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Chapter 5 and Chapter 6

by: Shristi Tuladhar

Chapter 5 and Chapter 6 MKT 320

Marketplace > University of Miami > Marketing > MKT 320 > Chapter 5 and Chapter 6
Shristi Tuladhar

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Chapter 5 and Chapter 6 notes, case notes, video notes
Ian Scharf
MKT 320
75 ?




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This 5 page Bundle was uploaded by Shristi Tuladhar on Monday February 8, 2016. The Bundle belongs to MKT 320 at University of Miami taught by Ian Scharf in Summer 2015. Since its upload, it has received 45 views. For similar materials see Retailing in Marketing at University of Miami.


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Date Created: 02/08/16
Unit 1, Class 6 I. Potbelly Sandwich Works Video: the product is made to order sandwiches, soups and deserts,  friendly atmosphere. Price: one price point for all sandwiches. Place­average of 2200 square feet.  Promotion: store openings, national sandwich day.  Growth Strategy: market development with some market expansion. Positioning Strategy: target young urban professionals, time compressed. Competition: Subway,  Jimmy John’s, Panera. External Opportunities and Threats:  Opportunities: further expansion. Threats: any increase in minimum wage affects companies like these. II. Pet Economy Video Why Americans spend so much on their pets? Americans spend 40­45 billion dollar in their  pets every year. And 99% is not covered by insurance. This is because they consider the pets as a  member of their family, and there is emotional attachment.  Future products and services for pets: old kennel approach replaced by pet hotels, food  products­pet food looks like human food. III. Course content: Retail strategy: statement identifying the retailers target market, the format and resources the  retailer plans to use to satisfy the target markets needs and the bases on which the retailer plans to  build a sustainable competitive advantage.  Target market: it is the market segments or segments toward which the retailer plans to focus its  resources and retail mix. Retail format: describes the nature of the retailers operations –its retail mix type (the type of  merchandise and services offered, pricing policy, advertising and promotion programs, store  design, and visual merchandising, typical locations and customer services, this it will use to satisfy the needs of its target market.  Sustainable competitive advantage: advantage that the retailer has over its competition that is  not easily copied by competitors and thus can be maintained over a long time period. How?  The Magnificent Seven 1. 2. 3. 4. 5. 6. 7. Growth Strategies: Market Penetration: existing target market, existing retail format. Example: opening  more stores in the target market or keeping existing customers open for longer hours. Cross  Selling means that the sales associates in one department attempt to sell complementary  merchandise from other departments to their customers. Market Expansion: existing retail format, new market segment.     Retail Format Development: new retail format for the existing market segment.  Diversification: new retail format directed towards a different market segment.  Strategic retail planning process: set of steps the retailer goes through to develop strategy and  plan. How retailers select target market segments, determine appropriate retail format, and build  sustainable competitive advantage.  Mission statement: broad description of a retailers objectives and the scope of activities it plans  to undertake.  SWOT ANALYSIS: analysis of the retailers internal environment (strengths and weakness) and  external environment (threats and opportunities). STRENGTHS AND WEAKNESSES ANALYSIS OPPORTUNITIES AND THREATS ANALYSIS BARRIERS TO ENTRY: conditions in a retail market that make it difficult for other firms to  enter the market. Economies of scale, customer loyalty and the availability of great locations. SCALE ECONOMIES: cost advantages due to the retailers size.  BARGAINING POWER OF VENDORS: markets are less attractive when only a few vendors  control the merchandise sold in the market. Vendors have the opportunity to dictate prices and  other terms hence reducing the retailers profits. The vendors would have the power to dominate  and sell the products to the retailers at a higher price. COMPETITIVE RIVALRY: it is the frequency and intensity of reactions to actions undertaken  by competitors. High rivalry retailers attempt to steal employees from one another, advertising and promotion cost increase, profit falls. A large number of competitors of the same size, slow growth  and high fixed costs, and lack of perceived differences between competing retailers is the  conditions for high rivalry.  IV. Harrod’s of London Reasons for success: 1.  Unique group of high  net worth customers 2.  Runs the network itself 3.   Bundles advertising with other promotional opportunities 4.   