MKT 320, Unit 2, class 1
MKT 320, Unit 2, class 1 MKT 320
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This 6 page Class Notes was uploaded by Shristi Tuladhar on Tuesday March 8, 2016. The Class Notes belongs to MKT 320 at University of Miami taught by Ian Scharf in Summer 2015. Since its upload, it has received 21 views. For similar materials see Retailing in Marketing at University of Miami.
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Date Created: 03/08/16
Unit 2, Class 1 I. Mall of the America video What environmental factors suggest that the concept would be successful? Need to have a large local market In the 13 counties that surround the mall there is 3 million people Average household income is close to 70000 Need a natural tourist area: Over 10,000 lakes that attract over 15 million tourist a year. Desire to combine shopping and entertainment. What environmental factors suggest that the concept would NOT work? The decline of shopping malls. Get stores into the mallHow would attract the stores to come into the mall this big. What were the primary challenges facing managers as they designed and built it? Money Authorization The design of the mall Logistics: parking, bathrooms, needs of disabled Advertising: they had to attract the people far away too because if its just customers living in Minnesota then the mall would go bankrupt. Almost 40% of people shop in Mall of America live more than 150 miles away from the mall. From a retailer’s perspective, why locate there? Higher foot traffic From a retailer’s perspective, why NOT locate there? Higher rents Some people may just come there for entertainment It might be intimating to a lot of people, a mall this big. II. Domino’s Pizza in Mexico How do they address cultural and societal differences? They adjust their products for local taste and preferences They use consistent signage High traffic locations What is their entry strategy and why has it worked? Rather than trying to start fresh, they look for a successful entrepreneur in the country, and the franchisee is in charge of everything (master franchise). They delegate everything to this successful entrepreneur. III. Course Content: Store Locations: The types of locations available are: planned and unplanned. A. Unplanned Locations: they do not have a centralized management that determines what stores will be in a development, where the specific stores will be located, and how they will be operated. Freestanding Sites: retail locations for an individual, isolated store unconnected to other stores, however they might be near other freestanding stores or near a shopping center. The advantages are: their convenience for customers (easy access and parking), high vehicular traffic, and visibility to attract customers driving by, modest occupancy cost, fewer restrictions on signs, hours, or merchandise that might be imposed by management of planned locations. The disadvantages are: there is limited trade area, no nearby retailers to attract customers interested in conveniently shopping for multiple categories of merchandise on one trip. They also typically have higher outstanding cost because they typically do not have other retailers to share the common area maintenance costs. They also have little pedestrian traffic (number of customers in and out), limiting the number of customers who might drop in because they are walking by. Retailer that is not connected to any other retailers. Outparcels: It is a freestanding site that is in the parking lot of another retailer. Freestanding store that are not connected to other stores in a shopping center, but are located on the premises of a shopping center, typically in a parking area. They can offer customers the convenience of a drive through window, extensive parking, and clear visibility from the street. Urban Locations CBD: Central Business District. It is the traditional downtown financial and business area in a city or town. It is the commercial and business center of a city. It draws many people and employees into the area during business hours. There is high level of pedestrian traffic, but the shopping flow in the evening and on the weekends is slow in many CBDs. There is parking problems reducing consumer convenience, and the vehicular traffic is limited due to congestion in urban areas. There are people living in the nearby areas. Inner City: Low income residential area within a large city. Empty lots, buildings, and condemned houses, attract criminals making it dangerous to live in the inner city. Though the income levels are lower in inner cities than in other neighborhoods, inner city often achieves a higher sales volume and higher margins, resulting in higher profits. They offer lower priced packaged foods that have longer shelf lives. Hence, the consumers have to travel to suburb to get healthier items. Main Street: traditional downtown shopping area in smaller towns, and secondary shopping areas in large cities and their suburbs. B. Shopping Centers: owned as a single entity. Group of retail and other commercial establishments that are planned, developed, owned and managed as a single property. Convenience, Neighborhood and Community shopping centers (Strip shopping centers): Attached rows of openair stores, with onsite parking usually located in front of the stores. Like the university center. Convenient locations, easy parking, low occupancy costs. The disadvantages are they have limited trade area due to their size, and lack entertainment and restaurants to keep customers in the center for a longer time. No protection from the weather. Hence do not attract many customers as large enclosed malls. Power centers: consist primarily of collections of big box retail stores such as full line discount stores, off prince stores, warehouse clubs, and category specialists. These centers are open air too but, unlike traditional strip centers, power centers consist of a collection of freestanding “anchor” (main big store) stores and only a minimum number of smaller specialty store tenants. They are located near an enclosed shopping mall. They offer low occupancy cost and modest levels of consumer convenience and vehicular and pedestrian traffic. Shopping Malls: climate controlled, enclosed, lightened shopping centers with retail stores on one or both sides of an enclosed walkway. Parking provided around the perimeter of the mall. These enclosed shopping malls attract many shoppers and have a large trade area because of the number of stores and the opportunity to combine shopping with an inexpensive form of entertainment. Older citizens get their exercise by walking the malls, and teenagers hangout and meet their friends in shopping malls. Malls generate significant pedestrian traffic inside the mall and have sales per square foot almost the twice than the power or the strip centers. the customers don’t have to worry about the weather, level of consistency there like uniform hours of operation. However, the occupancy costs are high, intense competition inside the shopping centers, some malls are old hence unappealing to