SCM 400 Final

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Objective-and-Task Method

Determines the budget required to undertake specific tasks to accomplish communication objectives -establishes communication objectives -then determine necessary tasks and their costs total of all costs incurred to undertake the tasks is the communication budget

Ch 11: Implementing CRM Programs

Develop programs to: 1. Build Loyalty (committed to purchasing from the retailer, will resist efforts of competitors to attract their patronage) --Emotional attachment to retailer (Personal connection, Memorable positive experiences, Encourage family and friends to shop with retailer) 2. Increase share of wallet (the percentage of customers' purchases made from the retailer) Customer Pyramid: -80-20 rule: 80% of profits come from 20% of customers -rather than dividing groups into 80% good and 20% bad, four segments 1. Platinum -top 25% -buy a lot, place more value on customer service than price 2. Gold -buy significant amount -still patronize competitors bc price plays greater role in decision making -goal is to move them to platinum 3. Iron -purchase modest amt of merch -spending levels, loyalty, profitability not substantial enough for special treatment -might not be worth it to try to move them up due to limited income, price sensitivity, shared loyalties w/ other retailers, etc. 4. Lead -negative contribution to firm's income -demand a lot of attention but don't buy much -when they buy, often buy merch on sale or abuse return privileges -might complain about retailer to others -retailers pay NO attention to them Customer Retention: Two approaches to retain customer and increase share of wallet 1. Personalization -(1-to-1 retailing) --ex Zegna contact freq customer directly to tell them of a new shipment of nice suits -asking best customers to participate in focus group 2. Community -Retail brand community: group of customers who are bound together by their loyalty to retailer and the activities the retailer sponsors and undertakes -ex Nike: hosting running groups that meet weekly at store for refreshments. runners who have logged >100 miles earn special recognition. Customer Conversion: Converting Good Customers into Best Customers -Customer alchemy: converting iron and gold customers into platinum customers achieved through: Add-on selling -a way to achieve customer alchemy; involves offering and selling more products and services to existing customers to increase the retailer's share of wallet with these customers (customer databases helps with this) -ex. distribute coupons for kitty litter to customers that buy cat food but not necessarily litter -coupons can be provided when swipe their freq shopper cards, when they log on to retailer's website, or through messages via mobile phone Deal with unprofitable customers two approaches to dealing with them: 1. Offer less costly approaches for dealing with these customers -flagged and automated services rather than a costly call to an agent 2. Charge customers for extra services demanded Four approaches retailers use to build loyalty and retain better customers: 1 Launch frequent-shopper programs 2 Offer special customer services 3 Personalize the services they provide 4 Build sense of community

4. Purchasing the merch or service

How to Convert Positive Evaluations into Purchases 1. Make it easy to purchase merch 2. Provide info to reinforces customer's positive evaluation 3. Liberal return policy (refunds, money-back guarentee) 4. Create a sense of urgency or scarcity

15: How do retailers use communication programs to develop brand images and build customer loyalty? Brand equity 431-433 CH 15 Top-of-mind awareness 434-435 CH 15

Important use of communication programs is to develop strong brand images that enhance customer loyalty. Brand - name, symbol, term, design, or other feature that identifies seller's good or service as distinct from other sellers -in retailing context, name of retailer serves as the brand Brands are very valuable to both customers and retailers because they provide information that helps enhance the shopping experience and create loyalty toward the retailer and its products and services. Value to Retailers (Brand Equity) -Attract customers -Build loyalty -Higher prices leading to higher gross margin -Reduce marketing costs -Facilitates entry into new markets Gap -> GapKids Value to Customers -Promises consistent quality -Simplifies buying process -Reduces time and effort searching for information about a product/retailer **Brand Equity-value a brand image provides retailers -brand w/ good equity aka strong brand name influences customers' decision processes, often by encouraging repeat visits, which in turn leads to greater loyalty -enables retailers to increase margins bc customers will tolerate higher prices

CH 13: List the issues retailers consider when developing and sourcing store-branded merchandise internationally

**National (manufacturer) brands: -Designed, produced, and marketed by a vendor and sold by many retailers Store/Private-Label Brands -Developed by retailer, only sold in retailer's outlets -Similar to national, retailers use name to create a private label for merch Developing store brands: -In-House: large retailers (e.g., Macy's) have specialized divisions: Identify trends, design, specify products; Selecting manufacturers; Monitoring/managing manufacturing conditions and product quality -Most retailers don't own/operate or have ownership stakes in manufacturing facilities -Smaller retail chains can offer store brands without making significant investment in supporting infrastructure --ask national or store brand suppliers to make minor changes to products, provide merch with store's brand name or special label copyrighted by national brand --or store brand manufacturers can sell to them from predetermined stock selection Sourcing Merch: 1. Costs associated with global sourcing decisions -Currency fluctuations -Tariffs/duties -Longer lead times -Increased transportation costs 2. Managerial issues associated with global sourcing decisions -Quality control -Time to Market -Social/political risks (human rights, child labor) 3. Resident buying offices -Orgs in major market centers provide services to help retailers buy merchandise Ex: -accompanies, translates, negotiates, accountant, informs of costs -once order placed writes contract and follows up on delivery and quality control 4. Reverse auctions -one buyer, many potential sellers -not popular with vendors (don't want to be anonymous) where price is sole basis for winning -no strategic relationships with vendors (primarily through electronic auctions)

Step 1. Establish objectives

-Establish objectives to provide direction -Overall objective is to generate short-term/long-term sales and profits -Use communication objectives rather than sales objectives to plan and evaluate though Communication objectives: -Specific goals related to the retail communication mix's effect on the customer's decision-making process -Long-term: ex. altering brand image -Short-term: ex. increasing store traffic -Breadth of merch: vendors with small # of products can focus on developing consistent programs, retailers have to develop programs that promote wide range of products -Product vs location --Vendors aren't concerned w/ where customers buy as long as they buy their brands --Retailers aren't concerned w/ what brands customers buy as long as it's in their stores

Main Street

-downtown shopping area in smaller towns -secondary shopping areas in large cities and their suburbs pedestrian walkways next to crosswalks, pedestrian shelters, etc. instead of streets Main Street vs. CBDs: -Occupancy costs lower than CBDs -Traditional downtown shopping area -They don't attract as many people (bc fewer people work in the area) -There are not as many stores (smaller overall draw) -Smaller selections offered -Some planners restrict store operations

17: List the advantages and disadvantages of alternative store layouts

1. **Grid: -parallel aisles w/ merch on shelves on both sides of the aisles -cash registers located @ entrances/exits of the stores. -suited for utilitarian benefits customers -best for grocery, discount, and drug stores bc these stores are where customers are likely to explore the entire store Adv -Easy to locate merchandise -Cost efficient bc less wasted space -Allows more merchandise to be displayed Dis -Does not encourage customers to explore store -Limited site lines to merchandise 2. Racetrack aka loop: major aisle that loops around the store to guide customer traffic around different departments w/i the store -POS terminals located in each department bordering racetrack -more common in large upscale stores, such as department stores Adv -draws customers around the store -Provide different viewing angles and encourage exploration, unplanned buying 3. Free-form: arranges fixtures and aisles in an asymmetrical pattern -Used in specialty stores and within departments at upscale department stores Adv. -Provides an intimate, relaxing environment that facilitates shopping and browsing -Pleasant relaxing ambiance doesn't come cheap - small store experience Dis. -Costly -Inefficient use of space -More susceptible to shoplifting - salespeople can not view adjacent spaces. -customers aren't naturally drawn around the store and personal selling becomes more important to encourage customers to explore