Zero tolerance on fixing and maintaining the screens Why consumer product manufacturers are interested: The upscale audience is hard to  reach...they prefer an entertainment experience vs. a utilitarian one Pluses of digital signage 1.  Extra ad revenues 2.   Additional sales 3.   Better signage for customers Minus 1.  Atmosphere inconsistent with store image Unit 1, Class 7 1. McDonalds in India video Think Global 1.Brand name 2.Reputation 3. Information and Distribution systems   4. Buying Power Act Local 1. Merchandise 2.  Sourcing 3.  Locations 4.  Pricing How did they adapt to Indian Marketplace? 1.  Sensitive to dietary restrictions 2.  Developed infrastructure 3.  Used local suppliers and managers 2. Course content Financial Objectives ROA: the appropriate financial performance measure is not profits but return on assets. It is the profit generated  by the assets possessed by the firm.  Societal Objectives: related to broader issues that make the world a better place to live.    Retailers might be  concerned about providing employment opportunities to the minorities. Or offering environment friendly boxes.  These are difficult to measure compared to financial objectives. But explicit societal goals can be set.  Personal Objectives: many retailers particularly owners of small and independent businesses have important  personal objectives like status, self gratification and respect.  Net sales: the total revenues received by retailers that are related to selling merchandise during a given period  minus the returns, discounts and credits for damaged merchandise. Gross Sales + Promotional allowances ­  Customer returns. Gross margin: also called gross profit is the net sales minus the cost of cost of goods sold. It indicates how much  profit the retailer is making on merchandise sold without considering the expenses associated with operating the  store and corporate overhead expenses. Operating Expenses: included general, selling and administrative expenses. Overhead costs associated with  normal business operations. When estimating a retailers operating expenses one needs to decide whether these  other expenses are related to normal operations of the retailer or are extraordinary nonrecurring expenses that arise only during the year in which they are incurred.  Net profit margin: it is the operating profit margin minus interest, taxes and depreciation. Gross margin­­­ Operating expenses­­­­Extraordinary expenses­­­Interest­­­Taxes­­­Depreciation. Assets: economic resources owned and controlled by a firm and there is current and fixed assets. Debt­Equity Ratio: total debt / total equity. Equity is the difference after subtracting all liabilities from assets.  The debt to equity measures how much money a company can safely borrow over long periods of time. High  ratio, greater the risk and more potential for bankruptcy.  Current Ratio: current assets, short term assets / short term liabilities, current liabilities. The retailers ability to  pay its short terms debt obligations and loans payable and other payable with short term assets.  Quick Ratio  (Acid test ratio): current assets, short term assets / short term liabilities, current liabilities. Same  ratio as current ration but inventory is removed on both sides. Inventory removed from current assets and current  liabilities. Top­Down vs. Bottom­Up planning: Top down is goals get set at the top of the organization and are passed  down to the lower operating levels. Bottom up planning involves lower levels in the company developing  performance objectives that are aggregated up to develop overall company objectives.  Types of measures: Input measures: resources or money allocated by a retailer to achieve outputs or results.  Amount and selection  of merchandise inventory, the employees, advertising.  Output measures: assess the results of a retailers investment decisions. Sales revenue, gross margin, net profit  margin hence ways to evaluate a retailers input or resource allocation decisions. Productivity measures (the ratio of an output to input) determine how effectively retailers use their resources like what return they get on their investment in inputs. 3. Target: Two models target deals with: targets sells through designer where designer comes to target and sells  and this is a traditional model. Store within a store model, it removes the liability from the Target because they  view it as an item inside the store not a target item. Role of consumer expectations: the expectations today: limited time partnerships with top designers, which will  create a sense of urgency and excitement. The new model vs. long standing partnerships?  The advantage of old model is it creates excitement because its there for limited period of time, and the advantage of new model is that both retailers can benefit from each other. Ability to attract top designers and high­end specialty shops as partners: Previous success, shoppers expect  designer brands, exclusivity.


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