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AESHM 275 Retail Management Exam 1 Study Guide

by: Clare Schubert

AESHM 275 Retail Management Exam 1 Study Guide AESHM 275

Marketplace > Iowa State University > General > AESHM 275 > AESHM 275 Retail Management Exam 1 Study Guide
Clare Schubert
Retailing Management

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Helpful vocab and tidbits for your first Retail Management exam.
Retailing Management
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This 12 page Study Guide was uploaded by Clare Schubert on Monday January 25, 2016. The Study Guide belongs to AESHM 275 at Iowa State University taught by Amrut in Spring 2016. Since its upload, it has received 257 views. For similar materials see Retailing Management in General at Iowa State University.


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Date Created: 01/25/16
AESHM 275 Exam 1 Review Chapter 1 What is retailing Set of business activities that adds value to products and services sold to consumers for their personal and family use What types of businesses are included in retailing Sale of products in stores buying cosmetics from an Avon sales person ordering from a catalog renting a DVD sale of services hotel doctor s exam haircut pizza delivery What is a supply chain Set of rms that make and deliver goods and services to consumers What is a retailer s role in the supply chain Business that sells products andor services to consumers for their personal or family use Links manufacturer to consumers rm performs more than one set of activities in the channel retailer engages in Wholesaling activities by operating is own distribution centers to supply its stores retailer performs some Wholesaling and manufacturing activities operating warehouses or designing privatelabel merchandise manufacturer undertakes retailing and Wholesaling activities Apple operating its own retail stores How do retailers create value 4 ways 1 Providing an assortment of products and services 2 Breaking bulk 3 Holding inventory 4 Providing services What is the social and economic significance of retailing More than 8 of the total US gross domestic product comes from retailing doesn t include the sales and employment of many rms providing consumer services such as entertainment home repairs and health care Demand is an indication of a vibrant financial system Retailers are large employers What is corporate social responsibility CSR Organization voluntarily engaging in business practices that meet or exceed the ethical and legal expectations of its stakeholders employees customers community and society Reducing use of energy supporting local businesses or schools promote a positive image to customers build employee morale save money Retail industry facts and employment statistics 2012 more than 14 million people were employed in retailing Approximately 11 of the US workforce Additional 15 work for companies that either provide services to andor sell products through retailers Retailers should focus on opportunities available by serving the needs of 4 billion people 25 of the world s population at the lowest end of the income distribution Bottom end have spending power of more than 5 trillion More than 90 of all retail sales are made in stores Over 40 of US retail sales are made by companies with more than 10000 employees Management and entrepreneurial opportunities in retailing Starting salaries between 35000 and 65000 May double in 35 years if they perform well Senior manager salaries between 120000 and 300000Becoming a much more sophisticated business Need to be comfortable with new technologies information and supply chain management systems and international business as well as managing diverse workforce and buying merchandise Some of the world s most successful people are retailing entrepreneurs Sam Walton Walmart Jeff Bezos Amazon Do Won and J in Sook Chang Forever 21 Howard Shulz Starbucks Differentiate between intratype and intertype competition lntratype competition between the same type of retailers retailers that use the same retail approach lntertype competition among retailers that sell similar merchandise using different types of retail outlets drug and department stores What is scrambled merchandising When retailers offer merchandise not typically associated with their type of store clothing in a drugstore Increases intertype competition What is a retail strategy Identifies 1 Target Market 2 The nature of the merchandise and services the retailer will offer to satisfy the needs of the target market compare strategies to other businesses 3 How the retailer will develop unique asset that enable it to achieve long term advantage over its competitors What is the retail mix Set of decisions retailers make to satisfy customer needs and in uence their purchase decisions How do retail distribution systems differ from those in the US in global regions such as China India and Europe What are the reasons for these differences Social and Political ChinaIndia to reduce unemployment by protecting small business to preserve green spacestown center Geography lower population density in the US than India China and Europe Market size large retail markets in US India and China Countries in Europe distribute channels and retail chains operate in a single country What are some examples of strategic vs tactical decisions that are made by retailers When major environmental changes occur the current strategy and the reasoning behind it must be reexamined Take advantage of new opportunities or avoid new threats in the environment Strategy must be consistent with the firm s financial objective Development of critical assets location human resource information and supply chain systems supply chain organization customer loyalty that enable retailers to build strategic advantages Longterm advantages in plan What are some common ethical decisions for retailers Ethics principles governing individuals and companies that establish appropriate behavior and indicate what is right and wrong Most businesses aren t regulated by law but must follow their own code of ethics What types of retailing career opportunities are available at the store and corporate levels Appendix lA Begin At Assistant buyers merchandise planners or department store managers Variety buying