15: List the steps involved in developing a communication program (No Allocate the promotional budget; No plan implement, and evaluate communication programs)

1. Establish communication objectives 2. Determine communication budget 3. Allocate budget 4. Implement and evaluate programs

Delivery Gap

1. Give information and training 2. Provide incentives -such as paying commissions on sales to motivate employees 3. Improve internal communications -Retailers can reduce conflicts by issuing clear guidelines and policies concerning service and explaining the rationale for these policies -ex: training should teach employees how to apologize for behavior 4. Provide instrumental and emotional support -Instrumental Support - appropriate system, right equipment to deliver the services. (ex. Jiffy Lube has personnel, equipment, and building layout designed to get customers out in "jiffy") -Emotional Support - associates need emotional support from their coworkers or a concern for the well-being of others. dealing w/ customer problems and maintaining supportive, understanding atmosphere and attitude 5. Empower store employees Empowerment: means allowing employees at the firm's lowest levels to make important decisions regarding how service is provided to customers -Benefits to Employee: --Stimulates initiative --Promotes learning --Teaches responsibility --Manager's Approach: --Provide guidance to employees --Train employees to the challenge Empowerment not for everyone -Some employees will not take the responsibility -It is expensive for some standardized retailers -Empowerment idea is not embraced by all cultures --Latin America: The role of employees is not to make business decisions; their job is to carry out the decisions of managers 6. Use technology -Kiosks: -Kiosks can offer opportunity to order merchandise not in store -Kiosks can free employees to deal with other customer requests -Customers can use kiosk to learn more about merchandise Kiosks can provide customer solutions -Hand Held Scanners - help to provide customer service by allowing customers to scan large merchandise instead of struggling with the product to checkout -Intelligent Shopping Assistants - a device connected to a shopping cart with customer database to provide personalized information to shoppers

16: Explore the various strategies a store manager can undertake to control costs (No Shoplifting)

1. Labor Scheduling: -using store employees efficiently bc employees are largest op expense to retailer -determining employees assigned to each area of the store during each hour -difficult because customer traffic varies throughout the day -companies use customer software sometimes -This must be done correctly or can lead to too many workers, costing money, or not enough and giving a bad experience 2. Store Maintenance: activities involved with managing the exterior and interior physical facilities associated with the store 3. **Inventory Shrinkage: the loss of inventory due to employee theft, shoplifting, mistakes, inaccurate records, and vendor errors (1.5% of total sales, retail theft $107 billion worldwide, US is $3 billion) -is the difference between the recorded value of inventory (at retail prices) and the value of the actual inventory (at retail prices) in stores and distribution centers divided by retail sales during the period Energy Heating and Lighting? Reducing Employee Theft -Trusting, supportive work atmosphere -Employee screening (Honesty test, extensive reference checks, drug testing) -Security policies and control systems -Employee theft is an HR problem

Step 2. Determine communication budget

1. Marginal Analysis Method 2. Objective-and-Task Method 3. Rule-of-Thumb Method economically correct method is marginal analysis -shows managers how they should approach budget-setting programs. Co-op (cooperative advertising)-promotional program undertaken by a vendor and a retailer working together -vendor pays for part of retailer's promotion but dictates some conditions

CH 5: Classify the different strategic growth opportunities retailers pursue

1. Market Penetration -open more stores within target market -existing stores longer hours -Cross Selling - sales associates in one department sell complimentary merchandise from other departments 2. Market Expansion -using retailer's existing retail format in new market segments -ex: Dunkin Donuts opening new stores outside traditional target market in northeastern US 3. Retail Format Development -Multi-channel retailing UK based TESCO: --Tesco Express: small stores located close to where customers live and work --Tesco Metro: bring convenience to city center location by specializing in ready-to-eat meals --Tesco Superstores: traditional stores --Tesco Extra: one-stop destination with the widest range of food and non-food products 4. Diversification -Introduces a new retail format toward a market segment that is not currently served by the retailer Related vs. Unrelated diversification: Related: retailers' present target market and retail format shares something in common with new opportunity --might entail purchasing from same vendors, operating in similar locations, using same distribution or management information system, or advertising in same news-papers to similar target markets Unrelated: little commonality between retailer's present business and new growth opportunity Vertical integration into wholesaling or manufacturing Best growth opp to approach: Market penetration because they build on retailer's present bases of advantage and don't involve entering new, unfamiliar markets or operating new, unfamiliar retail formats

CH 4: Describe the process that consumers go through when making retail patronage and buying decisions

1. Need recognition 2. Information Search 3. Evaluation 4. Choice 5. Visit 6. Loyalty

CH 16: Describe how to improve the ability of workers through efficient recruiting, socializing, and training

1. Recruiting -Job description -Locating prospective employees -Screening applicants -Selecting -Legal considerations 2. Socialization -Orientation programs 3. Training -Structured program -On-the-job training -Blended approach -Analyzing success and failures

16: Examine how to improve the effort of workers through proper motivation, evaluation, rewards, and compensation (No compensation programs; No legal compensation issues)

1. Setting Goals to Motivate Employees -Employee performance improves when employees feel: --That their efforts will enable them to achieve the goals set for them by their managers --That they'll receive rewards they value if they achieve their goals 2. Evaluating Store Employees and Providing Feedback -Who: human resource department designs, evaluation done by immediate supervisors -How often evals be made: annually or semiannually, feedback from evaluations is the most effective method for improving employee skills -Format: 50% sales/customer relations (greeting, product knowledge, etc), 25% operations (store appearance, loss prevention, merch control and handling), 25% compliance (dress code, flexibility, working relations) -Eval errors -Feedback: performance outcome vs. process 3. Rewarding Store Employees **Extrinsic rewards: provided by either the employee's manager or the firm, such as compensation, promotion, and recognition --a la carte plans give effective employees a choice of rewards for their good performance Intrinsic rewards: personal rewards --ex: salespeople might like to sell because they think it's challenging and fun. So sometimes employers shouldn't choose extrinsic rewards like linking compensation to how much is sold because that salesperson won't enjoy working because of the stress and will find it NOT intrinsically rewarding --Contests with small prizes to create excitement and make selling challenging for everyone --Job Enrichment: the redesign of a job to include a greater range of tasks and responsibilities, including skill variety, task significance, autonomy, and job feedback. EX: experienced sales associate who has lost interest in job could be given responsibility for merchandising particular area, training new salespeople, or planning and managing a special event 4. Compensation Programs Types -Straight salary comp -Incentive comp plans (reward on basis of productivity) -Straight commission --drawing acct: salesppl receive weekly check based on estimated annual income, and commissions earned are credited against annual income --Quota: target level used to motivate and evaluate performance --Quota-bonus plan: provide sales assoc w/ bonus when performance exceeds quota

