Retailing PDF

RETAILING. Consists of all activities involved g. Consumer-Owned - owned by in the sale of goods and services to the ultimate consumers and operated by hired consumer. Part of the process of marketing. managers. Final part of the marketing process....

RETAILING. Consists of all activities involved g. Consumer-Owned - owned by in the sale of goods and services to the ultimate consumers and operated by hired consumer. Part of the process of marketing. managers. Final part of the marketing process. 2. Type of Merchandise Carried - classified by variety of assortment of their merchandise. MARKETING. Planning and executing the Variety - number of lines of merchandise conception, pricing, promotion, and distribution carried. Broad or narrow. Thought as the of ideas, goods and services to create exchanges width of a store’s merchandise offerings. that satisfy individual and organizational Assortment - the choices offered within objectives. a line. Shallow or deep. Thought as the depth of a store's merchandise selection. RETAIL STRUCTURE. All retail outlets which 3. Kind of Business - retail stores can be goods or services move to the ultimate classified by the kind of business they engage in, consumer. or merchandise group they belong to. CHANNEL OF DISTRIBUTION. 4. Location - Central Business District, inter-organizational system in which products Shopping Centers, Stand-alone selection. are marketed. Strategic Classifications CLASSIFICATION OF THE RETAIL 1. Margin Turn-over - analyzing the retail STRUCTURE. structure by Ronald Gist. Margin - difference between the Descriptive Classifications cost and retail selling price. 1. Type of Ownership - most common Turnover - number of times the classification. average inventory is sold in a a. Independent - single store dominated given year. retailing in terms of number of outlets. 2. Retail Price and Service Strategy - b. Chain - multi-unit organization is utilizes two major value dimensions - characterized by the sale of similar price and service - to categorize firms. merchandise 3. Strategic Group Analysis - can be c. Manufactured-Owned - some applied to any line of merchandise. manufacturers practice forward integration STRATEGIC PLANNING. Defining the overall d. Government-Owned - governments mission or purpose of the firm. operate retail store that sell agricultural MISSION STATEMENT. What firms intend to do products and how it plans to do it. Reflects its corporate e. Farmer-Owned - farmers operate a culture. limited number of retail outlets. Involve purchasing other producer’s products for OBJECTIVES. Statements of results to be resale. achieved. Include profit, sales, volume. f. Public Utility Owned - to boost the consumption of natural gas or electricity. SITUATION ANALYSIS. Assessment of internal strength, weaknesses, and external threats, opportunities.  target market. Involves changing 3 APPROACHES IN SELECTING TARGET customer base. MARKETS 3. Productivity Improvement - improved earnings through cost reductions. FIrms 1. Aggregation - assumes that most in mature or declining phase. consumers are alike in their needs and Cost Reduction - competitive weapon in wants. Attract the broadest possible increasing productivity. Key = number of buyers by mass advertising. self-service to hold down labor costs. 2. Partial Segmentation - target market Improved Merchandising Mix - improve selection. Retailers offer goods to most productivity by increasing turn-over. segments of the market with different Price Margin Increases - key element in versions of the same product. productivity-based strategies. Market Segmentation - heterogeneous market developing into homogeneous LAWS AFFECTING THE RETAIL MIX groups. 1. Price - heart of a retailer’s marketing 3. Extreme Segmentation - personalized plan. service and depth of a product line. Horizontal Price Fixing - when management agrees with POSITIONING STRATEGY - plan of action competitors price which shows how the organization will compete in identical items will be sold. chosen markets. How to differentiate itself from Vertical Price Fixing - illegal other organizations competing for the same practice. When a manufacturer customers. sets a minimum price. Predatory Pricing - setting RETAILING MIX prices in a deliberate effort. 1. Product Sales below cost - laws that do 2. Price not allow the sale of items at 3. Presentation less than their cost to the 4. Promotion retailer. 5. Personal Selling Price Discrimination 6. Customer Service Like grade and quality - legal STRATEGY IMPLEMENTATION IN when differences exist in the RETAILING cost of ,manufacturing or 1. Market Penetration - seek an advantage delivery. over competition by strong market The Good Faith Defense - presence. Designed to increase the charge different prices to number of customers, quantity of various retailers. purchase, purchase frequency. 2. Promotion - laws that help prevent 2. Market Development - attracting new misleading or deceptive promotion. market segments or changing the a. False and Misleading customer base. Involves bold strategy Advertising shifts. b. Proportional Availability Operational Evolution - changing c. Advertising Substantiation. competitive strategy focusing on a new  3. Distribution Regulations - ensure a strong c. Hours and days of operation - “blue and healthy commercial environment. laws” prohibit the sale of various types a. Exclusive Dealing - suppliers require a of merchandise on Sunday. retailer not to sell a competitor’s d. Direct retailing - prohibit liquor products. shipment through the mail. b. Gray Market Retailing. Outlets not e. Bait and switch advertising - goods are authorized by the manufacturer to sell advertised at a very low price. the merchandise they offer for sale. c. Dual Distribution - wholesalers operate SOCIAL RESPONSIBILITY retail outlets. 