Retailing and E-Commerce (Exam One - Study Guide)

What is the relationship between price, variety, and assortment

- Carrying a wide variety and deep assortments of products costs money - Offering high levels of service is costly. - Most retailers have to make a decision between the three. - Those that offer all three charge higher prices.

Retail Channel

the way a retailer sells and delivers merchandise and services to its customers.

What is the retailers goals in the information search:

to limit the customer's information search to their store, website, app.

What is e-commerce?

use of the internet and web to transact business

Culture is learned through

values, norms, and rituals

Social Retailing

via social media (Facebook, Twitter, Pinterest, Instagram, etc.)

Cross-Shopping

when shoppers display inconsistent shopping behavior

Hedonic needs

satisfied when purchases accomplish a need for entertainment, emotional, and recreational experience as in department stores or specialty stores.

utilitarian needs

satisfied when purchases accomplish a specific task

Single Channel Retailing

selling/delivering through only one channel.

extreme value retailers

small discount stores that offer a limited merchandise assortment at very low prices

Culture

the collection of learned meanings, beliefs, values and customs that direct the behavior of a particular society o Sense of identity o Model for acceptable behavior

Success in the information search is measured on

conversion rates. the percentage of customers visiting the store/website that make a purchase.

Franchisee

Help with market research, site selection, design/layout, operations, hiring/training programs, equipment, etc.

Category Specialist

Big-box stores that offer a narrow but deep assortment of merchandise

Retailers Strategies after the purchase

- Follow-up communication - Request customer reviews - Social media strategies - Customer Support - Return/Exchange policies - Loyalty Programs - Referral Programs

Reference Groups

- People used by an individual as a basis of comparison o Greatly influence perceptions and purchases by § Serving as a source of information § Reinforcing/discouraging purchase behavior § Enhancing image/esteem

What are the different options for retail ownership?

1. Independent, Single-Store Establishments 2. Corporate Retail Chains 3. Contractual Vertical Marketing Systems

What are the eight unique features of e-commerce technology?

1. Ubiquity 2. Global Reach 3. Universal Standards 4. Richness 5. Interactivity 6. Information Density 7. Personalization/Customization 8. Social Technology

wholesale-sponsored voluntary cooperative group

A group of retailers organized by a wholesaler. The wholesaler aids in buying, merchandising, inventory management, site location, store design/layout, human resources, insurance, etc.

retailer cooperative

A group of retailers that join together to organize a new business (wholesale). Retailers MUST purchase products from the new business and use a common name. Advantages include buying in bulk and joint advertising & promotion

What is the supply chain?

A set of firms that make and deliver goods and services to consumers. Raw Material Suppliers > Manufacturer > Wholesaler > Retailer > Consumer

Department

Carry a wide variety & deep assortment, offer customer services, and organize stores into distinct departments for displaying merchandise

Characteristics for Need Recognition

Changed circumstances, time since last purchase, current product underperforming, running out of a product, another product seems superior to current product, previous purchase requires something new.

Which factors are having the greatest effect on the future of retailing?

Changing demographics, Technology, Consumers trade up and trade down, smaller store formats, E-commerce challenges the brick and mortar model, urbanization in America, Four Giants... Amazon, Google, Facebook, Apple

specialty

Concentrate on a limited number of complementary merchandise categories and provide a high level of service

What is affecting the market?

Consumer confidence levels, showrooming, shifting foot traffic patterns, major discounting.

benefits of catalog channel

Convenience 24/7 shopping, Product information readily available, no technology needed, easier to browse.

Which social factors influence the buying process?

Family, Reference Groups, Culture

What are the benefits of each non-store channel?

Haptic touch, personal service, risk reduction, immediate gratification, entertainment and social experience, browsing, cash payment.

What is the relationship between information search and conversion rates?

High conversion rates are desirable, Retailers successful in limiting their customers information search to their store/website/app, will have higher conversion rates.

How to help the decline of the department store?

Increase exclusive merchandise, increase private-label merchandise (Store Brands), Expand multichannel and social media presence, hire for excellence/expertise, think showrooms, store-within-a-store and popup collaborations.

Which non-store channels are available to retailers?

Internet (Electronic and Mobile), Catalog, Television Home Shopping Channel, Direct Selling, Automated Retailing (Vending Machines)

Supermarkets

Large, self-service stores that carry a complete line of food products, along with some nonfood products

second tier department store

Modestly-Priced merchandise, less customer service

Full-Line Discount

Offer a wide variety of merchandise, limited service, and low prices

Benefits of mobile channel

Portability and convenience, location technology, software applications (Apps)

Convenience

Provide a limited variety & assortment of merchandise at a convenient location in 3,000 - 5,000 ft2 stores with speedy checkout

Warehouse Clubs (Wholesale Clubs)

Retailers that offer a limited & irregular assortment of food & general merchandise with little service at low prices for ultimate consumers & small businesses.

