Retail Strategy Exam 2
urban locations
-Central Business District -Inner City -Gentrified Residential Areas
What are 5 dimensions used to evaluate service quality?
1st Tangibles 2nd Assurance/credibility 3rd empathy/courtesy 4th responsiveness 5th reliability/accuracy
Three Factors to Consider when evaluating a site
1st The characteristics of the site 2nd The characteristics of the trading area 3rd The estimated potential sales that can be generated
4th responsiveness:
Do they respond to you, does an associate help you in the store
changing importance weights is typically _____ because it reflects customers personal values
HARDER
Equal Pay Act of 1963
Requires that men and women be paid the same amount for doing the same job
Fair Labor Standards Act of 1938
This act federally established minimum wage and overtime pay.
job application form
a form used by employers to collect personal, educational, and occupational information from a job applicant
social risks
arise when customers believe a product will affect how others view them
multiattribute attitude model
based on the notion that customers see a retailer, a product, or a channel as a collection of attributes or characteristics: (1) its performance based on relevant attributes (2) importance of those attributes to customers DOES NOT reflect customers actual decision process.
Personalized Approach
includes activities that enhance the shopping experience and gives retailers a competitive advantage; above and beyond
reference group
includes one or more people whom a person uses as a basis of comparison for beliefs, feelings, and behaviors -affect buying decisions by : (1) offer information (2) rewards for specific purchasing behaviors (Sephora points card) (3) enhance a customers self image
The value customers believe they can gain from searching VS. the cost of searching is called _______ _______
information search
comparison shopping
judging the benefits of different products by comparing several factors, such as quality, features, and cost
Most retail chains open multiple stores in an area to _____ and______ by using economies of scale
lower promotion and distributions costs
3rd Learning New Trends
many customers shop to learn new fashion trends and styles. This need is often fulfilled by fashion
2nd tangibility:
parking lot, building, how are they dressed
health and safety laws
regulations that hold that employers must provide every employee with an environment free of hazards that are likely to cause death or serious injury
Cues to assess service
reliability, tangibility, empathy, responsiveness, assurance
physical risks
when customers feel that a product or service may affect their health or safety
store with in store
when retailers rents part of the retail space in a store operated by another retailer; EX: McDonalds at the entrance of Walmart
factors affecting long term profit generated by stores
(1) economic conditions (2) competition (3) strategic fit with target market (4) operating costs
WHY is location important?
1. Location is a prime consideration in where customers choose to shop 2. A good location is inimitable, sustainable competitive advantage 3. Location decisions are expensive 4. Locations are difficult to change
6 Hedonic Needs
1st Stimulation 2nd Social experience 3rd Learning New Trends 4th Status and power 5th Self Reward 6th Adventure
building codes
Legal restrictions describing the size and type of building, signs, type of parking lot, and so on that can be used at a particular location.
postpurchase evaluation
Part of the customer's internal information and affects store and product evaluations and purchase decisions
Gentrification
Renewal or rebuilding of a lower income neighborhood into a middle- to upper-class neighborhood, which results in driving up property values and rents and the dispossession of lower income residents.
extristic reward
Something given to you by someone else as recognition for good work; EX: pay increases, praise, and promotions.
unsatisfied need
The condition that arises when a customer's desired level of satisfaction differs from his or her current level of satisfaction.
1st reliability:
accuracy, charge for right amount, product sent on time
Delivery gap
actual service delivered:
demographic segmentation
dividing the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation; easily identified and can be reachable
3rd empathy:
do they treat you like a human? Are they respectful, are they nice, are they helpful
customer buying decisions are influenced by 4 social factors:
economy family reference groups culture
store maintenance
entails the activities involved with managing the exterior and interior physical facilities associated with the store. EX: parking lot, store signs; flooring, bathrooms
Customer service
interaction with a human; a set of activities and programs undertaken by retailers to make the shopping experience more rewarding for the customers; portion of your experience
How do retailers appeal to customers engaged in extended problem solving?
offer readily available information offer money back guarantees
consideration set
set of alternatives the customer evaluates when making a choice of a retailer to patronize.