1. Economic - role is to offer goods and d. Unfair Elimination of Competitors services that consumers need. e. Free Speech Issue 2. Legal - to conform all laws and f. Health and Safety - required to educate regulations and inform employees 3. Ethical - embody standards norms g. Environment Control Regulations 4. Philanthropic - reflect society’s expectations that retailers should be 4. Product good corporate citizens. a. Warning Requirements - monitor the safety of the products they sell ENVIRONMENTAL DYNAMICS b. Warranties - seller’s guarantee about the quality of goods. What are the New Consumer Demographics c. Weights and Measures Seal - inspected Smaller households by government representatives Two income households d. Fictitious trade name registration Increase in suburban movement e. Truth in mileage act Age mix changes f. Trademark protection An older population g. Labeling requirements Regional Growth h. Lemon Laws - designed to protect Growth in smaller communities consumers from defective automobiles. INcreasing mobility 5. Credit - important to many consumers. Growth in subculture a. Consumer creditor protection act An increasing number of male shoppers b. Fair credit reporting act c. Fair credit billing act The Boomer Generation - 1946-1964. 56-74 d. Equal credit opportunity act The Generation X (Gen X) - sandwich e. Consumer leasing act generation. 1965 - 1976. 44-55 f. Fair debt collection practices act. Generation Y (Millennial) - 1977-1994. 26-43 6. Methods of Selling - protect consumers Gen Z - 1995-2020. against unscrupulous retailers. a. Unordered Merchandise - not allowed to THE MOOD OF THE CONSUMER ship merchandise the consumer has not Intratype Competition - competition ordered. between 2 retailers of the same type. b. Push Money (PM) - paying salespeople Intertype Competition - competition a bonus to sell it. between different types of retails selling the same line of merchandise.  Corporate System Competition - Escalation of Price Competition - firms single-management ownership links increasingly buying a share of the resources. market. Forward Integration - establishes its Growing Importance of Power own wholesale and retail network Marketing Programs - manufacturers Backward Integration - retailer or now offer comprehensive merchandising wholesaler performs some programs to merchants. manufacturing functions. Market Saturation Designer-Owned Retail Outlets - they THE NEW FACE OF COMPETITION gain greater control over the way the Secondary Market Expansion - merchandise is presented. communities of 200,000 Extremes in Establishment Types - trend EMERGING TECHNOLOGIES today = diversity in retail outlets. 1. Electronic Funds Transfer - Retailers Supermarket Retailing - supermarket would like to reduce their float. concept. Float - lag between receipt of a Self-service and self-selection customer’s check and deposit Large scale but low cost physical funds in the retailer’s account facilities Combo Card/Debit Card - Strong emphasis on price purchase price is deducted Simplification and centralization of electronically from a customer’s customer services and wide variety and account. broad assortment of merchandise. 2. Video Technology - home television shopping Diversity in Formats - accelerating diversity in 3. Video Mail Order Catalogs formats illustrated in food retailing. 4. Interactive In-Store Video Sales Aids - Superstores are 30,000 square in-store video to stimulate sales. ft. 5. Electronic Shelf Labels - price changes Hypermarkets such as SM - made electronically rather than sales as high as 2B/year, heavy manually on each self. use of warehousing techniques. Combination Stores - merger of CUSTOMER ISSUES. Size of trends in the two different types of retailing market. operations. COMPETITOR ISSUES. Trends in the market Warehouse Markets - limited shares of primary competitors, which selection of general competitors are leaders and which are followers. merchandise SUPPLIERS. Suppliers can become [powerful Limited Assortment Stores - such as 7/11 competitors if they engage in forward typically located near more conventional food integration. stores. SHAREHOLDERS. Important in determining short-term and long-term goals. Shortening Life Cycles - life cycles of ECONOMIC AND RESOURCE retailing are becoming shorter. ENVIRONMENT. Assessment of trends in inflation. SOCIAL AND CULTURAL. Beliefs and values Social Experiences - shopping that guide the actions of organizations. becomes a social activity. LEGAL AND POLITICAL. Affect every Develop new acquaintances. dimension of retail from merchandising to Hobbies - interest in a hobby promotion to location. may bring people together. TECHNOLOGICAL CHANGES. Affect the Peer Group Attraction - shop to relationship between customer and retailer. Can be with a peer or reference also affect every dimension of retailing mix. group. Status and Power - seek the UNDERSTANDING THE CONSUMER opportunity to be served and catered as part of shopping. Types of Consumer Decisions 1. Consumers are problem solvers. Role of UNDERSTANDING THE HOW, WHEN, the retailer is to help them solve their WHERE, AND WHAT OF SHOPPING problems. 1. Where do Consumers Shop? 2. Consumers try to lower their risk. By Shopping Centers seeking information Downtown 3. Store and merchandise choice depends Outshopping on variables such as location which are Non Store Shopping under the influence of the retailer. 