Retail Management Exam Notes

World of Retailing Retailing: the set of business activities that adds value to the products and services sold to consumers for their personal use or family use * Retailer: a business that sells products and/or services to consumers for their personal or family use * Supply Chain: set of firms that make and deliver goods and services to consumers * Wholesalers: engage in buying, taking title to, often storing, and physically handling goods in large quantities and then reselling the goods to retailers and other businesses * Vertical Integration: that a form performs more than one set of activities in the channel, as occurs when a retailer engages in wholesaling activities by operating its own distribution centers to supply its stores *Backward Integration: when a retailer performs some wholesaling and manufacturing activities, such as operating warehouses or designing private-label merchandise Why are retailers needed? 1. Provide an assortment of products and services 2. Breaking bulk 3. Holding inventory 4. Providing services Corporate Social Responsibility (CSR): an organization voluntarily taking responsibility for the impact of its activities on its employees, customers, community and the environment * Intratype Competition: competition between same type of retailers * Intertype Competition: competition between retailers that sell similar merchandise using different types of stores, such as discount and department stores *Scrambled Merchandising: When retailers offer merchandise not typically associated with their type of store * Retail Strategy: how the retailer plans to focus its resources to accomplish its objectives 1. Target market, or markets, toward which the retailer will direct its efforts 2. The nature of the merchandise and services the retailer will offer to satisfy the needs of the target market 3. How will the retailer will build a long-term advantage over its competitors * Ethics: principles governing individuals and companies that establish a ppropriate behavior and indicate what is right or wrong Ch. 2 Types of Retailers Variety: number of merchandise bur differ in the variety and assortment of merchandised offered- Breadth of Merchandise * Assortment: number of different items offered in a merchandise category- Depth of Merchandise* Stock-Keeping Unit(SKU): each different item of merchandise * Conventional Supermarket: large self-service retail food store offering groceries, meat, and produce, as wells as nonfood items, such as health and beauty aids and general merchandise- stock about 30000 SKU’s * Limited Assortment Supermarkets or Extreme-Value Food Retailers: stock about 200 SKU’s * Power Perimeter: fresh-merchandise along the outer walls of a supermarket, that include dairy, meat, floral, produce, deli and coffee bar * Fresh Supermarkets: smaller and more convenient than a traditional supermarket and have less space devoted to packaged goods * Fair Trade: practice of purchasing from factories that p ay workers a living wage, and offer other benefits like onsite medical treatment * Locavore Movement: focuses on reducing carbon footprint caused by transportation of food throughout the world * Supercenters: large 185000 sq ft that combine a supermarket with a full-line discount store Ex.Wal-Mart * Hypermarkets: 100000 to 300000 sq ft combine food (60 to 70%) and general merchandise (30 to 40%) * Warehouse Clubs: retailers that offer limited and irregular assortment of food and general merchandise with little service at low prices for ultimate consumers and small businesses * Convenience Stores: provide a limited variety and assortment of merchandise at a convenient location in 3000 to 5000 sq ft stores with speedy checkout * Department Stores: retailers that carry a broad variety and deep assortment, offer customer services, and organize their stores into distinct departments for displaying merchandise * Full-Line Discount Stores: retailers that offer a broad variety of merchandis e, limited service and low prices Ex.Wal-Mart, Target, Kmart * Specialty Stores: concentrate on a limited number of complimentary merchandise categories and provide a high level of service Ex. Victoria Secret * Drugstores: concentrate on health and personal grooming merchandise * Category Specialists: big-box stores that offer a barrow but deep assortment of merchandise Ex. Bass Pro Shops * Category Killers: offering complete assortment, using their category dominance and buying power * Extreme- Value Retailers: small discount stores that offer a limited merchandise assortment at low prices Ex. Dollar Tree * Off-Price Retailers or Closeout Retailers: offer an inconsistent assortment of brand name merchandise at a significant discount off the manufacturers’ suggested retail price(MSRP) Ex. T. J.Maxx * Closeouts: end-of-season merchandise that will not come back the following season * Irregulars: merchandise that has minor mistakes in construction * Outlet Stores: off-price ret ailers owned by manufacturers or retailers * Factory Outlets: own by manufacturers Ex. Coach * Retail Chain: company that operates multiple retail units under common ownership and usually has centralized decision making for defining and implementing its strategy * Franchising: contractual agreement between a franchisor and a franchisee that allow the franchisee to operate a retail outlet using a name and format developed and supported by the franchisor Ch. 3 Multichannel Retailing Multichannel Retailers: retailers that sell merchandise or services through more than one channel * Retail Channel: the way a retailer sells and delivers merchandise and services to its customers* Internet Retailing, Online Retailing, Electronic Retailing or E-Tailing: a retail channel in which the offering of products and services for sale is communicated to customers over the internet * Catalog Channel: a nonstore retail channel in which the retail offering is communicated to customers through a catalog mailed to customers * Direct Selling: a retail channel in which salespeople interact with customers face-to-face in a convenient location, either at the customer’s home or at work * Multilevel System: independent businesspeople serve as master distributors, recruiting other people to become distributors in their network * Pyramid Scheme: develops when the firm and its program are designed to sell merchandise and services to other distributors rather than to end users * Television Home Shopping: a retail channel in which customers watch a television program demonstrates merchandise and then place orders for that merchandise, usually by telephone, via the internet, or via the TV remote* Infomercials: 30 to 60 minutes that mix entertainment with product demonstrations and then solicits orders placed by telephone * Direct-Response Advertising: 1 to 2 minute advertisements on TV and radio that describe products and provide an opportunity for consumers to order them * Automated Ret ailing: a retail channel in which merchandise or services are stores in a machine and dispensed to customers when they deposit cash or use a credit card * Vending Machines: automated retailing machines, placed at convenient, high-traffic locations * Benefits of Store Channel: 1. Touching and Feeling Products 2. Personal Service 3. Risk reduction 4. Immediate Gratification 5. Entertainment and social interaction 6. Browsing 7. Cash Payment * Benefits of Cataloging: 1. Safety 2. Convenience 3.Ease of use * Benefits of Internet Shopping: 1. Safety 2. Convenience 3. Broad and deep assortments 4. Extensive and timely information 5. Personalization * Risks in Electronic Shopping: 1. Security of credit card transactions on the internet 2. Privacy violations * Disintermediation: when a manufacturer sells directly to consumers and bypassing retailers * Channel Migration: consumers collecting information about products on their channel and then buying the product from a competitor Ch. 4 Custo mer Buying Behavior * Buying Process: steps consumers go through when buying a product or services, begins when customers recognize an unsatisfied need *Utilitarian Needs: shopping to accomplish a specific task * Hedonic Needs: shopping for pleasure; entertainment, emotional and recreational experiences * Cross-Shopping: buying both premium and low-priced merchandise or patronizing both expensive, status-oriented retailers and price-oriented retailers * Internal Sources: information in customer’s memory; names, images, past experiences * External Sources: info provided by ads and other people * Every day-low-pricing policy: assure customers that that won’t find an item at a lower price at a different store the next time they shop for it * Multiattribute Attitude Model: based on the notion that customers see a retailer, a product, or a channel as a collection of attributes or characteristics