store management slaes promotion and advertising personnel operationsdistribution real estate loss prevention and finance Chapter 2 What trends in uence today s retailers 4 Elements of the retail mix 1 type of merchandise andor services offered 2 variety and assortment of merchandise offered 3 level of customer service 4 price of merchandise Consumer s needswants gt competition increases and offerings overlap Difference between variety and assortment Variety breadth of merchandise the number of merchandise categories a retailer offers Assortment depth of merchandise number of different items offered in a merchandise category Know the difference between breadth and depth of merchandise Breadth of Merchandise Variety Depth of Merchandise Assortment What is a stock keeping unit or SKU each different item of merchandise Ex an original scent 33ounce box of Tide laundry detergent with bleach or a blue long sleeve button down collar Ralph Lauren shirt size medium Why is a more diverse assortment more SKUs often less productive and more costly for retailers to manage Inventory investment increases backup stock Most staff must be paid to provide information and assist customers alter products to meet customers needs and demonstrate merchandise To make a profit retailers offer broader variety and deeper assortments then charge higher prices may provide more personal sales services What is a NAICS Code North American Industry Classification System Collects data on business activity in each country Every business is assigned a hierarchical 6 digit code based on the type of products and services it sells First two digits identifies the firm s business sector Remaining four digits identify various subsectors Be able to understand and identify different types of food and general merchandise retailers Conventional supermarkets only account for slightly more than 60 of food sales not including restaurants Discount stores like Walmart and Target now offer a full assortment of grocery items in their superstores but traditional supermarkets also are carrying more nonfood items General merchandise retailers textiles clothing What are current trends in supermarket retailing Under substantial competitive pressure on multiple sides from Supercenters warehouse clubs extremevalue retailers convenience stores and drug stores All have increased space Consumers typically make 3 trips a week to buy food but less than 1 trip to buy nonfood items Retailers typically offer food merchandise to build the traffic in their stores and increase sales of more profitable nonfood merchandise Invested heavily in stateoftheart supply chains assortment planning and pricing systems that reduce their inventories while increasing their sales and margins l Emphasize fresh perishables 2 Target green and ethnic consumers 3 Provide better value with privatelabel merchandise 4 Provide a better shopping experience What is a supercenter Give an example Large stores 160000 to 200000 square feet that combine a supermarket with a fullline discount store Ex Walmart Super Target Meij er Fred Meyer Kroger Super Kmart Center One stop shopping experience broad assortments of grocery and general merchandise Compare su ercenters and hypermarkets h large store that combine a supermarket with a fullline discount store focus on d roceries and more nonfood items amp large store that combines food and general merchandise sell more food products amp greater emphasis on perishables stock fewer SKUs groceries hardware sports equipment furniture electronics Be able to identi the different types of retailers and give examples of each Super Target Walmart Carrefour supercenters and hypermarket drive local retailers out of business offer low wages provide nonunion jobs unfair labor practices threaten US workers through their purchase of imported merchandise cause excessive automobiledelivery truck traffic retailers that offer a limited and irregular assortment of food and general merchandise with little service at low prices for ultimate consumers and small businesses Costco Sam s Club provide limited variety and assortment of merchandise at a convenient location with speedy checkout charge higher prices for certain items gas stations What are some of the issues facing department store retailing and what are the different tiers of Department stores retailers that carry a broad variety and deep assortment offer customer services and organize their stores into distinct departments for displaying merchandise Sears Macy s Kohl s JCPenney located in large regional malls customer service has decreased due to reducing labor costs selling less hard goods appliances furniture consumer electronics Tier 1 upscale highfashion chains with exclusive designer merchandise and excellent customer service Bloomingdale s Nordstrom Saks Fifth Avenue Neiman Marcus Tier 2 traditional department stores retailers sell more modestly priced merchandise with less customer service Macy s Dillards Tier 3 value oriented caters to more priceconscious consumers Sears J CPenney Kohl s What is a service retailer Firms that primarily sell services rather than merchandise large and growing part of the retail industry Trends Aging population will increase demand for health care services younger people are also spending more time and money on health and tness What is a category killer and know several examples category specialist A discount retailer that offers a narrow but deep assortment of merchandise in a category and thus dominates the category from the customers perspective Low price and service wholesaling to business customers and retailing to consumers incredible growth deep and narrow assortments destination stores What is a franchise and the advantages and disadvantages of this form of ownership Contractual agreement in which the franchisor the company sells the rights to use its business trademark service mark or trade name or another commercial symbol of the company to the franchisee for a onetime franchise fee and an ongoing royalty fee percentage of gross monthly sales Advantages success rate unique relationship between the franchisor and franchisee onsite training location analysis assistance advertising and sometimes a protected territory Disadvantages pay money to franchisor franchisee needs financing for startup costs