Test 1 Study Guide
Test 1 Study Guide MAR 3231
Popular in Retail Management
Popular in Marketing
This 8 page Study Guide was uploaded by Leticia Notetaker on Friday February 19, 2016. The Study Guide belongs to MAR 3231 at Florida State University taught by in Spring 2016. Since its upload, it has received 170 views. For similar materials see Retail Management in Marketing at Florida State University.
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Date Created: 02/19/16
Intro to Retail Management Marketing - perception of the product, developing the product, getting product to store, o Important to retailers Retail - last step in the process, consumer gets the product o Assembly of merchandise available for purchase by consumers o Includes products & services o Think about familiarity Merchandising - need the right merchandise, in the right places, during the right times, at the right prices = success o Buyer's responsibility to get the right products for themselves Non-store retailing - online shopping, store not needed Supply chain ; critical in adding value the industry All steps must be completed in order to be successful 6 major divisions in the corporate office; VP responsible for each division o Once you reach the level of SVP or EVP you can make real money; 6 figures o Finance - > operations (distribution center, work rooms, store platforms, sales support areas - > human resource (sales promo, advertisement, manager of workman's comp, fun, working with ppl; patient, compassion, sales promotion (advertising, PR), merchandising ( buyers), store (director of stores, as companies grow then you have regional directors of stores) Common retail management division, many divisions = more opportunities Wholesale, entertainment marketing managers Durable; hardlines 30% of business (house ware, furniture, electronics, nice china) Non-durable goods; softlines 70% ( ready to wear) Walmart largest retail company; next 9 companies won't come close to what Walmart makes (#1 volume store, #2 Kroger; largest grocery store chain in the country, Costco is increasingly growing) .28 of each dollar goes to groceries, .43 to furniture stores, & the rest to traditional department stores o Most companies in retail have a profit of 1-5% with the avg. with 3.5% Issues o Philosophy of business, know who you are, set short & long term goals, know your target market, developing long range plans, evaluate those goals o Need a systematic approach o Surround yourself with the best ppl o high unemployment, low consumer confidence, high savings rates have reduced consumer spending Philosophy o Evaluate your progress, compare actual results to projected numbers o apply basic principles of retailing, in a well-structured, systematic & focuses retail strategy Retailing concept o Coordinated effort o Value driven The Sorting Process o Many steps/processes to make everything happen successfully o this process allows manufactures to reach more customers, reduce costs, & focus on their expertise buyers; buy in large quantities sell in small amounts to individuals marketing & research; retailers share info to the consumer & sales data to wholesalers operations; retailers store, mark, prepay to help small suppliers for a small cost stores; retailers complete transactions to consumers along with other services Distribution types o Exclusive – suppliers make agreements with one or few retailers; develop products that are exclusive (private label); fate of retailer is tied to manufacturer’s success, smooth channel relations o Intensive – suppliers sell through as many retails as possible; manufacturer is better assured of maximizing sales; relations can be volatile o Selective – suppliers sell through a moderate number of retailers How to add value o Hold less inventory bc technology allows for materials to be acquired quicker than in the past; creates efficiency & saves money o Adding value with customer service, without god service, having merchandise is pointless if it doesn't sell o Get involved & get your employees involved, good customer service & output makes customers happy to buy your products o buy in quantities to match demand Retail Value Chain o represents the total bundle of benefits offered to consumers through a channel of distribution What is value? o channel perspective; value is a series of activities & processes that provide a certain value for the consumer o customer perspective; value is a perception that the shopper has of the value chain, it is the view of all the benefits from a purchase vs. the price paid o loyalty or rewards programs are used Pitfalls o Planning solely from price o Need to develop loyalty to their customers Competing in the wrong value/price segment Believing augmented elements alone create value Paying lip service to customer service Multi-channel Retailing o A company becomes stronger as more channels develop o Retailers become manufactures & manufacturers become retailers (apple) Apple sells products (retailer) but also sells its products to other stores like Walmart, sprint, best buy, etc. (manufacturers); private label o Vertical integration – a firm performs more than one set of activities in the channel o backward integration – when a retailer performs some distribution & manufacturing o forward integration – where a manufacturer undertakes retailing activities The Total Experience o Disney "merchantainment" Understand what it is about Retailers think about this when planning their strategies Non store retailing o Don't have to be a store to be a retailer Direct market (80%), TV, online, radio, magazine Direct marketing – customer is initially exposed to a product through a non-personal medium & then orders by mail, phone, fax, or computer & selling- a few questions Advantages: reduced cost, lower prices, convenient to customers, pinpoint customer segments limitations: products often cannot be examined prior to purchase, clutter exists, long lead time required o divided in two broad categories: general (full line of products) specialty (focus on more narrow product lines) Important Strategies Specialogs - prints these for