Outlet centers
shopping centers that contain mostly manufacturers' and retailers' outlet stores; 70% of outlet centers contained at least 1 million residents
lifestyle centers
shopping centers that have an open-air configuration of specialty stores, entertainment, and restaurants, with design ambience and amenities such as fountains and street furniture
Merchandise kiosks
small temporary selling stations located in walkways of enclosed malls, airports, train stations or office building lobbies
Quota
target level used to motivate and evaluate performance
geodemographic segmentation
uses both geographic and demographic characteristics to classify consumers
composite segmentation
uses multiple variables to identify customers in the target segment according to their benefits sought, lifestyles, and demographics
financial risk
when a customer purchase expensive service
1st Stimulation
when trying to appeal to a customer's need for stimulation, the retailer will seek to stimulate their senses. This can be done in many ways, such as through the use of color, sounds, scents, etc.
"8 Reasons why you retail employee turnover is so high..." Bob Phipps, retaildoc.com
•There are no incentives, except at the manager level •Your policies or procedures are antiquated •Your training is minimal •Your employees are thrown into the job and not even introduced to the crew •You don't encourage employees to think, only to do •You make every day the same •You hire the wrong people •You keep promoting the wrong people
turnover equation
(number of employees who leave during the year / number of employees you have)
How important is location in businesses?
- 74% say location is very important -41% very important -33% important
Benefit: Personalized
- Customer Delight produces loyalty - Grater potential benefits to customers - Greater inconsistency - Higher cost
Downward Performance Spiral: 3rd Employee Response
- Decreased motivation and effort - Poor customer service - Lower job satisfaction - Greater turnover
Downward Performance Spiral: 2nd Retailers Response
- Layoffs - Freeze on hiring and promotion - Reduced training - Salary freeze - Greater use of part time employees and more outsourcing
Downward Performance Spiral: 1st financial Performance Problems
- Low profits- High costs- Very few expenses that are easy to cut quickly, except payroll
Benefits: standardized
- Lower cost - High consistency - Meet but does not exceed expectations
Segments of a trading area
- Primary trading area : 50%-70% - Secondary trading area: 20%-30% - Tertiary trading area: remaining customers
Negative Customer Service Experience
-49% of survey respondents have switched companies due to poor customer support WHY? Being redirected to multiple agents Not being able to get answers. Being put on hold for too long -22% of Americans would rather spend a night in jail than contact customer service
Challenges to Retailers
-Emphasis on expense control -Heavy turnover
Traffic Flow and Accessibility
-When traffic is greater, more customers shop -Good for convenience retailers -Not necessary for destination retailers -Too much can impede access to store -Accessibility to store is as important as traffic flow
4 criteria for evaluating market segments
1. Actionable: retailer should know how to satisfy needs 2. Identifiable: retailer determines which customers are in market segment 3. Substantial: retailer determines if merket is strong or buying power insignificant 4. Reachable: retailer can target promotions to consumers in the market segment
Service Recovery
1. Focus on customer concerns 2. Empower frontline employees 3. Show that you are listening 4. Express sincere understanding 5. Apologize and rectify the situation
The amount of information search is affected by
1. Individual consumer characteristics -Maximizer: Individuals who always aim to make the best possible choice - likely never to be satisfied because always in search for the best choice -Optimize: rational vs. Satisfice: Happy with their opinion 2. Market and buying situations -The availability of competing brands and retailers (increases info search) -Time pressure (decreases) -Prior experience (decreases) 3. Product types: High or low involvement products 4. Consideration Set
How do retailers satisfy customers hedonic needs?
1. Stimulation 2. Status and Power 3. Adventure
3 Types of Shopping Situations
1. convenience: concerned about minimizing their effort to get the product/service they want 2. comparison: consumers are more involved in purchase decision 3. specialty: consumers know what they want and will not accept substitutes
How can retailers increase the chances of customers coming to the store?
1. increase the beliefs about the stores performance 2nd change the customers importance weights 3rd add a new benefit
Worst Customer Service Industries (in order)
1.Government Offices 2.Telecommunications 3.Healthcare 4.Utilities 5.Insurance 6.Retail
Top Pain Points of Customer Service
1.Having to repeat details 2.Having to contact multiple times 3.Only having one option 4.Not being able to talk to a human 5.Spending time on hold with bad music 6.Poor connection 7.Not being able to resolve an issue online.
the degree to which each retailer provides each benefit is represented on a __ ____
10-point scale; 10=best, 1=worst
National labor rate looks at everyone over the age of __ and ________
16 and employed
What are 3 buyer decisions when making a purchase?