modification of the space according to the guidelines of the franchisor signage opening inventory and equipment franchisee must adhere to the franchisor s rules and operating guidelines required to purchase operating materials from the franchisor hours days and or years may be dictated by the franchisor How do service retailers differ from merchandise retailers l lntangibility performance or actions rather than objects 2 simultaneous production and consumption 3 perishability can t be saved stored or resold 4 inconsistency of the offering to customers What are the types of ownership for retail firms Independent SingleStore Establishments entrepreneurial activity is extensive Corporate Retail Chains company that operates multiple retail units under common ownership and usually has centralized decision making for defining and implementing its strategy Franchising Contractual agreement in which the franchisor the company sells the rights to use its business trademark service mark or trade name or another commercial symbol of the company to the franchisee for a onetime franchise fee and an ongoing royalty fee percentage of gross monthly sales Chapter 3 What is a retail channel Way a retailer sells and delivers merchandise and services to its customers The most common channel used by retailers is a store Channel opportunity to complete a transaction to sell and deliver What is multichannel retailing Using more than one channel to sell and deliver merchandise and services to customers Internet is now a channel Omniretailing a coordinated multichannel retail offering that provides a seamless customer experience when using all of the retailer s shopping channels What are the bene ts and challenges of multichannel retailing Bene ts intemet reaches more people mobiles catalogs DirectResponse TV Channel ads TV Home Shopping demonstrate merchandise and place orders deeper and broader selections Challenges various channels demand various skills and unique resources operational differences centralized vs decentralized consistent brand images across channels merchandise assortment pricing What are the unique features of each of the following Catalog retailing nonstore retail channel in which the retail offering is communicated to customers through a catalog mailed to customers provides safety and convenience benefits to customers consumers can look at and order from anywhere refer to the info in a catalog anytime by simply picking it up from the coffee table easier to browse than websites Directresponse TV channel retail channel in which customers watch a TV advertisement that demonstrates merchandise and then place orders for that merchandise telephone a bank of operators or access the intemet to use the company s website informercial 30 secs short form 12 mins ad Television home shopping retail channel in which customers watch a TV network with programs that demonstrate merchandise and then place orders for that merchandise television or via the lntemet Direct selling retail channel in which sales people interact with customers facetoface in a convenient location either at the customer s home or at work demonstrating merchandise benefits andor explain a service take an order and deliver the merchandise Automated retailing vending machines retail channel in which merchandise or services are stored in a machine and dispensed to customers when they deposit cash or use a credit card convenient high traffic location What are the benefits of each major retail channel Store catalog and intemet Store touchingfeeling products personal service risk reduction entertainment social experience immediate gratification browsing cash payments Catalog look at merchandise order from anywhere refer to info anytime easier to browse than internet Internet deeper and broader selection provide more info personalized info collect info about consumer shopping What is mcommerce Mobile Commerce Wireless handheld devices Completing a transaction via the cell phone Location sensitive What is channel migration Why are retailers concerned about it A customer practice in which customers search for information from a retailer s channel then purchase in a different channel maintained by a competitor Modern technologies allows customers to do this very easily Retaining customers is challenging What is showrooming Occurs when a consumer goes into a store to learn about different brands and products and then searches the Internet for the same product sold at a lower price Chapter 4 Identify and explain the stages in the customer buying process l Recognize need 2 Search for Information about retailers 3 Evaluate retailers 4 Select a retailer 5 Visit store or Internet 6 Repeat patronage Differentiate between utilitarian and hedonic needs Utilitarian shopping to accomplish a specific task work Hedonic shopping for pleasure entertaining emotional recreational What is crossshopping Pattern of buying premium and lowpriced merchandise or patronizing both expensive status oriented retailers and priceoriented retailers What is the multiattribute model and what does it predict Based on the notion that customers see a retailer product or channel as a collection of attributes or characteristics Predict a customer s evaluation of a product retailer or channel on the basis of 1 its performance on relevant attributes and 2 the importance of those attributes to the customer What is a consideration set Set of alternatives the customer evaluates when making a choice of a retailer to patronize Retailers develop programs to increase the likelihood that customers will remember them when they re about to go shopping Types of buying decisions extended limited habitual and examples of each Extended purchase decision process in which customers devote considerable time and effort to analyze their alternatives risk and uncertainty Limited purchase decision process involving a moderate amount of effort and time prior experience with the product or service and their risk is moderate Habitual purchase decision process involving little or no conscious effort buy the same thing they did last time because of time crunch and they like it What is Brand loyalty and retailer loyalty Brand Loyalty customers like and consistently buy a specific brand in a product category Retailer Loyalty customers like and habitually visit