4. Store atmosphere affects the in-store 2. Choosing a Store - the image of a retail behavior of consumers. outlet is important. Store has become a brand. MOTIVES FOR SHOPPING 3. Image - the ebay consumers feel about 1. Personal Motives - include role playing. an outlet. May be accurate or quite Result from internal needs. different from reality. Role Playing - consumers 4. Why think about images? - retailers engage in activities they should be concerned because the flow of perceive as associated with their customer traffic depends on it. role in life. 5. How are images formed? - should be Diversion - provides the aligned with management’s positioning opportunity to get a break from strategy. the daily routine. Price Policy - prices must be Physical Activity - to walk for consistent with the elements of exercise. the retailing mix. Sensory Stimulation - customers Merchandising Variety - image tend to feel at ease when a store improves when customers find a plays background music. product they like but not in Self-Gratification - alleviate other stores. loneliness or emotional stress. Employees - salespeople affect 2. Social Motives - desire for group an outlet’s image. interaction Type of Clientele - influenced by the type of people who shop there.  Advertising - tells whether the WHAT DO CONSUMERS BUY? outlet is old-fashioned or Price and brand - major attributes that modern, low or high price, small affect purchase. or large. Price - measure of worth Brand - measure of quality CHANGING THE OUTLET’S IMAGE Other factors are freshness, dating, unit Managers should not try to change an pricing, and coupons. outlet’s image without careful thought Price - higher income consumers are and planning. Should ask 3 questions less price conscious than lower income 1. What kind of image will serve consumers. best in the existing market? Brands - some only purchase only 2. What kind of image does the well-known national brands. store have now? Brand Switching - occurs when prices 3. What changes can be made to are stated on a per-unit basis. improve the image? Shelf Displays and Location - more KEEPING THE IMAGE SHARP shelf space = highest profit margins. Manager should review the image Consumers purchase merchandise periodically. displayed at eye level. LISTEN TO CUSTOMERS Coupons - draw new customers to an Management can ask customers what outlet and to increase purchase. they like about an outlet and why they prefer it to others. WHEN DO CONSUMERS BUY? LISTEN TO NON-CUSTOMERS Sunday and continuous store hours are attractive to many shoppers. Sunday = HOW DO CONSUMERS SHOP? families and working people. The cost of shopping - consumers try to Retailers don’t like Sunday openings minimize the costs of shopping. because long hours drive up costs Money Cost - cost of goods purchased in without helping profits. the cost of travel Time Costs - time spent getting to and RESPONDING TO CONSUMER from the stores. DISSATISFACTION Energy Costs - carrying packages, Should not ignore people with waiting in line, and other psychological complaints, but should seek feedback. costs. PHILOSOPHY OF ACTION FOR Convenience Goods - items they will MANAGEMENT purchase at the most accessible outlets. Demands of consumers are normally not Indifferent to the brand. unrealistic. They simply want more, Shopping Goods - consumers make better and honest information. comparisons between various brands Specialty Good - consumer insists on a THE EVOLUTION OF LIFESTYLE specific brand. Consumers are willing to MERCHANDISING travel for specialty goods. Lifestyle retailing has grown in importance over the past 5 decades.  2. Fulfilled are mature. Most are THE MARKETING CONCEPT well-educated. Although their income Developed in the early 1960s by allows them many choices tgey are packaged goods firms such as Procter practical. and Gamble responding to the needs of 3. Believers are conservative with concrete consumers in merchandising decisions. beliefs and strong attachment to Involves focusing on consumer needs traditional institutions. Follow and integrating activities to satisfy the established routines. needs. 4. Achievers are successful, THE POSITIONING CONCEPT career-oriented people. They value Emerged during the early 1970 structure. s as an extension of the marketing 5. Strivers seek motivation, and approval concept. Forerunner of contemporary from the world around them. They lifestyle merchandising. emulate those who own more impressive WHY WORRY ABOUT LIFESTYLER possessions. MERCHANDISING 6. Experiencers are young and still in the Lifestyle analysis only adds to the process of formulating life values. demographic, geographic and 7. Markers are practical people. socio-economic information. 8. Strugglers' lives are constricted. They WHAT SHAPES LIFESTYLES? are cautious consumers and are loyal to Individuals can be grouped into distinct favorite brands. market segments based on the similarities of their lifestyles. WHERE DO LIFESTYLES COME FROM? It is rooted in consumer values. Values - beliefs shared by a number of individuals and learned from society. VALUE AND LIFESTYLES The VALS program allows retailers to predict consumer responses to merchandise. SELF-ORIENTATION - patterns of attitude and activities that help people or modify self-image PRINCIPLE-ORIENTED CONSUMERS - guided in their choices. STATUS-ORIENTED - heavily influenced by the actions and approval of others. ACTION-ORIENTED - desire for social or physical activity. 8 VALUES AND LIFESTYLES (VALS) SEGMENTS 1. Actualizers are successful, take-charge people with high self-esteem.