1st :Where do I wish to go? and Evaluating the potential of specific areas 2nd: How many stores; economy of scale vs. cannibalization 3rd: Where do I wish to go; evaluating the potential of specific sites
2 main problems in providing quality service
1st Intangibility of benefits - difficult for customers to evaluate service quality -difficult for firms to evaluate quality of service delivered by employees 2nd Inconsistencies for service provided.
Customers have 2 sources of information.
1st Internal Sources: comes from a customers memory/past shopping experience 2nd External Sources: information comes from search engines such as Google
At what stage do the best retailers know that it is focusing on their customers hedonic needs that allows them to differentiate themselves.
1st problem awareness
Stages in the buying process
1st problem awareness/need recognition 2nd search information 3rd evaluation of alternatives 4th purchase 5th post-purchase behavior
True cost of employee turnover - direct cost of turnover
1st recruiting and hiring new employees 2nd training costs- including management time 3rd full pay and benefits during training
unplanned locations
2 types: (1)Freestanding (2)urban retail locations that lack any centralized management to determine which stores locate in them or how they operate.
True cost of employee turnover - indirect cost of turnover
4th costs of mistakes 5th loss of customers loyal to departing employees 6th Lost or damaged relationships with suppliers
True cost of employee turnover - employee satisfaction and customer satisfaction
7th employee morale and customer perceptions of that morale
census blocks
8 million in the US, each containing the residences of about 40 people
impulse buying/unplanned purchasing
A buying decision made by customers on the spot after seeing the merchandise; type of limited problem solving
Zoning
A planning tool used to separate industry and business from residential neighborhoods. 5 categories: residential commercial mixed residential neighborhoods industrial commercial
Convenience, neighborhood, and community shopping centers
AKA Strip Centers; attached to rows of open-air stores
Enclosed Shopping Malls Advantages & Disadvantages
Advantages: enclosed, climate-controlled, lighted shopping centers with retail stores on one or both sides of an enclosed walkway Disadvantages: high costs, dislike mall management, intense competition, inconvenient, old, internet sales takeover
What does (ACSI) stand for and how often does it release new data?
American Customer Satisfaction Index - Comes out every quarter.
Leader Decision-Making Styles
Autocratic leaders: make decisions alone, then tell employees Democratic leaders: seek information and opinions from employe Transformational leaders: delegate challenging work to subordinates, provide personal mentoring
Omnicenters
Combines enclosed malls, lifestyle center, and power centers
shopping center property management firm
Company that specializes in developing, owning, and maintaining shopping centers.
_____ _____ are emerging as a prime information source for shoppers when collecting data during the buying process
Consumer Reviews
Knowledge Gap
Customer expectations for service quality; Management perceptions of customer expectations
Showrooming
Customers visit a store to touch, feel, and even discuss a product's features with a sales associate, and then purchase it online from another retailer at a lower price.
on-the-job-training
Employee training at the place of work while he or she is doing the actual job. EX: server trains while taking orders with another server
EDLP
Every day low pricing -no temporary price discounts Ex: Walmart, Costco
T/F: there is only one approach that is best for retailers
FALSE; retailers must explore various factors to determine what factors are most important for them
Metropolitan Statistical Area (MSA)
In the United States, a central city of at least 50,000 population, the county within which the city is located, and adjacent counties meeting one of several tests indicating a functional connection to the central city.
shrinkage
Inventory losses that occur as a result of theft or deterioration.
Gaps of service Quality
Knowledge Gap, Standards Gap, Delivery Gap, Communications Gap
What are the three most important things in retail?
LOCATION LOCATION LOCATION
straight commission
Pay that consists only of money earned from sales
psychographic segmentation
Segmenting a market based on psychological characteristics of customers based on how they spend their money, activities involved, and their attitudes about the world they live in
power centers
Shopping centers that consists primarily of collections of big-box retail stores, such as full-line discount stores, off-price stores, warehouse clubs, and category specialists.