the customers, Lifestyle Centers openair configurations, Shops at Sunset. Shopping centers that have an open air configuration of specialty stores, entertainment and restaurants. They have fountains and street furniture round hence making it attractive. They cater to the lifestyles of the consumers in trade areas. They are particularly attractive to specialty stores. Outdoor attractions, specialty stores. Bad weather affects because its open air. Easy parking. Lower occupancy costs than that of enclosed shopping malls. Less retail space. May attract few customers than enclosed malls, but as it is located near highincome areas, higher purchases compensate for the fewer number of shoppers. MixedUse developments (MXDs)they combine several different uses into one complex, including retail, office, residential, hotel, recreation, or other functions. Appeal to people who have had enough of long commutes to work and the social fragmentation of their neighborhoods. They are popular with retailers because they bring additional shoppers. It combines residential, commercial, cultural, institutional, industrial in one building or area that provides pedestrian connections. Efficient use of space because, land costs are the same whether the developer builds a shopping mall by itself or an office tower on the top of the mall or parking structure. Outlet centers: these are the shopping centres that contain mostly manufacturers and retailers outlet stores. In the past the outlet stores sold damaged merchandise or excess production overruns. However, now the products at outlet centers are made specifically for the outliers. The quality is not the same as the branded merchandise sold in department or specialty stores. The outlet centers are typically in remote locations. These remote locations offer lower cost and reduce the competition between the outlet stores and department and specialty stores offering merchandise at full price. Tourism represents 50% of the traffic generate for many outlet centers. Popup Storestemporary stores like a Christmas or a Halloween stores and either used for seasonal purposes or try a new concept. They focus on new products or a limited group of products. Store Within a Store: agreement in which a retailer rents a part of the retail space in a store operated by another independent retailer. Like Sephora inside JC Penney. The store within the retailer manages the assortment, inventory, personnel, and systems, and delivers the percentage of sales or profits to the host. The store within gets an excellent location with high pedestrian traffic of customers in its target market. The host retailer generates increased revenue from the space and enhances its brand image. JC Penney, one retailer leases out space to a second retailer and second retailer has a smaller version of the store. Merchandise Kiosks: small selling places typically located in the walkways of enclosed malls, airports, college campuses, or office building lobbies. Some are staffed and resemble a miniature store or cart that could be easily moved. Others are vending machines such as kiosks. Temporary selling space. Location and Retail Strategy: a critical factor affecting the type of location that consumers select to visit is the shopping situation in which they are involved. The three types of shopping situations are convenience shopping, comparisonshopping, and specialty shopping. Convenience? when consumers are engaged n convenience shopping, they are primarily concerned with minimizing the effort to get the product or service they want. More concerned about the convenience. they are insensitive to price and brands. They just care about convenience. they want to make the purchases as quickly and easy as possible. Like, getting a cup of coffee during the work break. These are convenience stores, quick service restaurants, gas stations. More convenience at strip malls. Comparison? Consumers involved in comparison shopping are more involved in the purchase decision. They have general idea about the type of product or service they want but they don’t have a well developed preference for a brand or a model. Hence, they seek information are wiling to expend efforts to compare alternatives. (More items, retailers to look at) More comparison at shopping malls. This type of shopping behavior when buying furniture, appliances, apparel, consumer electronics. Category specialists are the destination stores, places where consumers will go even if its inconvenient, just liked enclosed malls are destination locations for fashionable apparel comparison shopping. Specialty? When consumers go specialty shopping they know what they want and will not accept a substitute. They are brand or retailer loyal and will pay a premium or expend extra effort if necessary to get exactly what they want. Like buying organic vegetables, luxury automobile. Destination stores. They are willing to travel an inconvenient location to get the product. Greater specialty items at power centers or shopping malls. Societal and Legal Issues: this restrict where retailers can locate and operate their stores. Urban Sprawltrend to no longer shopping in cities and hence shopping in suburbs. The increased expansion of residential and shopping center development in suburban and rural areas outside of their respective urban centers. In addition to a decline of downtown, the other negative consequences are congestion and air pollution due to increased auto mobile travel, loss of farmland, concentrated poverty. However, this migration to suburbs are better housing opportunities, public schools and less crime, Zoningthe local governments in the United States uses zoning to regulate land uses in specific areas to prevent any indifference with existing uses by residents or businesses as well as encourage the preservation of a community sense of identity. Like zoning might keep McDonald’s from operating a franchise in a residential area. Building Codes Issues: specify the type of building, signs, size and type of parking lot and so forth that can be used at particular location. Some building codes require a certain size parking lot or a particular architectural design. There is restriction on the sign sizes and styles. Likewise the licensing requirements may vary in different parts of a region. Like in some places no alcoholic beverages can be sold and in some places it can be sold. Signage (how big you make your signs and licensingliquor licenses). IV. Stephanie Wilson’s Boutique case Pluses and minuses of each location: Downtown arcade: may get interest because of redevelopment, you don’t know what the customers going to look like from a demographic perspective Tenderloin villageclose to your house and cheapest from the, she knows the landlord, lower traffic Appletree mall: know what your customers look like, high rent and more competition Appropriateness for each location Downtown arcade: more conservative merchandise Tender line village: charge little bit more Apple tree mall: competitively charged merchandise
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