retailers - dollar tree) -Specialty Stores -Off-Price Retailers -Drug Stores
classification by merchandise type: food retailers
-Traditional supermarkets -Superstores -Combination stores -Supercenters -Warehouse clubs and stores -Convenience stores -Limited-Line Stores
Steps of the retail strategy:
1: The mission, vision, objectives and situation analysis help to develop the retail strategy 2: Provides a framework for current and future actions 3: Dictates how objectives will be achieved 4: Affected by controllable and uncontrollable variables 5: VITAL characteristics: - Integration is essential - Must be dynamic - Requires strategic thinking - Stems from a desire to create and control the future
Independent retailers: Family owned, "Main Street" retailers
Advantages •Quick response to customers •Involvement in the community •Lower retail expenses •More opportunities to build customer relationships Disadvantages •Hard to take advantage of economies of scale •Lower levels of expertise in functional areas •Smaller number of employees
Central Business Districts
Advantages: Easy access to public transportation Close to government office/businesses High levels of traffic Disadvantages: Consumer perception of poor shopping Inadequate and expensive parking High rent and older buildings High crime
Strip Shopping districts (main street)
Advantages: Stores visible from the road Large choice of retailers offering similar items Lower rents Parking Disadvantages: Very competitive Limited location availability Lack of pricing flexibility Higher advertising costs
Freestanding Sites
Aka isolated sites "stand-alone" Common with large stores and convenient stores Limited competition in the area Typically lower rent Harder to attract customers
Drug Stores
Although technically a specialty store, drug stores have been expanding rapidly over the past decade, morphing into larger stand-alone stores. Drug stores typically sell medicine and drugs, but have also gotten into food and merchandise.
Customer service
Anything a retailer provides in addition to the core product or service - parking - bathrooms
convenience stores
Are located in areas that are easily accessible to customers, thus they provide their customers with convenience. - cater to a neighborhood and carry a very limited assortment of products.
situational analysis: overview of the company
Company sales Product/service history Competitive analysis Geographical considerations Consumer analysis SWOT analysis
Differentiation is a
Competitive Advantage - distinguishes the retailer and their product from others - Effective development of multiple channels of distribution while focusing on the customer's needs and wants
E-tailing disadvantages
Concerns about fraud and security Consumers privacy concerns Difficult to determine the final cost of a product at checkout Junk mail from e-tailers Non completion of sales Cant inspect the product physically before buying Difficult to return Branding for e-tailers is more difficult
Typical customer profile Variables:
Demographic consumer data Geographic data Psychographic data Behavioristic data Geodemographic data Types of buyers
Brick and Mortar Advantages
Experience Instant gratification Personal service Interaction with salespeople Stimulation of senses Cash payments Easy returns and exchanges Impulse purchases
vision statement
Focuses on tomorrow and what an organization wants to ultimately become - includes values - focuses on future goals
With regard to customer behavior, subgroups should be:
Homogeneous (similar) within the segments and Heterogeneous (different) between segments
Regional Shopping Centers
Includes megamalls/super regional centers Enclosed with inward-facing stores Has at least on anchor store Provides general merchandise
Market and location selection
Involves decisions on market and physical location as well as channels of distribution - number of stores - channels
Department Stores
Large retailers that carry a wide breadth and depth of products. They offer customers more service than general merchandise retailers.
