Retail Marketing Notes - 2 PDF

**Intro to Retailing** **Chapter 1:** **Five Rights:** 1. 2. \*Majority of sales happen in store\* **Definition of retail:** A set of business activities that adds value to the products and services sold to consumers for their personal or family use **Retailer:** A business that sells pro...

**Intro to Retailing** **Chapter 1:** **Five Rights:** 1. 2. \*Majority of sales happen in store\* **Definition of retail:** A set of business activities that adds value to the products and services sold to consumers for their personal or family use **Retailer:** A business that sells products and/or services to consumers for personal or family use - - **Manufacturer's perspective:** Retailers are part of the distribution channel **Supply chain:** Set of firms that make and deliver goods/services to the final consumer **\*Vertical integration:** Firm performs more than one set of activities in the channel **Backward integration:** Retailer performs some distribution and manufacturing activities **Forward integration:** Manufacturers undertake retailing activities **How retailers add value:** 1. Buy other products at the same time 2. Buy it in quantities customers want 3. Buy it at a convenient place when you want it 4. See it before you buy; get credit; layaway **U.S. retail is unique:** -Has the greatest retail density (wealth driven) -Has the greatest concentration of large retail firms -Large enough to operate their own warehouses, eliminating the need for wholesaling -The combination of large stores and large firms result in a very efficient distribution system \***23.5 - 46.3** U.S. retail square footage per capita, January 2020\* **Retailers serve diverse markets** **Retailers serve stakeholders:** -Stakeholders = all affected by a firm's actions -Customers want low prices -Shareholders want higher profits -Employees want higher wages -Community members want support -Retailers must balance needs of all **Corporate social responsibility:** The voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations, in addition to the concerns of its stakeholders EX) Patagonia **Conscious retailing:** The firm cares about more than just making a profit. It has a sense of purpose inherent in its activities and apparent to customers -The retailer has a greater purpose -Consideration of stakeholders -Conscious corporate culture, driven by leaders -Ethically-based decisions -Commitment to social issues **Retail + technology:** -It's not just e-commerce -M-commerce -Internet managed supply chains -Real-time in-store inventory online -Tailored assortments to each store based on sales\ -Merchandise tracking/pricing/inventory technology EX) Walmart AI can do all your shopping for you **Strategic vs tactical decisions:** Strategic decisions are: -Made infrequently -Long-term -Require significant investment -Not easily reversed Store location, organizational design, MIS, distribution systems, customer service = strategic decisions -- **Strategy competition:** Direct = Ulta vs Sephora (category killer) Indirect = different prices Intratype \*primary competition = same type of merchandise same target customers (Dillard's) Intertype = Variety = Scrambled merchandising = selling stuff not associated with the type of store **Strategy customers:** Who is the target market? What are significant demographic and lifestyle trends? **Retail strategy:** A retail strategy should identify: -Target mix -Product/service mix (retail mix) -A long-term sustainable strategy **\*Retail Mix:** Personnel - customer service Presentation - store design and display Product - assortment Promotion - communications mix pricing Pricing Place - location **Types of Retailers** **Chapter 2:** \***Know your customer** - each retailer has a different customer base that they must stay true to or they will fail \***How to classify retailers**: -Variety and assortment -Services offered -Pricing -Ownership -Store type \***Variety (Breadth)** - Wide (lots of categories) vs. narrow (only one category), the number of merchandise categories carried \***Assortment (Depth)** - Deep vs. shallow, the number of items in a category (**SKUs** - size, colors, etc.) EX) Walmart has the deepest assortment, Aldi has a shallow assortment \***Breadth and depth**: -Can describe a store or a category of merchandise \***Cost considerations**: -Stocking a deep and broad assortment is costly for retailers. Why? Because the retailer must have backup stock for each SKU in addition to holding the inventory \***Trends in Supermarket retailing**: - -Online ordering/delivery -Ready-to-eat meals + kits -Private label and exclusive products \- Improved shopping experience - events + restaurants -Gourmet or specialty food items \***Supercenters**: -Large stores (160,000 - 200,000 square feet) -Most SKU's -One-stop shopping \***Warehouse clubs**: -Limited and irregular merchandise assortment -Limited service -Low prices -Low inventory holding costs -Low markup -Fast selling items \***Convenience stores**: -3,000 - 5,000 square feet -Buy now - eat now EX) Break Time \***Online grocery**: -All-online -Delivery / Instacart \***General merchandise retailers**: EX) Marshall's (clothes), Walgreens (medicine) \***Department stores**: -Hard goods -Soft goods -Broad + deep (sort of) -Services EX) Macy's, Dillard's \***Three tiers of department stores**: 1. 2. 