2 Approaches to Customer Service
Standardized Approach Personalized Approach
T/F: Employees privacy protection is very limited
TRUE
T/F: If you are a truly unique you can break all the rules
TRUE
T/F: Most retailers pay attention to only 1 of 6 hedonic needs
TRUE
T/F: PLACE is the only P you cannot imitate
TRUE
T/F: Technology has dramatically reduced the cost of information search
TRUE
T/F: The country is facing a national labor shortage
TRUE
T/F: You only have to MEET expectations to be satisfied, they do not have to exceed expectations
TRUE
T/F:How happy my employees are will directly effect how happy my customers are
TRUE
EEOC (Equal Employment Opportunity Commission)
The Government agency that oversees discrimination in the workplace;1972
Central Business District (CBD)
The downtown or nucleus of a city where retail stores, offices, and cultural activities are concentrated; building densities are usually quite high; and transportation systems converge.
cross-shopping
The pattern of buying both premium and low-priced merchandise or patronizing both expensive, status-oriented retailers and price-oriented retailers.
What are Adjacent Tenant considerations
Who do I want to be next door to? Complementary or Competing?
block group
a collection of adjacent blocks that contain between 600-3,000 people
incentive compensation plans
a compensation plan that rewards employees on the basis of their productivity
retail market segment
a group of customers who are attracted to the same retail mix because they have similar needs
shopping center
a group of retail businesses built on a site that is planned, developed, owned, and managed as a unit
satisfaction
a postconsumption evaluation of how well a store or product meets or exceeds customer expectations
Extended Problem Solving (EPS)
a purchase decision process during which the consumer devotes considerable time and effort to analyzing alternatives; often occurs when the consumer perceives that the purchase decision entails a lot of risk
habitual decision making
a purchase decision process in which consumers engage with little conscious effort; occurs when decisions are not important
straight salary compensation plan
a salesperson is paid a fixed fee per week, month, or year
job description
a written description of the basic tasks, duties, and responsibilities required of an employee holding a particular job
freestanding sites advantages and disadvantages
advantages Convenience High traffic and visibility Modest occupancy cost Separation from competition Few restrictions disadvantages little pedestrian traffic higher occupancy coststraff
Empowerment
allowing employees at the firms lowest levels to make decisions about how service is provided to customers
merchandising planners
are responsible for allocating merchandise and tailoring the assortment of several categories for specific stores in a geographic area
Communication Gap
communication about service quality
emotional support
concern for others' well-being and support of their decisions in a job setting
brand loyalty
consistent preference for one brand over all others
VALS vertical dimension
consumers resources are measured, including income, education, healthy, and energy level as well as leadership, variety and information seeking
retailer loyalty
customers like and habitually visit the same retailer to purchase a type of merchandise
Store advocates
customers who like a store so much that they actively share their positive experiences with friends and family
Shoppers delight: which grocery chain came in first for dunnhumby's Retailer Preference Index for 2022? a.Amazon b.Costco c.Wegmans d.HEB
d.HEB
RATER MODEL
determines perception of actual service delivered.
mixed-use development
development that combines housing and businesses in one area EX: the Domain in downtown Austin
VALS(values of lifestyle survey) from Strategic Business Insights
examines the intersection of psychology, demographics, and lifestyles. ; used for the U.S and Canada ONLY
Common Area Maintenance (CAM)
expenses associated with a commercial property typically include maintenance and repair costs, the cost of security personal and alarm systems, as well as fees for the management of the common area
3 types of customer decision making
extended problem solving limited problem solving habitual problem solving
3 types of unplanned retail locations
freestanding sites, urban locations, main street locations
Outparcels
freestanding stores that are not connected to other stores in a shopping center, but are located on the premises of a shopping center, typically in a parking area
ESRI's Tapestry is a widely used tool for _______ segmentation.
geodemographic segmentation; classifies U.S residential neighborhoods into 65 distinctive segments
Food deserts are
geographical areas with little or no access to healthy foods.
psychographic makeup#1: self-values
goals for life, not goals for the day
Customers have a
good idea of what type of product they want, but don't have a strong preference for brand, model or retailer.
benefit segmentation
group customers seeking similar benefits
geographic segmentation
groups customers according to where they live; segments based of geography can be identifiable, substantial, and reachable
structured training program
helps new employees acquire basic skills and knowledge, which they need to be able to do their jobs
psychographic makeup #2: Self-Image/Self-Concept
how individuals perceive themselves and what behavior they exhibit as buyers and consumers of products
Trade area
is a contagious geographic area that contains all your customers of a particular retailer or group of retailer
inner city
is a low income residential area within a large city
2nd Social experience
many customers shop to fulfill the need for social experience, consider the groups of teenagers who go shopping together at the mall. Malls cater to particular groups need for social experience through the use of food courts and other gathering areas
Culture
meaning, beliefs, morals, and values shared by most members of a society
Who handles the merchandise selection, inventory tasks, advertising, and promotion tasks?
merchandise manager/buyer
WHY do companies have bad customer service?
o Big companies with big profit margins o No competition to improve customer service
Dissatisfied customers
o Typically, don't complain o Produce little or no results. o Not easy to recover.