CH 7: Review the types of unplanned locations

1. Unplanned (freestanding and urban sites) -do not have centralized management that determines what stores will be in a development, where the specific stores will be located, and how they will be operated 2. Planned (shopping centers) -the shopping center developer and/or manager makes and enforces policies that govern store operations, such as the hours that a store must be opened --shopping center mgmt also maintains COMMON AREA MAINTENANCE (CAM) such as parking lots and is responsible for security, lot lighting, etc. 3 types: freestanding, urban, main street locations

Urban

Advantage to Retailers: Affluence returned Young professionals Returned empty-nesters Incentives to move provided by cities Jobs! Low occupancy costs High pedestrian traffic 1. Central business district (CBD)-traditional downtown financial and business area in a city or town -Daily activity draws people in during business hours -High level of pedestrian traffic but shopping flow in evenings and weekends often slow Advantages: -Draws people into areas during business hours -Hub for public transportation -Pedestrian traffic -Residents Disadvantages: -High security required -Shoplifting -Parking is poor -Evenings and weekends are slow 2. Inner city -low income area -empty lots and buildings attract gangs and criminals -retailing in inner city can provide needed services and jobs for inner-city residents and property taxes to support redevelopment -high sales volume, higher margins and higher profits thanks to lower occupancy costs -Local governments provide incentives as retailers provide jobs and tax revenue 3. Gentrified residential sites -inner cities going through process of gentrification (renewal and rebuilding of offices, houses, and retailers in deteriorating areas) -young professionals and retired empty-nesters moving into these areas -Big-box retailers like Target opening smaller versions of stores in redeveloping areas

Mass media advertising

Advertising-announcements/persuasive messages seek to inform/persuade target market about products -used to generate awareness in the need recognition stage -low cost per exposure -control retailers have over content and timing of communication -Not effective for information search bc amt of info transmitted is limited Impossible to personalize messages or interact directly w/ customers -Cost-effective method for announcing sales or new-store openings Types: 1. Newspapers -freestanding inserts (FSI) aka preprint - distributed in well-defined local markets, offer a quick response, useful for delivering messages on short notice -cost of developing low, cost of delivering can be high if broad circulation 2. Magazines -done by national retailers (Target, Gap) -growth of local/regional/specialized mags so local retailers can use more now -mags offer print and online versions->lower cost per exposure -used mostly for image ads bc reproduction quality is high 3. Direct Mail -any brochure, catalog, advertisement, or other printed mktg material -CRM and loyalty programs help to personalize messages -relatively expensive on per customer basis 4. Television (national an local) -used for image advertising bc high production quality and communicate through image/sound -can demonstrate products usage (ex: car, furniture, electronics) -high production costs, national broadcast time expensive -Spots: ads in local markets, have relatively small audiences, more economical for local retailers 5. Radio -can be easily targeted to specific segments of market

What is Employment Branding

Aka employment marketing. -marketing research to understand what potential/current employees are seeking as well as what they think about the retailer -developing a value proposition and an employment brand image Communicating that brand image to potential employees Fulfilling the brand promise by ensuring that the employee experience matches the image created Retailers often use ad agencies that specialize in employment marketing Marketing programs that attract "best and brightest" potential employees Starbucks - "Love What You Do" Southwest - "Free to Actually Enjoy What You Are Doing"

2. Information Search

Amount of information search depends on: value from searching versus the cost of searching Sources of information: Internal -memory and past experiences External -Consumer reports, advertising, word of mouth, Internet, Social Media Amount of info searched -depends on value customers believe they can gain from searching versus cost of searching -value stems from degree to which additional info improves customer's purchase decision -Bigger ability to gather external info -Physical distance doesn't limit -Quality/Performance reviews easily found -Increased price competition due to ease of info collection

Locating departments or merch categories in the store

As customers enter and pass through decompression zone, they turn right (western cultures) and are welcomed with introductory displays, including graphics and observe the prices/quality of the first items they encounter in the "strike zone". Most compelling merch placed here. Impulse Merchandise -heavily trafficked areas such as 10 ft beyond entrance on the right side of store or on the main level or near escalators and cash wraps (POP counter or cashier) -purchased w/o planning such as fragrances/cosmetics Demand/Destination Merchandise -products the customers have decided to buy before entering the store -back left-hand corner of the store -eggs, milk, bread -dept stores: children's merch, furniture, customer service areas Special merchandise -lightly trafficked areas -glass pieces -women's lingerie for a more private shopping experience -furniture since requires lots of floor space Adjacencies -cluster complimentary merchandise next to each other to promote unplanned purchases (encourages cross selling) -cereal and bananas -beer and diapers Prime locations for merch: -Highly trafficked areas --Store entrances --Near checkout counter Strike zone -Highly visible areas --End aisle --Displays Tools used to map out floor space Planograms: diagram that shows how and where specific SKUs should be placed on retail selves or displays to increase customer purchases -Supermarkets and drug stores place private-label brands to the right of national brands - shoppers read from left to right (higher priced national brands first and see the lower-priced private-label item) -Can be illustrated using photographs, computer output, or artist renderings Virtual-Store Simulations -Learn the best place to merchandise and test how customers react to new products -Customers sit in front of computer screens that depict a store aisle, retina tracking devices record eye movements of the customer Videotaping customers -Learn customers' movements, where they pause or move quickly, or where there is congestion -Evaluate the layout, merchandise placement, promotion

CH 3: benefits offered by the four major retail channels: stores, internet, mobile, and catalogs (No Comparison of electronic and mobile phone internet channels)

Benefits of multichannel retailing: Improved customer perception Increased sales Better data collection Enhanced productivity Store Channel: -Browsing -Touching and feel -Personal service -Cash payment -Entertainment and social interaction -Immediate gratification -Risk reduction Catalog Channel -Safety -Convenience (orders can be placed anywhere) -Information anytime Internet Channel -Deeper/broader selection -More info for evaluating merch -Personalization -Expand market presence (think brandy melville) -Provide info to improve shopping experience across channels -Perceived risks in internet shopping

Category specialists

Big-box stores that offer a narrow variety but deep assortment of merch Most use self-service approach, bu offer assistance to customers in some areas of stores ex. Staples has warehouse atmosphere with cartons of copy paper stacked on pallets, plus equipment in boxes on shelves. But in some other departments, such as computers and other high-tech products, it provides salespeople in the display area to answer questions and make suggestions Destination stores Category killers -they offer a complete assortment in a category/specialize in it. -Using their category dominance and buying power, they buy products at low prices and are ensured of supply when items are scarce Intense competition -primarily compete on price and location -better customer service (ex. Home Depot hiring experienced builders as sales associates to help customers with repairs or providing classes to train customers to DIY) Wholesaling to business customers and retailing to consumers Incredible growth