3. \***Full-line discount stores**: -Broad variety, limited service, low prices EX) Walmart, Target \***Specialty stores**: -More depth, less breadth -Faster -Private label or branded -Specific market segments EX) Alo, Lululemon, Altar'd State Issues: fast fashion vs slow fashion, decline in mall shopping, etc. \***Category specialists/category killer/big box/destination**: -Customer buy a larger % of the time -Low price/low service -Lots of growth EX) Staples, Lowes, Menards \***Extreme value retailers**: -Focus on low income customers -Imply good value -Low cost location -Limited service -Fast growing segment -Adding more food EX) Dollar General, Dollar Tree \***Off-price retailers** - offer an inconsistent assortment of brand name merchandise at low prices EX) Marshalls, Ross \***Outlet stores**: -Manufacturer outlets -Retailer outlets -Flash sale sites EX) Nordstrom \***Types of retail ownership**: -Independent, single-store \- Wholesale supply groups - grocery -Corporate retail chains -Franchises \***Service vs merchandise retailers**: -Intangibility (can\'t touch) -Simultaneous production and delivery -Quality control -Perishability - can't be stored -Supply and demand -Inconsistency of the offering -Reliance on people Omnichannel Retailing Chapter 4: \***A channel** - the way a retailer sells and delivers merchandise and services to customers -Retail channels: store, online, app, social media, catalog, TV \***Medium** - communicates but not a way to purchase EX) Watching a youtube channel **Chanels**: -Single-channel (retailer POV) -Multi-channel - multiple channels that aren't integrated (retailer POV) -Cross-channel - customer uses multiple channels in one (consumer POV) \***Onmichannel** - coordinated, seamless, synchronizes customer experience **Why omnichannel?** Awareness/discovery → consideration → purchase → service → post-purchase loyalty - -Providing an integrated experience -Some have different divisions for online vs in-store inventory reflected online and on social -Showrooming -Private label merchandise reduces this -Pricing -Retailers adjust prices based on competition in different channels -Some adjust by location **Channel strengths (in store)**: -Touch and smell of products -Personal service -Risk reduction -Immediate gratification -Entertainment and social experience -Browsing -Cash payment **Channel strengths (online/internet retailing)**: Consumers perceive more risk shopping online (can't touch and feel) + data privacy can be an issue -Deeper and border selection -More info for evaluating merchandise -Personalization -Expanded market presence -Information to improve shopping experience across channels **Technology**: -Increases conversion rates \***M-commerce**: -Customers access retail sites from anywhere -Location-sensitive -Biggest disadvantage is smaller viewing screen -Some retailers design distinct websites and apps for different services **Customer Buying Behavior** **Chapter 5:** \***Customer decision-making process**: 1. 2. a\. For store and product 3. 4. a\. Of channel and product 5. a\. Evaluation and satisfaction \***Need recognition** - desired level of satisfaction doesn't match present level of satisfaction EX) Spurred by a company (promotions, Sonic slush deal "half-off", new iPhone color) **Types of needs**: 1. 2. -Stimulation -Social experience -Trends and fashion -Power and status -Adventure \***Simulating need recognition**: -Suggestions by sales ass -Advertising/direct mail\ -Visual merchandising\ -Special events -Signs -Displays -Samples\ -5 senses -Coupons -Influencers \***Factors affecting information search**: -Value of searching vs cost of search (have you ever spent a ton of time searching for something then regret it?) -Product characteristics (require more search for your requirements) -Complexity -Cost -Customer characteristics (narrow choices, ask for advice) -Experience -Perceived risk -Time pressure -Education -Number of choices \***Sources of information**: -External -Internal \***Reducing information search**: Goal: Increase **conversion rate** -Keep merchandise in stock -Reduce waiting time -Easy navigation and checkout -Price matching -Money back guarantees \*How can retailers encourage customers to spend more time in the store? -More time = more \$ EX) Target (many options), IKEA (childcare) \***Multiattribute model**: Rate a retailer based on: -Performance of relevant attributes -Importance of those attributes (Look at table 1.1) **Consideration set**: the set of alternatives the customer evaluates when making a selection EX) When thinking about grocery stores, what grocery stores are in my consideration set (close by, large range of assortments)? Walmart, Aldi -Retailers develop programs influencing top-of-mind awareness: - - - - -Increase performance beliefs at your stores - Lowe's not for women / made stores brighter -Decrease performance beliefs about a competitor - ACE / home improvement centers too big -Etc. \***Scarcity** - anywhere you can shop that you buy quickly (at regular price) because you know it will be gone EX) TJ Maxx \***Satisfaction (post purchase evaluation)** - a post-consumption evaluation of how well a store or product meets or exceeds customer expectations EX) What am I loyal to? Telescopic mascara brand **Postpurchase cognitive dissonance** - internal conflict due to discrepancies between beliefs and purchases (regret) \***3 types of buying decisions**: 1. -Financial risk, performance risk, social risk, physiological risk (a car) 2. -Prior experience, personal knowledge, impulse buying, unplanned purchasing (hydroflask) 3. -Purchase isn't important, purchased it in the past, loyal to brands or stores (chips) \***Customer loyalty**: - - \***Factors that influence the buying process**: -Economy (shein and temu example) -Family (kids growing up, changes what you buy) -Reference groups (influences your purchasing) -Culture (traveling different places) \***Market segment** - a group of consumers who are attracted to the same retail mix because they have similar needs - -Actionable - similar needs/benefits -Identifiable - determine size of segment and find them -Substantial - large enough -Reachable - can market to them \***Lifestyle/psychographic segmentation** - how you spend your time and money, good predictor of purchases Exam 1 - Thursday 11am Study iClicker, quizzes, study guide (Exam blueprint), 43 MC true/false/matching, 2pts and 4 pts questions, partial credit, scantron Quizlet: For each chapter include iClicker, exam blueprint, quizzes, notes