specific segments, Infomercials - program length tv commercials, 30 mins TV shopping o Home shopping network - TV, studios on campus Sales per minute Incredible consumer knowledge, know what they want & what target markets are watching when Sell products that you cannot find in everyday stores, work with celebrities o 24/7 356 shopping; interactive multichannel retailer with direct to consumer expertise, assortment of exclusive products & brand names o HSN (3.3B) QVC (8.5B) Direct Selling – personal contact with consumers in their homes & phone solicitations initiated by retailer o advantages – convenient shopping & personal touch with demos that can be performed, consumers can relax in their home & be more attentive at the time of the shopping o disadvantages – on-line transactions are easier & offer more options for consumers, high turnover, door to door has poor connotation o best sellers: Mary Kay, Avon, Tupperware Vending machines Product available differ around the world, grow more around the world than in the us,24 hour sales; cash or card operated, eliminates the need for sales person, convenient locations Airport Retailing o Growing industry, airports that look like malls o Large group of prospective shoppers, captive audience o More so non-traditional store retailing vs. non-retailing Store Retailing Wheel of Retailing Retail innovators appear first as low price operations with low or moderate cost & low profit margin requirements & upgrade over time o focus on product quality, prices, & customer services o low end -> medium -> high end strategies 4 principles o many price sensitive shoppers will trade service, selection & convenience for low prices o price sensitive customers not loyal will switch to retailers with lower prices o newer stores with advanced technology may have lower operating costs o moving up the wheel hopefully will add sales & prestige Key Lessons o Don’t lose sight of your prime customers o Beware the dangers in upgrading target markets o Do not create opening for new cot conscious Retail Life Cycle 4 stages o intro; 1st stage, many risks & nothing is assured o growth: sales & profits show rapid growth o maturity: slower sales growth, greater competition, excess capacity o decline: final stage where sales & profits fall off, over storing, copies of products have entered the market as you experience growth, competition will increase Naics Codes for Retailers Know it exists & understand (check ppt.) Set up to collect data in US, Canada & Mexico Break down merch into major categories & then break it down more to be able to collect the sales data from each country How Retail Institutions are Evolving mergers - combinations of separately owned firms diversification - retailers become active in businesses outside their normal operations downsizing - unprofitable store are closed or divisions are sold off a good leader can adapt & lead ppl through change Store Based Retail Strategy Mixes food-oriented; supermarket, convenience & combination store, warehouse general merchandise; specialty, department, variety stores, outlets Independent Retailing 2.3 million retail firms account for 1/4 of total retail sales in the US over 100,000 new retail businesses started each year (ease of entry) 70% of independents operated by owners & their families; ownership of Successful bc they understand the importance of being relevant, concerned about the market, never short change on quality, Competitive state of Independents use bullet points to understand topic, doesn’t need to be memorized advantage - lots of freedom to do what you want with the company disadvantage - labor intensive & pressure to do well, lack of bargaining power Chain Retailers Same in every store where ever the location, all have a corporate office, range in number of stores, centralized operations generates at least 70% of total US sales Competitive State of Chains advantages - bargaining power, specialized staff, computerized warehousing, national advertising disadvantages - limited flexibility, excessive standardization, higher investment cost Lease Departments Hire their own staff but must be the right type of ppl to have in the store o Properly trained, went through orientation, understands store policies & procedures rent out space in department stores, % of sales paid as rent advantages - one stop shopping, reduces store cost, additional revenue disadvantages - may decrease store image, staff & procedures may not be up to the store's standards leased departments include; cosmetics, jewelry, optical, photography Department Stores Department Stores (large section of test questions) large scale retail organization selling a variety of both soft & hard line products, destination retailer attracting customers from all over (ex. Macy's, Bloomingdales, Dillard’s, JCP) quality of goods ranges from avg. to very good, centralized checkout & assistance in each department, emphasizes fashion/trend in both soft & hard lines department store operations o branch stores, major shops, flagship store (upper floors offices & merchandise on other floors), budget types of department stores o conventional/traditional stores; Macy’s, Bloomingdales o junior department stores; Bealls, Stein Mart softlines & some hard lines, mix of private labels & branded goods o chain department stores; Sears, JC Penny's, Montgomery Wards (top 3) o specialty; Saks 5th, Neiman Marcus o family owned; Nordstrom, Dillard's challenges o price conscious consumers like discounts, service conscious like specialty stores, no brand exclusivity, shopping malls generate traffic aiding specialty stores, some try to reinvent themselves, unproductive selling space strategy mix (don't have to memorize strategy mixes, but understand them) o location, process, atmosphere, merchandise, depth of assortment, promotion Full Line Discount Stores high volume, low cost, broad assortment of products buildings & overhead less expensive carries brand names, shopping carts & centralized checkout many private brands in soft goods more fashion sense each year (target) store numbers o revenues approaching $500+B, bug 3 operated over 