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MKTG 488 Exam 1 Study Guide

by: cethornt

MKTG 488 Exam 1 Study Guide MKTG 488

GPA 3.5

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These notes cover what will be on exam 1
Retail Strategy
Dr. Christopher Newman
Study Guide
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This 4 page Study Guide was uploaded by cethornt on Tuesday October 4, 2016. The Study Guide belongs to MKTG 488 at University of Mississippi taught by Dr. Christopher Newman in Fall 2016. Since its upload, it has received 9 views. For similar materials see Retail Strategy in Business Administration at University of Mississippi.

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Date Created: 10/04/16
MKTG 488 EXAM 1 STUDY GUIDE 1. Planned vs. unplanned retail locations • Planned: Shopping center and/or manager makes and enforces policies that govern store operations • Unplanned: Don’t have centralized management that determines what stores will be in development 2. Trade Area and Zones • Trade Area: A contiguous geographic are that accounts for the majority of a stores sales and customers • Primary Zone: 60% to 65% of a store’s customers • Secondary Zone: 20% of a store’s customers • Tertiary Zone: 5% of a store’s customers • Customer spotting: approach to estimating retail trade areas 3. Types of Shopping Centers • Neighborhood & Community Centers “Strip Malls”: o Advantages: convenient locations, easy parking, low occupancy costs o Disadvantages: limited trade area, lack of entertainment, no weather protection • Power Centers: collection of big box stores such as discount stores (Target), off-price stores (Marshall’s), warehouse clubs (Costco), and category specialists (Lowe’s) Advantages: o Open air set up o Free-standing anchors o Usually near malls o Limited specialty stores o Low occupancy costs o Convenient o Larger trade areas o Modest vehicular Pedestrian traffic • Regional/Super Regional Malls: o Advantages: Many different retailers, High pedestrian traffic, Comfortable setting, Uniform operation hrs. o Disadvantages: High occupancy costs, Mall management, Intense Competition, Time pressure • Lifestyle Centers: 50K sq. ft. of upscale chain specialty stores, Open-air configuration, Restaurants, cinema, entertainment, Small department store format • Mixed Used Developments: One complex that is used for retail, offices, residential, recreation, hotel, Efficient use of space, Pedestrian friendly, “All in one” • Outlet Centers: Typically consist of manufacturers’ outlets and retail outlets, Lower rent compared to malls, tourism is the main driver • Theme/Festival Centers: Typically employ a common architectural theme among all stores, usually located in places of historic interest for tourists, anchored by restaurants and entertainment facilities • Omnicenters: Combines enclosed malls, lifestyle centers, and power centers, designed to generate more pedestrian traffic and longer shopping trips, capture cross-shopping consumers • Airports: Rent 20% higher than malls (but sales per sq. ft. 3-4 times higher) • Store Within a Store: Small retailer located within a larger store • Temporary Pop-Up Stores: New products or limited group of products 4. Different Types of Leases • Independent, single store establishment (flexible, responsive) • Corporate retail chains (lower prices, more resources) • Franchises (pay lump sum + sales royalties to franchisor) 5. Types of Retailers General Merchandise Retailers: • Department Stores: wide variety, deep assortment, lots of customer service, merchandise organized in distinct departments o Issues: competition (discount stores: price, specialty stores: assortment depth, service), periodic sales (customers wait for sale, location of department stores are inside of malls, increase of online shopping) o Increase exclusive merchandise and private label merchandise, increase marketing and advertising • Specialty Stores: limited number of complementary categories, narrow deep assortments, high level of service in small store, often pursue very specific target markets, among the most profitable and fastest growing type of retailer in the world • Discount Stores: 60,000 to 80,000 square feet, broad variety, average to shallow assortment, limited service and low prices, competition from category specialists • Category Specialists AKA “Category Killers”: narrow deep variety assortment, low price and service, destination stores, intense intra- competition, home improvement centers • Off-Price Retailers “Close Out Retailers”: offer inconsistent assortment of brand name items, low prices, unique buying strategies, outlet stores and factory outlets • Drug Stores: specialty store that focus on heath and beauty care, narrow deep assortment, high competition (rising health care costs, other pharmacies), evolution to new formats (drive thru, higher food variety, etc.) • Extreme Value Retailers: focus mostly on low income consumers, wide variety but shallow assortment, small package size, special package size, low prices with low terrible service, one of the fastest growing types of retailers Food Retailers: • Convenience Stores: limited variety and assortment, tailors offerings to local market, higher prices than supermarkets • Supermarkets: o Conventional Supermarkets: most popular type of food retailer, average variety and assortment, modest service, perishables account for 30% of sales o Limited Assortment Supermarkets: 1,000 to 1,500 SKU’s, offer one or two brands and sizes, designed to maximize efficiency and reduce costs, 40-60% lower prices than conventional supermarkets o Supermarket Trends: Increasing competition, changing consumption patterns o Supermarkets response to trends: Power Perimeter (fresh perishables), Target specific segments, more private label brands, better in store experience • Supercenters: twice as big as discount stores, larger emphasis on food than discount stores, part supermarket/part discount store, large stores (185,000 square feet), 30k-60k different SKU’s, one stop shopping experience o Hypermarkets: smaller stock wise, offer unique items, higher focus on food • Warehouse Clubs: limited and irregular assortment of food and general merchandise at low prices, very little customer service, inexpensive store design, low inventory holding costs by carrying a limited assortment of fast selling items • Services Retailers: Services characterized by intangibility 6. Supply Chain (Members) • Manufacturer -> Wholesaler/Distributor -> Retailer -> Consumer 7. Backward vs. Forward Integration: a. Vertical Integration: when a firm performs more than one set of activities in the distribution channel i. 2 Types: • Backward Integration: retailer undertakes distribution and/or manufacturing activities (ex: starbucks) • Forward Integration: manufacturer undertakes wholesaling and/or retailing activities of its products (ex: American apparel) 8. Factory Outlets vs. Outlet Stores • Factory Outlet: products are sold from one brand only • Outlet Stores: various brands sold 9. Different Tiers of Department Stores st • 1 Tier: high end, higher prices great customer service (nieman marcus, Nordstrom) • 2 Tier: moderate prices and moderate service (macys, dillards, belk) • 3 Tier: valued pricing, discount pricing for price conscious budget people who like to save, get little to no service (JC penny, khols) 10. How to interpret Lambda in Huff Gravity Model • When lambda is equal to 1 it means the size of the store and travel time are equally important to customers in your area • When lambda is less than 1 store size is more important than travel time 11. Shopper Solutions • Brands collaborate with retailers to create new value for shoppers 12. What is an SKU? • Identifies each unique item in a store • Stock Keeping Unit 13. Characteristics of Retail Services: • Differentiate by offering more or better services o Special financing o Layaway o Warranties o In house repairs o Shopping/wish lists o Returns o Workshops/seminars o Convenient hours, locations, parking • How do retailers differ? Merchandise, services, store design and visual merchandising, location  


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