Limited Problem Solving (LPS)
occurs during a purchase decision that calls for, at most, a moderate amount of effort and time
5th Self Reward
often customers shop to reward themselves. Retailers appeal to this need through marketing that encourages customers to "treat your self" EX: bath and body work buy 3 candles (each a 30$ value) get 3 free
Conversion rate
percentage of consumers who buy a product after viewing it
destination stores
places where consumers will go even if it is inconvenient, just like enclosed malls are destination locations for fashionable-apparel comparison shopping
6th Adventure
refers to shopping for the "thrill of the hunt". Many customers love bargain stores in order to find the one nice thing Ex: TJMAXX
Illegal Discrimination
refers to the actions of a company or its managers that result in members of a protected class being treated unfairly and differently from others
distributive fairness
refers to the way a consumer judges the outcomes of an exchange
VALS horizontal dimension
reflects peoples primary motivations based on their self image
labor relations laws
regulations that describe how unions can form and how companies must respond to them
The retailer or employer's brand ____ influences the responses of applicants
reputation
5th assurance:
reputation, guarantees and warranties, protect data
mystery shoppers
researchers posing as customers who gather observational data about a store
Anchors
retailers courted by the central developer because they attract a significant amount of customers and make the other retailers look more appealing
Natural Barriers VS. Artificial Barriers
rivers or mountains VS. railroad tracks, highways
team incentives
sales incentives based on the performance of a group, department, or the store as a whole
quota bonus plan
salespeople earn bonus when their performance exceed their quota
drawing account
salespeople receive a weekly check based on their estimated annual income
utilitarian needs
satisfied when purchases accomplish a specific task. Shopping needs to be easy, and effortless like Sam's or a grocery store.
4th Status and power
some customers shop in order to feel more important, or feel as if they have a particular status in society. Spas typically fulfill this need.
Standards Gap
standards specifying service to be delivered; explain services.
Principle of Cumulative Attractiveness
states that a cluster of similar complementary retailers will have more drawing power than isolated stores engaging in the same retailing activities.; There is a direct relationship between amount of product selection offered and trade
GIS (geographic information system)
systems capable of storing, analyzing, and displaying geographically referenced information. WHY? -Store info about your customers and trade areas in geographic areas
Customer experience
takes in every interaction you have with a firm; includes marketing emails, text messages, wrapping packages, watching videos they post.
pop-up stores
temporary locations that allow a company to test new brands without a huge financial commitment EX: Halloween City
Leadership
the ability to motivate individuals and groups to accomplish important goals
sexual harrassment
the abuse of one's position of authority to force unwanted sexual demands on someone
organization structure
the framework in which the organization defines how tasks are divided, resources are deployed, and departments are coordinated
trade area
the geographic area that encompasses most of the customers who would patronize a specific retail site
urban decay
the process of a previously functioning city, or part of a city, falling into disrepair; major cause is when businesses relocate from urban settings to suburbs
labor scheduling
the process of determining the number of employees assigned to each area of the store at each hour the store is open
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
job enrichment
the redesign of a job to include a greater range of tasks and responsibilities
Standardized approach
the service level that customers want to receive from any retailer such as basic employee curtesy.
planned locations
the shopping center and/or manager makes and enforces policies that govern store operations; in the U.S, 47% of gross leasable retail space is in planned locations
Cheif Executive Officer (CEO)
the top manager of an organization
urban sprawl
the uncontrolled expansion of urban areas.
psychographic makeup #3: lifestyles
the way we live
sentiment analysis
to assess the favorableness or lack of favorableness in their customers' sentiments by monitoring these social media
instrumental support
to deliver the service desired by customers
main street
traditional downtown shopping area in smaller towns