the same retailer to purchase a type of merchandise What are the factors that in uence the buying process The Economy lots of uncertainty and risk Family participation consumer or use Reference Group selfimage celebrities family friends rewards Culture meanings beliefs values What is a reference group One or more people whom a person uses as a basis of comparison for beliefs feelings and behaviors Affect buying decisions 1 offering information 2 providing rewards for specific purchase behaviors 3 enhancing a consumer s selfimage How do customers decide which retailer to go to and what merchandise to buy Research customers evaluations of retailers and services Importance of benefits Location Scarcity of an item positive purchase intention make it easy to buy What social and personal factors affect customer purchase decisions Economy culture family reference groups How can retailers get customers to visit their stores more frequently and buy more merchandise during each visit Location product mix food available near front of store Why and how do retailers group customers into market segments Group of customers who are attracted to the same retail mix because they have similar needs Use 4 criteria to evaluate whether a retail segment is a viable target market What are the criteria for evaluating market segments Actionable identi able substantial reachable Actionable retailer should know what to do to satisfy needs for the consumers in the segment Banana Republic demographic characteristic of physical size such as petite or regular Identi able retailer is able to determine which customers are in the market segment segment size consumers to whom the retailer needs to target its communications and promotions Substantial market is too small or its buying power insigni cant can t generate suf cient pro ts to support the retailing mix activities Reachable retailer can target promotions and other elements of the rail mix to consumers in the segment What are the types of market segmentation Geographic segmentation groups customers according to where they live countries states cities neighborhoods Demographic segmentation groups customers on the basis of easily measure objective characteristics such as age gender income and education most common means of de ning segments Geodemographic segmentation geographic and demographic characteristics to classify consumers tend to buy the same types of things Lifestyle or Psychographics how consumers describe themselves refers to how people live how they spend their time and money what activities they pursue and their attitudes and opinions about the world in which they live surveys VALS survey Buying Situation llin vs weekly shopping Bene t Segmentation group customers seeking similar bene ts Composite multiple variables to identify customers in the target segment according to their bene ts sought lifestyles and demographics How can retailers limit information search by consumers Information from sales associates Provide an assortment of services provide good assortments Low pricing credit De ne satisfaction and explain how it can lead to store and brand loyalty How does the expectations perceptions satisfaction model of consumer behavior help to explain these associations Why is postpurchase evaluation important to retailers How do fashions develop and spread Appendix 4A Chapter 5 10 What is a retail strategy and why is strategic planning more important than ever to retailers What are the elements of retail strategy target market retail format and sustainable competitive advantage What is a retail mix What is a retail market What are the criteria for selecting a target market How do retailers create a sustainable competitive advantage What are some sources of more and less sustainable competitive advantage What is a retailing concept What are some approaches for building customer loyalty brand image positioning unique merchandise customer service customer relationship management CRM programs What are privatelabel brands also called storebrands or own brands What is retail positioning and how does it promote loyalty for customers and competitive advantage for retailers What is crossselling What is privatelabel brand and how does it aid in developing a competitive advantage Why is location an important factor in building sustainable competitive advantage Be able to identify the 4 different growth strategies market penetration expansion retail format development and diversification Which are the most attractive retail markets BRIC countries What are 4 market entry strategies for retailers wishing to expand internationally Direct investment JV Strategic alliance Franchising What is the strategic retail planning process Identify the steps and their key elements What is a SWOT analysis Chapter 6 What are some examples of retailer goals and objectives for success f1nancial societal and personal What is return on assets ROA Why is it important What is the strategic profit model What are the two paths in the strategic profit model What is an income statement Know the order and definition of components in the income statement and the relationship among components What is a balance sheet Know the order and definition of components in the balance sheet and the relationship among components What is net sales and how does it differ from gross sales What is cost of goods sold COGS What is gross margin What are operating expenses What is operating profit margin What is net profit margin What are accounts receivable Know how to calculate gross margin operating expense and operating income What are assets current assetsfixed assets Why is inventory turnover an important measure of merchandising success 11 What are nancial ratios used for what information do they provide for retailers What is cash ow analysis and why is it important for retailers What criteria should be followed when setting and measuring performance objectives Differentiate between input output and productivity measures Know various ways of assessing retailer performance Growth in Stock Price Accounting Measures ROA Benchmarking Performance over Time Compare performance indicators for three years Performance Compared to Competitors Make a formula sheet 85 by 11 paper size Write on ONE side only 12


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