What is the retailers role in the supply chain?

Retailers typically buy products from wholesalers and/or manufacturers and resell them to consumers. Retailers add value and are more efficient at adding this value than manufacturers or wholesalers.

What are the different type of buying decisions?

Routine Response, Limited Decision Making, Extensive decision making, impulsive decision making

Drugstores

Specialty stores that concentrate on health & personal grooming merchandise

What are the challenges of multichannel retailing?

Supply chains and information systems, providing a consistent brand image across channels, merchandise assortment, pricing, reduction of channel migration (showrooming).

What is NAICS

The United States, Canada, and Mexico have developed a classification scheme to collect data on business activity in each country. Every business is assigned a hierarchical, six-digit code based on the type of products and services it sells. The first two digits identify the firm's business sector, and the remaining four digits identify various subsectors.

How can retailers provide an omni channel experience

The customer can be shopping online from a desktop or mobile device or by telephone, or in a bricks and mortar store and the experience would be seamless. Ex. Starbucks - Loyalty Program.

Assortment (Depth of Merchandise)

The number of items a retailer carries in a category. From deep to shallow.

Variety (Breadth of Merchandise)

The number of merchandise categories a retailer offers. From Wide to Narrow.

What is the primary objective of a retail channel?

Transaction

first tier department store

Upscale, high fashion chains, exclusive designer merchandise and excellent customer service

alternative evaluation

Utilizing the information collected to make comparisons: o Select evaluate criteria o Comparing retailers/channels/products o Developing perceptions

third tier department store

Value-oriented retailer catering to more price conscious customers.

Need Recognition

When individuals perceive a difference between their actual state vs. their desired state, need recognition occurs

Benefits of the internet channel

Wider variety; deeper assortments, more information for evaluation, personalization, expanded market presence, collect

What is a retailer?

a business that sells products and services to consumers for Grocery stores, General merchandise stores, Specialty stores, Non-store retailers, and Restaurants.

customer satisfaction

a comparison of customer expectations and the performance of the product/channel/retailer

Franchising

a contractual agreement where the franchisor (the company) sells the rights to use the business brand name (trademark, service mark, etc.) to the franchisee. Franchisee pays a one-time franchise fee plus an ongoing percentage of sales. Franchisee must implement the franchisor's program.

Omni Channel Retailing

a coordination multichannel retail offering that provides a seamless and synchronized customer experience, using all of the retailer's shopping channels.

Market Segment

a group of customers with similar wants and needs.

What is forward integration?

a manufacturer performs wholesaling and/or retailing activities.

multi-attribute model

a model that constructs an attitude score based on the multiplicative sum of beliefs about an option times the evaluation of those belief characteristics. - It helps collect data on: product availability, variety of merchandise, assortment, product description, visuals/videos, user reviews, customer service, wait time, retailer brand, price, free shipping, returns

What is backward integration?

a retailer also performs wholesaling and/or manufacturing activities.

What is retailing?

a set of business activities that adds value to the products and services sold to consumers for their personal or family use

internal information search

always occurs first, customer searches for information stored in memory.

The Franchisors

are motivated and already members of communities. They lose out on a portion of profits Selling franchises helps ______________ grow the business more quickly

How do retailers create value?

by providing an assortment of products and services, breaking bulk, holding inventory, and providing services.

external information search

customers required additional information from an external source.

What are the most common segmentation bases?

geographic, demographic, geodemographic, psychographic/lifestyle, buying situation, benefit

What makes a variable market segment?

identifiable, substantantial, accessible, actionable

Segmentation

is the process of breaking down a heterogenous market (different needs/wants) in to smaller homogenous groups.

Supercenters

large stores that combine a supermarket with a full-line discount store

Stages of the buying process

need recognition, information search, alternative evaluation, choice, purchase, post purchase evaluation

What are the stages in the buying process?

o Assumes that customers think rationally about the process o Customers may or may not experience all stages o Occurs on two levels in retail... Retailer/format and merchandise

How to minimize the number of real and virtual shopping carts abandoned?

o Make it easy to purchase o Provide information to reinforce positive evaluation o Reduce the risk of making a mistake o Create a sense of urgency or scarcity

Family Roles in purchase decisions:

o initiators o Informational gatherers o Influencers o Decision makers o Purchasers o Users

What is vertical integration?

occurs when a firm performs more than one set of channel activities.

Off-Price Retailers

offer an inconsistent assortment of brand name merchandise at low prices

multichannel retailing

offering more than one channel to sell/deliver products and services.

Buying Process

the steps or stages that customers go through when buying a product or service.

Define Buying Process

the steps or stages that customers go through when buying a product or service.

Factors that affect the degree of information search

· Product Characteristics - Complexity, Cost · Customer Characteristics - Past Experience, involvement · Market Characteristics - number of options · Risk Associated with marking the wrong decision · Buying Situation