Signage and Graphics

Call-to-action signage: in strategic locations in the store convey how, where, and why to engage with the retailer via QR codes on customer's cellphones, via email, short-message services, Facebook, or other digital channels Category Signage: used within particular department or sector of store to identify types of products offered, usually located near goods they refer Promotional signage: special offers and found within the store -or displayed in windows to entice the customer into the store Point-of-Sale signage: signs placed near merchandise they refer to so that customers know its price and other detailed information (can point out aspects of products that are of greater interest to customers) Digital signage: signs whose visual content is delivered electronically through a centrally managed and controlled network, distributed to servers in stores, and displayed on flat-screen panels -Can be entertaining displays to simple price displays -Better at drawing attention than regular signage -Can be easily tailored to store market

Asset MGMT Path: Asset Turnover

Comes from balance sheet income statement summarizes financial performance over period of time, bal sheet summarizes financial position AT given point in time (typically end of fiscal year) Total Assets -Economic Resources (e.g., inventory, buildings, computers, store fixtures) owned or controlled by a firm Current Asset Current Assets = Cash + Account Receivable + Inventory + Other current assets Accounts receivable are primarily the monies owed to the retailer by customers that have bought merchandise on credit 2/10 net 30 Current Assets can easily be converted to cash within one year Fixed Assets = Fixture, Stores (owned) Asset Turnover: Net Sales/Total Assets -Amount of sales/revenues generated per dollar of assets -The higher the ratio the better

Standards Gap

Commit firms to providing high-quality customer service -Service excellence occurs only when top management provides leadership and demonstrates commitment -Top management's commitment sets service quality standards, but store managers are the key to achieving those standards Define role of service providers -Description of service must be specific so expectations are clear Set service goals -based on their belief about the proper operation of the business rather than the customers' needs and expectations -Employee participation in setting service standards leads to better understanding and greater acceptance of the goals -Service goals related to customer-based criteria -Service goals should be measurable Measure service performance -assess service quality continuously -Customer surveys -Mystery Shopper: professional shoppers that visit stores to assess the service provided by store employees and the presentation of merchandise. Some stores use own employees but most contract w/ outside firm

Specialty stores

Concentrate on a limited number of complementary merchandise categories and provide high level of service Narrow but deep assortments Sales associates expertise the ability to freely shop on your own and sample products in a low-key environment results in customers' spending more time shopping Among the most profitable and fastest growing firms in the world ex. -Victoria's Secret is leading specialty retailer of lingerie -Sephora leader in perfume and cosmetics grouped by product category instead of brand like in dept stores, with brands displayed alphabetically. Other examples: Resale stores that sell secondhand or used merch such as: -thrift stores (merch donated and proceeds go to charity) -consignment shops (accepts used merch from people and pays them after its sold)

CH 14: Identify the factors retailers consider when pricing their merchandise (No Competition or pricing strategies uses by service retailers)

Customer Price Sensitivity -**Price Elasticity: % in change in quantity sold divided by the percentage in price -the more expensive something comes the less likely consumers are to buy it -More substitutes more elastic -Inelastic: price sensitivity is more positive than -1.0 -Elastic: price sensitive; when price elasticity is more negative than -1.0 Price elasticity=measure price sensitivity -The more substitutes=elastic (sensitive) -necessities=price-inelastic -Products expensive relative to customer's income=price elastic

CH 18: Identify how retailers can build a competitive advantage through customer service

Customer Service: activities/programs undertaken by retailers to make the shopping experience more rewarding -These activities increase the value customers receive from the merchandise and service they purchase Strategic Advantage Through Customer Service -Good services keeps customers returning to a retailer and generates positive word of mouth communication. -Providing CONSISTENT high quality service offers and opportunity for retailers to develop a sustainable competitive advantage -Customer Service Approaches 1. Personalized Service: requires that service providers tailor their services to meet each customer's personal needs -relies primarily on sales associates -Less consistent than standardized service -Need sophisticated software to perfectly personalize service (more costly) -Greater benefits to customers -Greater inconsistency -Higher cost -Internet shopping has aided in personalization Ex: Nordstrom, Amazon, Car Dealerships 2. Standardized Service: establishing a set of rules and procedures for providing high quality service and ensuring that they get implemented consistently -Increase consistency, less expensive to have sales people tailor services -Customers who want to shop efficiently benefit from standardized services -Meets but doesn't exceed expectations Ex: McDonald's, Wal-Mart, IKEA, Dollar General, Save-A-Lot High levels of customer service can be costly, but good customer service is worth an investment...It costs more to acquire customers than to generate repeat business.

18: Customer Evaluation of Service Quality

Customers compare perceptions of the service they receive with their expectations Perceived Service - customers' perceptions of a retailer's customer service depend on the actual service delivered. -Services are intangible so they are hard to evaluate accurately. -Customers are often influenced by the manner in which the employees provide service not the outcome 5 characteristics that affect perceptions of service quality 1. Reliability: dependably and accurately, such as... -performing as promised -meeting promised delivery dates -ex. Nordstrom "use good judgment in all situations" (always check w/ alterations dept before promising pick-up date, don't answer Qs you don't know answer to, etc.) 2. Assurance (trust): knowledge/courtesy of employees and their ability to convey trust and confidence -guarantees and warranties, return policies -looking out for what is best for the customer is best strategy for long-term customer retention 3. Tangibility: appearance of physical facilities, equipment, personnel, and communication material -appearance of store and salespeople -Ex. Nordstrom maintains consistent image at all touchpoints (Nordstrom rack, catalogs, social media, etc.) 4. Empathy: caring, individualized attention provided to customers -personalized service, receipts of notes and emails, recognition by name 5. Responsiveness: provide customer service personnel and sales associates that really want to help customers and provide prompt service -returning calls and emails, giving prompt service

In-store marketing/design elements

Customers often make purchase decisions in store so the store atmosphere is important 1. Point-of-purchase displays (POP) -merch displays @ checkout counter. can't be personalized, interactivity low, info content minimal OR high, cost per exposure low 2. Samples -offer potential customer opp to try product/service before making buying decision -one of the most costly promo tools, also one of most effective 3. Special events -sales promo program comprising a number of sales promo techniques build around seasonal, cultural, sporting, musical, or other type of activity

CH 8: Summarize the factors considered in locating a number of stores

Economic Conditions -areas were population is large and growing=attractive Competition -competition affects the demand -retailers going urban and suburban Strategic Fit -Area needs to have consumers in the retailer's target market -Demographic, lifestyle profile, size and composition of households in an area Operating Costs -Affected by proximity of other areas where retailer operates -Local and state legal environment has effect -need to determine incremental sales from exploiting economies of scale and increasing cannibalization: -Econ of scale: -opening multiple stores in area to lower promotion and distribution -Cannibalization -suffer diminishing returns associated with locating too many additional stores in an area -open stores as long as profits increase