Brick and Mortar Disadvantages
Limited market Time it takes for a customer to get to the store More difficult to compare prices in a physical store COVID
Trading Areas: primary secondary and tertiary market
Primary: 50-70% of market, Secondary: 20-30% of market, Tertiary (fringe): less than 20% of the market
Market and Location Analysis/Decisions
Process of looking at various, potential markets, and a specific location within each of these markets • Choosing target market • Analyze the trade area • Selecting the site - Helps to evaluated potential market areas and locations - Location decisions help differentiate a retailer - Location decision should enhance or mirror the overall retail value proposition - Ultimate goal - maximum customer access
E-tailing advantages
Provides flexibility Easier to track customers to conduct retail research Easier to start a business Way to communicate with current and potential customers Provides alternative methods to deliver products and services to consumers Expands trade area Less overhead costs Convenience for the customer to shop anywhere there is internet access Provides an easy way for customers to compare product prices Consumer can find product ratings online
Tourist trade
Sales from outside the area in which the retailer is located
Community Shopping Centers
Smaller than regional shopping centers Diverse tenant mix Anchors are smaller department stores Can have a number of smaller stores
SMART
Specific, Measurable, Attainable, Realistic, Timely
Retail Classifications
Systems exist to classify retailers (by ownership or merchandise type)
strategic planning
Tends to be a year in length but can be prepared for any length of time - Should be reviewed and revised regularly - Composed of controllable (services offered, employees, hours) and uncontrollable variables (economy, environment, politics)
Neighborhood Shopping Centers
Tends to be outdoors and in a straight (strip) or curved line Typically contains a strong anchor (Publix) Draws customers from 3-5 miles radius
Retail information systems (RIS)
Tools to gather and store data which can be turned into information and used by decision makers - Ranges from simple to sophisticated - primary and secondary
Lifestyle Centers
Upscale retailers Caters to retail needs and "lifestyles" of consumer in the trading area A type of "souped-up" neighborhood center, sells nonessential items
vision statements should answer the following questions:
What are our values? What are we working toward? How should we set up our retail climate? What image do we want to present to our customers, employees and shareholders?
The mission statement answers the following questions about the retailer:
Why are we in business? What do we do? What do we stand for?
Customer Segments should be based upon ...
a customers buying habits
trading area:
a geographical area containing the consumers of a particular business or group of businesses for specific goods or services
Franchise
a type of business based on a contractual agreement between a franchisor and franchisee
Discount Stores
a type of department store that offer limited customer services and have merchandise priced below that at department stores. While department stores tend to sell merchandise "at" market price, discount operations differentiate themselves by selling their merchandise "below" the market price. - Extreme Value stores are deeply discounted
Integrated Retail Management:
an approach that involves coordinating all functions of a retailer so that different areas deliver consistent messages and service to customers - Provides a framework to guide retail decision making - Shows the "big picture" of major decision areas for retailers
Maria has owned and operated a Mexican restaurant for 10 years. It is so popular that her customers request t-shirts and other items to purchase as souvenirs. Maria starts a website dedicated to selling souvenirs. This is an example of: (chap 3) a. A brick and mortar format b. A multichannel retailer c. Selection of a target market d. All of these answers are correct
b. A multichannel retailer
One way for independent retailers to compete with chains is to: (chap 4) a. Have the HR department hire the best and the brightest b. Offer extra services such as free gift-wrapping c. Buy goods due to cost reductions through economies of scale d. All of these answers are correct
b. Offer extra services such as free gift-wrapping
Channels of Distribution:
brick and mortar, internet, combination
You go to Target and notice that there are several people in the parking lot writing down the license plate states of the cars parked there. This is an example of : (chap 7) a. Illegal activity of the retailer b. Geolocation technology c. Customer spotting d. Designated market area analysis
c. Customer spotting
Which of the following is a requirement for a useful target market? (chap 3) a. Must respond well to advertising efforts b. Must have knowledge of a retailer's history and operations c. Must have adequate money or credit to purchase a retailer's products/services d. Must be categorized into a particular demographic to understand the consumer
c. Must have adequate money or credit to purchase a retailer's products/services
Specialty Stores
carry a limited number of products within one or a few lines of goods and services - got their name because they "specialize" in just one type of product.