7000 full line stores, each one focused & aware of their target customers challenges o growing competition, category killers (toys r us, best buy), .coms o saturation of prime locations o full line discount stores converted into supercenters but not smaller ones are being developed o hypermarkets - carry more food items than supercenters; did not work in the US strategy mix o business district, isolated stores, competitive prices, slightly below avg. to avg. service, avg. to good quality products, heavy on newspaper promotion, price oriented Off-Price Chains Ross, Tj maxx, Marshalls, home goods, Burlington features brand or designer names, simple service & checkout, few dressing rooms, very low prices, opportunistic buys, don't mention brand names in advertising strategy mix o business district, low prices, below avg atmosphere/service, little assortment, avg to good quality products, limited selling Factory Outlets manufacturer owned, closeouts, discontinued merch advantages - control of where merch is sold, profitable despite low prices, low costs, few services, control of store location more outlet malls in many states, $23 B in sales, 14,000 US factory outlet stores strategy mix o out of the way site or discount mall, very low prices, service very low, poor continuity & depth of assortment, little promotion Value Concepts wholesale warehouse membership stores annual fee, limited number of name brands, cashier system, 1400 US membership clubs ($60B), can buy in bulk, Apparel, appliances, electronics (35-60% of sales), food (20-35%), health, liquor, candy, beauty, tobacco (15-30%) Costco & Sam’s (90% of club sales) strategy mix o isolated store or secondary site, very low prices, very low service/atmosphere, moderate width & poor depth of assortment of goods, little promotion & some direct mail Convenience Stores well located, food oriented, open long hours, ease in shopping, carries a fair amount of essential items, tailored to local market, pricier than avg, highest percent of fill-in sales, annual sales = $190B (exclude gas sales) 7/11, RaceTrac, circle k o major food based convenience chains but also sell gas, o new concepts; fast, fresh, healthy food strategy mix o located in neighborhoods, avg to above avg prices, average service, avg quality merch with medium assortment, moderate promotion Specialty Type Stores category killers, power retailer - books, toys r us, office supplies o Cassettes -> records -> CDs -> iPods Sephora (1000 stores) open-sell with over 200 brands variety store, inexpensive products but not full assortments extreme value retailers; dollar tree, family dollar, dollar general (sales of these 3 exceeded over $25B) o Taking market share from discounters who took market share from retail stores higher income consumers shop at these stores for "the thrill of the hunt" focus on o minimum classes, narrow width & extensive depth of assortments, more targeted customer with greater customer service o concentrated on one major family of business (ex. juniors) o estimated sales equaling $2.5 trillion including auto dealers o top 50 equal $450B with 1.3 apparel specialty store chains o limited, gap o designer stores - DK, Armani, Tommy Hilfiger o boutiques - upscale, narrow; resemble specialty stores (Spanx) o concept stores o challenges mall based retailers who are dependent on anchors to generate traffic, decline in mall shopping, lack of interest & new fashions, more stores being opened by manufacturers o strategy mix business district/shopping center, competitive to above avg prices, avg to excellent service, extensive depth of assortment, heavy use of displays, extensive sales force Wide, deep, narrow, shallow Take Aways Identifying major players when it comes to discount stores Distinguishing the difference between discount stores, up price retailing, wholesalers, retailers, factory outlets, Kmart an example when talking about value; somewhat of a player in discount retailers Hypermarkets; lack of success in the states bc of their mix o General merchandise & food o Lean more towards supercenters o Hypermarket popular in Europe Off price chains o Opportunistic buys o When advertising they don't show the brands o Tj Maxx headquarters Boston, Ross in NYC Factory outlets o control of where merch is sold o Buyers throughout the season get a list of merch that has been returned (didn't sell) Opens shelf space to bring in new merch Value Concepts o Buy in bulk o Retail & wholesale; businesses come in & buy in bulk Specialty Store o Category killer These store come in & make it hard for other to compete against them Wide & deep assortment Leadership What is it? What does it mean to you? What experience do you have? The ability to inspire ppl, to influence the thinking, attitude, & behavior of your ppl & associates The process of influencing & supporting others to follow you & do willingly the things that need to be done Leadership is not a position, it is a relationship Actions should always be reasonable, relevant & ethical Ability to step outside your comfort zone What do leaders do? Mold, stretch, make things happen, define the business in terms of a cause, make a difference, stand for a purpose, enhance other's skills Supply a sense of direction; have a vision & a plan Monitor progress towards our goals Defining business as a cause Ppl are capable of the highest generosity & self-sacrifice; believe in what you're doing OWNERSHIP Focus on the business results of their actions; become accountable Pay attention to details that others may fail to notice Be significant; help other be successful When invested in something, you become BOSSES VS. LEADERS Bosses set standards, tell associates how to do the job & inspect the final project Leaders create ownership & commitment to produce good results, expect the work to be done correctly & on time TYPES OF LEADERS Transformational leaders o Learn staff & capabilities of each member o Results oriented, set goals & objectives & explains vision o Able to transcend their personal needs for the sake of the group o Charismatic, visionary
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