Motivating Talent: Aligning Goals

Employees' goals usually different than firm's. Retailers use these three methods to motivate/coordinate employee activities: Policies and Supervision -indicate what employees should do -Behavior enforced by managers Organization Culture -set of values, traditions, and customs of a firm that guides employee behavior -Behavior enforced by social pressure Incentives -encourage employees to perform in certain ways -Commission (based on % of sales made or margin) -Bonus (additional compensation awarded on basis of evaluation of employee performance) -Stock Options (profit sharing is a type of incentive that can be offered as a cash bonus based on the firm's profits or as a grant of stock options that link additional income to the performance of the firm's stock)

Keeping Talent: Building Employee Commitment

Empowering Employees Empowerment-managers sharing power and decision-making authority with employees -Gives employees confidence -Provides greater opportunity to provide service to customers -Employees are more committed to firm's success 5 activities that build employee engagement -Reducing Status Differences -Promotion From Within -Balancing Careers and Families -Flextime, job sharing -Provide Benefits

9: Identify the legal issues involved with human resource management

Equal Employment Opportunity -Protect employees from unfair discrimination in the workplace Compensation -40-hour workweek, overtime pay, minimum wage, and employee pensions Labor Relations -The process by which unions can be formed and the ways in which companies must deal with the unions Employee Safety And Health -The employer is obligated to provide each employee with an environment that is free of hazards that are likely to cause death or serious injury Sexual Harassment -Unwelcome sexual advances, requests for sexual favors, and other inappropriate verbal and physical conduct Employee Privacy -Employees' privacy protection is very limited Developing Policies -HR department is responsible for developing programs and policies to increase awareness of legal restrictions and know how to deal with potential violations

Space allocated to merch categories

Factors retailers consider when deciding how much floor or shelf space to allocate merch: 1. Productivity of allocated space -on the basis of its effect on the profitability of the entire store -add more space to a section as long as the profitability of the additional space is greater than the profitability of the category from which space was taken away **Sales per square foot, sales per linear foot: -apparel retailers display most of their merch on freestanding fixtures typically measure space productivity as sales per square foot -in supermarkets, most perch is displayed on shelves. bc shelves have approx. the same width, only the length, or the linear dimension sales per linear foot, i used to assess space productivity 2. Merchandise's inventory turnover -merch categories w/ higher inventory turnover merit more space than merch categories with lower (inv TO part of GMROI) -more space needs to be allocated to fast-selling merch to min need to restock the shelf frequently and reduce stockouts 3. Display needs for the merch -physical limitations and fixtures affect space allocation -retailer might decide it wants to use merch display to enhance its image -might overallocate space and present wide range of colors

CH 2: Identify the various types of general merchandise retailers

General merchandise retailers come in various forms, each with its own offerings, benefits, and limitations. These formats include 1. Department stores 2. Full-line discount stores 3. Specialty stores 4. Drugstores 5. Category specialists 6. Extreme value retailers 7. Off-price retailers 8. Outlet stores

Profit Margin Management Path: Net Profit Margin %

Info comes from income statement (statement of operations) Gross Margin (GM) = Net Sales - COGS -Gross margin percentage = gross margin/net sales. -Retailers use this to compare: --performance of various types of merchandise --own performance with that of other retailers with higher or lower levels of sales Reduction in COGS -slotting fee: retailer requires vendor to pay fee -chargeback fee: when merch bought from vendor does not meet requirements such as regarding delivery Operating Expense -Important to retail because: --do not directly help the production of income --can highlight overspending or possible savings Are there opportunities to control costs with operating expenses? Overall equation: Operating Profit Margin % (EBITDA) = Gross margin - Operating expenses - Extraordinary (recurring) operating expenses -(earnings before interest, taxes, and depreciation) it's a measure of the profitability from continuing operations of a retailer -then subtract int, tax, deprec, nonrecurring / Net Sales = Gross Sales + Promotional Allowances - Returns, Discounts, and Credits for Damaged Goods Important: -focus on Op Profit Margin (EBITDA) because it reflects the performance of retailers' fundamental operations, not the financial decisions retailers make concerning deprec, assets, taxes, capital structure

CH 10: Describe the information and merchandise flows in a supply chain (**EDI)

Information Flows: -Customer demand info captured at store thanks to UPC -Cashier scans UPC at the POS terminal, when it ships, advance shipping notice is sent Data Warehouse: purchase data collected at the point of sale goes into a database -can be accessed by various dimensions - time, location, merchandise -target promos, group products together in stores Electronic Data Interchange: -computer-to-computer exchange of bus documents using a standardized format (occurs over the internet; communicated many different things about the order, including times, descriptions, vendors names, etc..) -Security Policy: to help secure information; a set of rules that apply to activities involving computer and communication resources that belong to an organization --Authentication: verifies person or computer at the other end is who or what it claims to be --Authorization: system ensures person or computer at the other end has permission to carry out the request --Integrity: system ensures that the arriving info is the same as that sent, data is protected from unauthorized changes or tampering through a data encryption process Physical Flow of Merchandise - Logistics 1) Merchandise from vendor to DC 2) DC to Stores 3) Alternatively, merch can go from Vendors directly to Stores -Logistics: "the planning, implementation, and control of the efficient flow and storage of goods, services, and related information from the point of origin to the point of consumption to meet customer's need."

Rule-of-Thumb Method

MARGINAL AND OBJECTIVE-AND-TASK METHODS SET THE COMMUNICATION BUDGET BY ESTIMATING COMMUNICATION ACTIVITIES' EFFECTS ON THE FIRM's FUTURE SALES OR COMMUNICATION OBJECTIVES Uses past sales and communication activities to determine the present communication budget. 1. Affordable Budgeting Method - sets communication budget by determining what money is available after op costs and profits are budgeted -Drawback: assumes the communication expenses don't stimulate sales and profits. -When retailers use this method, they typically cut "unnecessary" coms expenses if sales fall below forecast rather than increasing coms expenses to increase sales 2. Percentage of Sales Method -set as a fixed percentage of forecasted sales -forecast sales, then apply predetermined % -Drawback: This method assumes the same percentage used in the past, or by competitors, is still appropriate for the retailer 3. Competitive Parity Method -set so retailer's share of communication expenses equals share of the market -ex: Sporting goods owner-manager estimates total amt spent (ex: $5000) on coms by all sporting goods retailers in town. Then estimates own market share (such as 45%) for sporting goods and multiplies 45% by $5000. -Drawback: does not allow the retailer to exploit the unique opportunities or problems they confront in a market

Public Relations

Managing communications and relationships to achieve various objectives -Building/maintaining a positive image of the retailer -Handling unfavorable stories or events (on-line reviews) -Maintaining positive relationships with the media In many cases, public relations activities support other promotional efforts by generating "free" media attention and general goodwill can't be personalized, mostly controlled, and cost per exposure low Neiman Marcus Christmas Catalog

CH 12: Explain the merchandise management organization and performance measures (No Buying Organization)