Intratype
companies that compete for the same customer base and households (Walmart /Target)
Integrated marketing communication (IMC)
comprises all of the tactics that will be used to reach and communicate with the retailer's targeted market and market segments: PR, publicity, marketing, advertising, sales promotion, POP, personal selling
A good vision statement contains: (chap 3) a. A statement of a desired future b. A reminder of why the organization exists c. Values for the retailer d. All of these answers are correct
d. All of these answers are correct
Geolocation technology can: (chap 7) a. help determine where an online buyer is located b. help a retailer in determining the trade area c. determine the location of the site visitor down to the city level d. All of these answers are correct
d. All of these answers are correct
Which of the following is included in a situational analysis? (chap 3) a. Company strengths b. A description for the target market c. The geographical aspects of the location d. All of these answers are correct
d. All of these answers are correct
Which of the following is included in the IMC mix? (chap 3) a. Product decisions b. Whether to operate on the Internet c. Whether to have a physical store d. None of these answers are correct
d. None of these answers are correct
One of the advantages for a chain store is: (chap 4) a. Costs are higher b. Difficult to tailor products to a geographic area c. Absence of economies pf scale d. None of these answers is correct
d. None of these answers is correct
Define the relationship between objectives, strategy, and tactics
develop Objectives first, then create a Strategy, then create the Tactical executions (LOST)
Intertype
different types of retailers who sell the same lines of products and compete for the same household dollars (Dunkin' Donuts /Wegman's)
A SWOT is a statement that explains the purpose of the business. (chap 3) a. True b. False
false
A target market consists of the boundaries of a retailer's geographic area. (chap 7) a. True b. False
false
One disadvantage to owning a franchise is the bigger capital outlay required compared to starting from scratch. (chap 4) a. True b. False
false
One of the benefits of having a vision statement is that profits will increase (chap3) a. True b. False
false
Primary data
generated specifically to solve some problem
Retail objectives
goals that state what will be accomplished within a given time period - Mission and vision statements provide guidance in developing these - Should be SMART
secondary data
have already been collected and analyzed in another context and are not gathered to solve a particular problem
Off-Price Retailers
have grown in number and strength over the past years, driven by many environmental factors, but the number one factor was the poor economy. They look like discounters in that they sell brand-name merchandise at every-day-low prices (EDLP) - rarely offer any additional customer services
PESTLE/PEST:
is an analysis that looks at different factors of an environment Political economic social technical legal environmental
category killers
known also as power retailers or category specialists, are usually discount specialty stores that offer a deep assortment of merchandise in a particular category.
LOST
link objectives, strategies, and tactics
traditional (conventional) supermarkets
offers a full line of groceries, meat and produce with at least $2 million in annual sales and up to 15% of their sales in general merchandise/health and beauty care. The stores carry between 15,000 and 60,000 SKUs and may have a deli, bakery and/or pharmacy. Rely on high inventory turnover.
POS
point of sale
Trading area considerations
population Availability of a labor force Rules, laws, and regulations Types of schools State of the areas economy Number and size of competitors Communications or promotion network Types of transportation available Proximity of suppliers
Divertive
sell the same type of merchandise or services, but they don't specialize in the merchandise that they sell (buying flowers in a supermarket)
Leased Departments
spaces in larger, already established retail stores that are rented (leased) to third parties or outside vendors
mission statement
statement that describes business purpose (Focuses on today and what an organization does to achieve it)
A SKU is a ...
stock keeping unit retailer-defined numbers or codes used to identify each unique product sold
-Geolocation:
technology that uses web geography to determine where an online buyer is located Personal information is not collected; only city and state is required
Retail Strategy
the "big picture" of how to achieve objectives
Franchisee
the buyer of the franchise
Tactical executions (tactics) -
the day to day operational activities that help retailers achieve their strategy and implement the retail plans
Planning
the establishment of objectives, policies, and procedures to carry out goals
Integrated retail management planning
the establishment of objectives, policies, and procedures to carry out goals that are consistent within and across channels
Franchisor
the owner of a franchise and has developed a successful business mode
Target marketing -
the process of identifying and attempting to reach people with a company marketing efforts
Competitive analysis
the process of identifying the performance of brands or products within the retailer's market
Chain Stores: Economies of Scale
there is more than one store in the company - Bulk of sales in retailing comes from chains - Many are divisions of larger companies Advantages •Cost reductions through economies of scale •Use information technology more •Human resource capabilities to hire best and brightest Disadvantages •Higher costs •Slower to respond to environmental changes •Harder to tailor products to different geographical areas
A retail objective should have a deadline. (chap 3) a. True b. False
true
Many times a retailer will use a leased department because the retailer lacks the expertise for a given product line. (chap 4) a. True b. False
true
Ross is an example of an off-price retailer. (chap 4) a. True b. False
true
Anchors:
very important and they pull traffic in there (EX: Publix, Marshalls, Hobby Lobby) - these shopping centers can charge more for rent
Geofence:
virtual geographic perimeters of a physical area - Helps to deliver relevant marketing and communication - May create differentiation
site types: unplanned
• Central Business District • Strip Shopping Districts
site types: planned
• Regional Shopping Centers (Malls) • Community Shopping Centers • Neighborhood Shopping Centers • Lifestyle Centers- up and coming things
Franchise Advantages
•Smaller capital outlay required •Established brand names •Economies of scale achieved •Training provided by franchisor on many functional areas