Merchandise category-assortment of items that customers see as substitutes for each other -ex dept store can offer wide variety of dresses for size 4-6, lowering price of one dress inc sales of that dress, but dec sales of others in category -pricing/promoting specific SKUs in category will affect sales of other SKUs in category 1. Category Management: -ensure store has best combo of sizes/vendors -maximizing the sales/profits of entire category not specific brand -ex: Breakfast cereal category vs. Kellogg Corn Flakes 2. Category Captain: -vendor works w/ retailer to develop better understanding of consumer shopping behaviors, creates satisfying assortments that satisfy customer needs, and improve profitability of the merch category -Problems --Vendor category captain may have different goals than retailer GMROI (gross margin return on inventory investment) -financial ratio that assess a buyer's contribution to ROA; measures how many gross margin dollars are earned on every dollar of investment made by the buyer -tells how well handling inventory and how much money it is making for you Buyers have control over: -GM affected by the prices set and prices negotiated with vendors when buying merch -Sales-to-stock ratio affected by the popularity of the merch they buy High s-to-s ratio means: buying merch customers want, so it sells quickly = Gross margin percent x Sales-to-stock ratio Sales-to-Stock Ratio: -Relationship between how much stock you have and how much you are selling -Retailers report on an annual basis -If the sales-to-stock ratio for a three-month season is 2.3, the annual sales-to-stock ratio will be 9.2 -Similar calculation to Inventory Turnover except Sales-to-stock uses sales and Inventory Turnover uses COGS Common scenarios while analyzing GMORI -High-margin-low-turnover: gourmet canned food has high gm but low turnover -Low-margin-high-turnover: bakery bread has low gm but high turnover. -Both achieve same GMROI -GMROI > 1.00: selling merch for more than costs to acquire it -GMROI < 1.00: firm selling for less than cost Increasing GMROI: 1. Improve Inventory turnover -reduce SKUS within category -reduce backup stock -buy merch more often in smaller quantities -reduce prices 2. Increase Gross Margin -increase prices -reduce COGS -reduce customer discounts

3. Evaluation of alternatives

Multiattribute attitude model: Retailer, product, or service: each are collection of attributes/characteristics Must evaluate on basis of -1. performance on attributes -2. importance of attributes to customer Retailers need to collect market research: -competitors -characteristics considered -own ratings -importance weights

Department stores

Nordstrom, Dillards -Broad variety -Deep assortment -Attentive customer service with salespeople working in specific salespeople for each department -Merchandise displayed into distinct departments -Soft goods (nondurable or consumer goods, which have a shorter lifespan such as cosmetics, clothing, and bedding) -Hard goods (durable goods, which are manufactured items that are expected to last several years, such as appliances, furniture, consumer electronics) focus almost exclusively on soft goods Major departments: women's, men's, children's apparel, home furnishings, cosmetics, kitchenware, small appliances Three Tiers: -Upscale, high fashion chains w/ exclusive designer merch and excellent customer service (Neiman Marcus, Bloomingdale's, Nordstrom, and Saks) -Traditional chains (Macy's, Dillards, which sell more moderately priced merch w/ less service) -Value-oriented chains (Sears, JCP, Kohl's for price conscious) Not as convenient because located in malls rather than local neighborhoods JCP and Sears following Kohl's by opening stores in nonmall locations Trends: -Second and third tier customer service has diminished because of retailers' desire to increase profits by reducing labor costs (centralized cash wraps means to lower costs by reducing services) -More sales since customers wait for sales Competition of department stores: -Discount store and off-price retailers on price -Specialty stores on service, depth of assortment To deal w/ eroding market share, department stores are 1. increasing amount of exclusive merch they sell 2. increasing use of private-label merch 3. expanding multichannel and social media presence 4. developing stronger marketing campaigns to enhance their store image

Full-line discount stores

Offer broad variety, limited services, and low prices. Offer both private label and national brands. Two largest chains -Wal-Mart & Target Intense competition from category specialists: Toys-R-Us, Best Buy, Sports Authority Differentiate strategy -Wal-Mart = Low price and good value -Target = More Fashionable Apparel Walmart -converted many of its discount stores into supercenters, which are more efficient than traditional discount stores because of economies of scale that result from high traffic generated by the food offering -expanding into more urban locations, using smaller storefronts that can be located in existing buildings, and appealing to price-oriented markets Target -fashionable merch at low prices in pleasant shopping environment -cheap chic image -offering limited-edition exclusive apparel and cosmetic lines Sears' KMart Brand is struggling, so attempting to: -lease retail space in its stores to independent merchants

Socialization of New Store Employees

Once hired, retailers need to introduce the new employees to the firm and its policies, values, and strategies. This socialization process affects the degree to which newcomers become involved, engaged contributors to the firm's successful performance. In addition, socialization helps newly hired employees learn about their job responsibilities and the company they've decided to join Orientation programs

Developing and Maintaining a Culture

Organization culture-the set of values, traditions, and customs of a firm that guides employee behavior -Behavior enforced by social pressure -Aren't written down as set of policies and procedures -Traditions passed along by experienced employees to new employees -Often has much stronger effect on employees' actions that do rewards offered through compensation plans, directions provided by supervisors, or written company policies Stories -Nordstrom - Hero Service Stores, emphasis on customer service. Manual rule: "use your best judgment", new salespeople learn from other employees -Ritz-Carlton - "wow story" reading -Whole Foods - working in teams and using its employees in the hiring process Wal-Mart - Saturday Morning Meeting, focuses on reducing costs to provide low prices CEO Leadership

Outlet stores

Outlet Stores (aka factory outlets)-off-price retailers owned by manufacturers or retailers. Seen as opportunity to improve revenues from irregulars, production overruns (too much produced), and merch returned by retailers

CH 9: Present activities undertaken to win the talent war

Retailers are engaged in a "war" with their competitors for talent who can deal with the increased complexities of retail jobs such as: -new technologies -increased profit/loss responsibilities -increased global competition -diverse workforce Corporate HR must attract, develop, motivate, and keep talent

CH 15: Identify the traditional media elements

Retailers communicate with customers using a variety of traditional media elements. These include: 1. Mass media advertising 2. Sales promotions 3. In-store marketing 4. Personal selling 5. Public relations

Developing Talent: Selection and Training

Selective Hiring: -Recruit "the right people" -leads to employee engagement -selected candidates feel they are special and they are working for a special company that won't just take anybody Training: -Important in retailing because overwhelming majority of retail employees have direct contact with customers -Increases employee engagement -More committed when feel company is making an investment in them -Increasing investments in management training programs and developing leaders -Increasing attention to college graduates- Generation Y versus Baby Boomers

Knowledge Gap

Social media (sentiment analysis assesses the favorableness or lack of favorableness in their customers' sentiments by monitering social media) Customer panels and interviews (ex. meeting once a month asking 10-15 customers to provide info about their experiences and how to improve) Interacting with customers (directly or through observation) Customer complaints Feedback from store employees (salespeople have good understanding of expectations and problems. need to communicate experiences to high-level managers who can act on it) Using customer research (store managers need to review suggestions/comments made by customers daily, summarize the info, and distribute it to service providers and managers

17: Describe how to assign store floor space to merchandise departments and categories (No determining store size)

Space management involves 3 decisions 1. Space allocated to merch categories 2. Locating departments or merch categories in the store 3. Determining appropriate store size

Sales promotions

Special incentives or excitement-building programs encourage customers to purchase a particular product/service 1. Coupons -discount on price of specific items -in newspapers, on products, on the shelf, at cash register, over internet, on mobile devices, through mail -induce customers to try products for first time -convert first time buyers into regular users -encourage large purchases -increase usage -protect market share against comp -used in loyalty programs 2. Rebates -manufacturer issues refund as portion of purch price returned to buyer in form of cash -retailers like it bc generates sales but they incur no handling costs -vendors offer generous rebates bc likelihood of consumers applying is low bc of hassle 3. Premiums -offers item for free or at bargain price to reward some buying, sampling, or testing -included by manufacturer in product packaging (toys in cereal) -placed on package (coupon for free milk on box of cheerios) -handed out in-store -delivered in mail (free VS perfume offer) To evaluate a trade promotion, the retailer considers: -Realized margin from the promotion -Cost of the additional inventory carried -Potential increase in sales -Potential loss -Additional sales

Drugstores

Specialty stores that concentrate on health and beauty care (HBC) Consolidation -Walgreens, CVS, Rite-Aid -increased concentration as occurred through mergers and acquisitions Competition -Supermarkets, discount stores and mail-in orders -pharmacies in discount stores and pressure to reduce health care costs Evolution to a new format -Stand alone sites with drive-thru windows, pick up prescriptions, in-store medical clinics, makeovers and treatments -Offering more frequent purchase food items in response to competition and pressures Improved systems provide personalized service

CH 6: Contrast the two paths to financial performance using the strategic profit model

Strategic profit model summarizes factors that affect a firm's financial performance, as measured by ROA ROA: measures profits that a firm makes relative to assets it possesses

Training Store Employees

Structured program -help new employees acquire basic skills and knowledge including company policies, how to use POS terminal, basic selling skills On-the-job training Blended approach -Best Buy Analyzing success and failures -some new approaches fail, and when they do, effective managers need to talk about the situation, analyze why it didn't work, and discuss how the sales associate could avoid the problem in the future

18: Indicate the activities a retailer can undertake to provide high-quality customer service

The Gaps Model For Improving Retail Customer Service Quality -Service Gap: when customer perception of service delivered by a retailer fails to meet the customer's expectations 1. Knowledge Gap: knowing what customers want, need, and expect and then using this info to improve CS 2. Standards Gap: setting service standards and systems to provide CS 3. Delivery Gap: meeting and exceeding service standards 4. Communication Gap: communicating the service promise

Feature Areas

The areas within a store that are designed to get customers' attention Windows - show what the store offers and draws the attention of passer bys, shows store image Entrances - have visually appealing things located at the entrances -Decompression zone: first 10 feet of the stores entrance, allows customers to relax and prepare or shopping (empty space) Freestanding displays: fixtures located on aisles and designed primarily to attract customers' attention and bring them into the department (often newest merchandise in the department) (ex. Dicks has mannequins or tables set up at each department showing new stuff) Mannequin: a life-size representation of the human body, used for displaying apparel **End Caps: displays located at the end of an aisle in store using grid layouts -Due to high visibility of end caps, sales of product increase dramatically when that merchandise is featured on the end cap -retailers use end caps for higher margin, impulse, and sale merch Promotional Aisle (Promotional Area): space used to display merch that is being promoted -Often seasonal items Walls - use shelving and wall space to add more merchandise, and display in a creative fashion Dressing Rooms - critical spaces where customers often decide whether to purchase an item (large, clean, and comfy dressing rooms put customers in the mood to buy) Cash Wraps (Point-of-Purchase counter or Checkout areas): places in the store where customers can purchase merchandise -Used to create impulse buys while customers are in line waiting to checkout

Communication Gap

The difference between the service promised by the retailer and the service actually delivered 1. Realistic commitments -Corporate ideas - reality of store operations need to be communicated -promotion programs developed by mktg dept, whereas store ops division delivers the service...poor coms bet. areas can result in mismatch bet. promo campaign's promises and service store actually offers 2. Managing customer expectations -Provide explanation -Describe how retailer is improving situation -Provide accurate info at point of sale -inform customers about their role and responsibility in getting good service -Ex. waiting time for an attraction

Ch 17: Identify the critical issues retailers need to consider when designing a store

To design a store, retailers must consider their main objectives: 1. Implement their retail strategy (primary objective) -must be consistent with and reinforce the retailer's strategy by --meeting needs of target market --building sustainable competitive advantage -McDonald's remodeled its stores to better appeal to European customers 2. Build loyalty -customers seek 2 types of benefits when shopping -Utilitarian Benefits: locate/purchase products in efficient/timely manner w/ min hassle -Hedonic Benefits: entertaining and enjoyable shopping experience 3. Inc sales on visits/provide flexibility -store design has a substantial effect on which products customers buy, how long they stay in the store, and how much they spend during a visit -design in a manner that motivates unplanned purchases -Setting up layout to have customers see everything influences sales 4. Control design/maintenance costs to increase profits -Store design influences --Shopping experience and thus sales --Labor costs --Inventory shrinkage -Certain lights help displays -Layouts help divide priorities to make sure no money is wasted or overlapping -Flexibility: when competitors enter the market, they sometimes cause existing retailers to change the mix of merch offered. As merch changes, so must the space allocate to merch categories and layout of the store 5. Meet legal requirements -stores must have "reasonable access" for customers, "fully accessible," and "undue burden." -Americans with Disabilities Act (ADA) --Protects people with disabilities from discrimination in employment, transportation, public accommodations, telecommunications and activities of state and local government. --Affects store design as disabled people need "reasonable access" to merchandise and services built before 1993. After 1993, stores are expected to be fully accessible. --32 inch wide pathways on the main aisle and to the bathroom, fitting rooms elevators and around most fixtures Lower most cash wraps and fixtures so they can be reached by a person in a wheelchair. Make bathroom and fitting room fully accessible Trade-Offs Because few store designs can't achieve all of these objectives, managers make TRADE-OFFS among objectives, such as providing convenience rather than encouraging exploration or vice versa. -Ease of locating merchandise for planned purchases vs. Exploration of store, impulse purchases -Giving customers adequate space to shop vs. Productivity of using this scarce resource for merchandise

Recruiting Employees

To recruit skillful, or potentially skillful, employees, store managers prepare a job description, find potential applicants with desired capabilities, and screen the best candidates to interview -many large retailers have found that having centralized recruiting process reduces costs and improves quality of candidates hired Job description -essential activities to be undertaken -used to determine qualifications of potential employees Locating prospective employees -employees as talent scouts -Recruiting minorities, immigrant and older workers (American Association of Retired Persons AARP) -Partnering with government agencies to recruit unemployed, veterans, and former welfare recipients -Using the storefront creatively Screening applicants -Application form -References and online search (verifying info on app by contacting references and doing an online search) -Social media (can reveal more about person than face-to-face interview) -Testing (intelligence, ability, personality, interest tests to gain insights about candidates. must be legally valid, scores can only be used if related to job. Drug tests used) -Realistic job preview (show applicants attractive and unattractive aspects of job through videos or other previews. Screens out applicants who would have most likely quit due to job requirements within 3 months hired) Selecting -after screening, selection typically involves personal interview -**Behavioral Interview: asks candidates how they would have handled actual situations they have encountered in the past, especially situations requiring skills outlined in the job description. Candidates might be asked to describe the situation, what they did, and the outcomes of their actions Legal considerations -**Equal Employment Opportunity Commission (EEOC) allows employees to sue employers that violate the law -Age Discrimination and Employment Act -Disparate Treatment: when a member of a protected class (women, minorities, etc.) is treated differently from nonmembers of that class --ex: unqualified man gets a raise instead of a qualified woman -Disparate Impact: when an apparently neutral role has an unjustified discriminatory effect --ex: retailer requires a college degree for all its employees, thereby excluding a larger proportion of disadvantaged minorities, when at least some of the jobs could be performed just as well by people who did not graduate from high school -Americans with Disabilities Act: opens up job opps for disabled individuals by requiring that employers provide accommodating work environments

1. Need recognition

Utilitarian Needs: -accomplish specific task -shopping needs to be easy/effortless. -work Hedonic needs: -entertainment, emotional, and recreational experience. -satisfied through stimulation, status and power, adventure -pleasure Conflicting needs: -Most customers have multiple needs -Customers make trade-offs between conflicting needs -Cross-shopping-buying expensive jeans and cheap top, brand name OJ and generic TP Retailers use approaches to stimulate need recognition: emails, direct mail, publicity, social media campaigns and quizzes

Extreme value retailers

broad variety but shallow assortment of household goods, heath and beauty care (HBC), and groceries Targets lower income consumers -these customers want well-known brands but can't afford large size packages -Proctor & Gamble create smaller packages for extreme-value retailers Names mostly imply good value not $1 price points, aka some merch is priced up to $20 (Dollar General and Family Dollar) Dollar Tree is a dollar purist -Low cost location (where their consumers live) -Limited services Expanding assortment to include more -private-label options -food -tobacco -impulse buys (candy, mags, gift cards) One of the fastest growing retail segments Walmart trying to compete by opening Walmart Express in urban locations and creating smaller/less expensive packages

Building Brand Equity

communications activities that create a high level of brand awareness, develop favorable associations with the brand name, and reinforce the image of the brand. 1. Brand awareness -ability to recognize/recall brand name -strength of the link between brand name and type of merch or service in minds of customers -Aided recall: when consumers indicate they know brand when name is presented to them -**Top-of-mind awareness: highest level of awareness, occurs when consumers mention a specific brand name first when they are asked about the type of retailer, merch category, or type of service --retailer build top-of-mind by having memorable names, repeatedly exposing names to customers through ads/locations/sponsorships, and using memorable symbols 2. Associations -anything linked to or connected with the brand name in a consumer's memory -can be positive or negative (Ex. Apple: pos=innovative products, Genius Bar; neg=high prices) -Common associations retailers seek to develop with their brand name: --Merch category (ex. Office Depot: wants to be assoc. w/ "office supplies") --Price/quality (ex. Saks: wants to be assoc w/ high quality) --Specific attribute or benefit (ex. Nordstrom wants assoc. w/ high customer service) --Lifestyle or activity (ex. Patagonia wants assoc. w/ active, environmentally friendly)

5. Post-purchase evaluation

customer's internal info that affects future store and product decisions Builds store and brand loyalty

**Marginal Analysis

firms should increase communication expenditures as long as each additional dollar spent generates more than a dollar of additional contribution approach retailers should use when making all resource allocation decisions, including # of locations in a geographic area, the allocation of merch to stores, the staffing of stores, and the floor and shelf space devoted to merch categories For different communication expense levels, estimate store sales, then gross margin, then other expenses. Then calculate the contribution, excluding expenses on communications, and the profit when communication expenses are considered. -to estimate, rely on judgment and experience or analyze past data Very hard to use because managers don't know the relationship between communication expenses and sales

Off-price retailers

inconsistent assortment of brand name merch at low prices Brand name and designer-label merchandise at 20-60% lower than MSRP (manufacturer's suggested retail price) -can buy @ low prices bc they don't ask suppliers for advertising allowances, return priveleges, markdown adjustments, or delayed payments merch bought opportunistically from manufacturers that have: -overruns -canceled orders -forecasting mistakes causing excess inventory -Closeouts- end of season merch that will not be used in following seasons -Irregulars- merch with minor mistakes in construction Customers cannot be confident same type of merch will be in stock each time they visit a store but some enjoy the hidden treasure aspect of it Flash sales (sites like RuLaLa and Hautelook)-each day at the same time, members receive email that announces deals available and each deal lasts for a specific and limited time and sales are first-come, first-served Outlet Stores (aka factory outlets)-off-price retailers owned by manufacturers or retailers. Seen as opportunity to improve revenues from irregulars, production overruns (too much produced), and merch returned by retailers TJX Companies (which operates T.J.Maxx, Marshalls, Winners, HomeGoods, TKMaxx, AJWright, and HomeSense), http://www.Overstock.com and http://www.Bluefly.com

Freestanding

location for individual store unconnected to other retailers. they might be near other free standing stores or shopping centers Advantages: -Convenience (easy access & parking) -High traffic and visibility -Modest occupancy cost -Separation from competition -Few restrictions (on signs, hours, or merch imposed by mgmt of planned locations) Disadvantages: -No foot traffic -No drawing power (no attracting customers shopping for mult categories) -higher occupancy costs than shopping centers (since no other retailers to share common area maintenance costs) Ex: CVS and Walgreens shifting from planned to freestanding because want accessible drive-through windows, more floor space, better access for receiving merch Outparcels- freestanding not connected to other stores but located in premises of a shopping center

Personal Selling

sales associates help customers satisfy their needs through face-to-face exchanges of information.

CH 1: Identify retailing activities

set of activities adds value to products/services 1. Providing an assortment of products and services -choose from wide selection at one location -don't have to go to one store for yogurt and another for ketchup 2. Breaking bulk** -reduces transportation costs -manufacturers efficiently make/ship merch in larger quantities at one time -consumers purchase merch in smaller, more useful quantities 3. Holding inventory -products available when consumers want -consumers can keep smaller inventory of products at home because they know local retailers will have the products available when they need more -valuable to people with limited storage space 4. Providing services -easier for customers to buy and use products -retailers offer credit (by now, pay later) -display products so that consumers can see/test them before buying -some retailer employ salespeople in stores or maintain websites to answer questions


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