Beruflich Dokumente
Kultur Dokumente
Retail
Management
Management
MBA-MK4
MBA-MK4
IV Semester
IV Semester
Academic Consultant: Garima
Academic Consultant: Garima
Tiwari
Tiwari
2
Unit:
Unit:
I
I
(8
(8
Sessions)
Sessions)
Retail Planning: Development and Control Retail Planning: Development and Control
The Customer and Retail Business: Knowing your The Customer and Retail Business: Knowing your
Customers Customers
Learning Learning
Attitude Attitude
Motivation Motivation
Perception Perception
3
Sno
Unit Lecture
no
Contents (sub topics) Slide no
(1) I 1
Overview of Retailing Environment
4-11
(2) 2
Retail definition , concept & Driving
Forces for Retailing, Functions of
retailer
12-28
(3) 3
Building & sustaining relations
29-35
(4) 4
Strategic Retail Planning, Development
& control
36-64
(5) 5
Type of retail stores
65-71
(6) 6
Market structure & structural change
72-87
(7) 7
The Customer and Retail Business:
Knowing & focusing your Customers
88-107
(8) 8
Learning, Attitude, Motivation,
Perception
108-146
FAQS, CASE STUDY, ASSIGNMENTS
147-155
LECTURE PLAN
Unit-I Sub: Retail Management (MBA-MK4)
Academic Consultant: Garima Tiwari
Session -I
Session -I
Overview of Retailing
Overview of Retailing
Environment
Environment
5
Introduction
Introduction
Retailing
Retailing
a set of business activities that
a set of business activities that
adds value to the products and services sold to
adds value to the products and services sold to
consumers for their personal or family use.
consumers for their personal or family use.
A
A
retailer
retailer
is a person who sells products
is a person who sells products
and/or services to consumers for personal or
and/or services to consumers for personal or
family use.
family use.
business that provides offerings in required format (size) business that provides offerings in required format (size)
Breaking Bulk
Breaking Bulk
-Buy it in quantities customers want
-Buy it in quantities customers want
Holding Inventory
Holding Inventory
-Buy it at a convenient place when you want it
-Buy it at a convenient place when you want it
Providing Assortment
Providing Assortment
-Buy other products at the same time
-Buy other products at the same time
Offering Services
Offering Services
-See it before you buy, get credit
-See it before you buy, get credit
7
Top 10 retail brands in the world
Top 10 retail brands in the world
1. 1. Wal-Mart Wal-Mart ( (www.walmart.com www.walmart.com) full line discount stores, membership ) full line discount stores, membership
clubs clubs
2. 2. Home Depot Home Depot ( (www.homedepot.com www.homedepot.com) Home centers, design centers ) Home centers, design centers
3. 3. Kroger Kroger ( (www.kroger.com www.kroger.com) Super markets, convenience stores, jewelry ) Super markets, convenience stores, jewelry
stores stores
4. 4. Sears Roebuck Sears Roebuck ( (www.sears.com www.sears.com) Department stores, specialty stores ) Department stores, specialty stores
5. 5. Target Target ( (www.target.com www.target.com) Full-line discount stores, department stores ) Full-line discount stores, department stores
6. 6. Albertsons Albertsons ( (www.albertsons.com www.albertsons.com) Supermarket, drug stores ) Supermarket, drug stores
7. 7. Kmart Kmart ( (www.kmart.com www.kmart.com) Full-line discount stores ) Full-line discount stores
8. 8. Costco Costco ( (www.costco.com www.costco.com) Membership clubs ) Membership clubs
9. 9. Safeway Safeway ( (www.safeways.com www.safeways.com) Supermarkets ) Supermarkets
10. 10. J.C.Penney J.C.Penney ( ( www.jcpenny.com www.jcpenny.com) Department stores , drug stores, ) Department stores , drug stores,
catalog catalog
8
Indian Retail Scene
Retail Philosophy By The People, For The People and Of The People
Retailing involves selling products and services to consumers for their individual or
family use. As the final link between consumers and manufacturers, retailers are a vital
part of the business world. Retailers add value to products by making it easier for
manufactures to sell and consumers to buy.
The Indian Retail Sector can be broadly
classified into
Indian Retail Sector
Food Retailers
Health & Beauty
Products
Home Furniture &
Household Goods
Clothing &
Footwear
Durable Goods
Leisure &
Personal Goods
9
Retail in India picked up in the 1980s, when the country started to open its economy.
Today, the Indian retail industry is evolving at a fast pace.
Potential Goldmine-India ranks first in the 2005 Global Retail Development Index
(GRDI) released by AT Kearney, and is rated the fifth most attractive emerging
retail market.
AT Kearney has projected Indias total retail market to grow at a compounded 30
percent over the next five years.
With the organised retail segment growing at 25-30 p.c.p.a, revenues may
triple from the current US$ 7.7 billion to US$ 24 billion by 2010.
The share of modern retail is likely to grow from its current 2 percent to 15-20
percent over the next decade, analysts feel. No wonder a heavyweight like
Reliance is planning to do a Wal-Mart in India!
In the next few years, India will see at least two domestic retail businesses attain
the magic figure of US$ 218 million in sales.
10
Fast Facts
Wal-Mart is moving a senior official from its headquarters (US), to head its market
research and business development functions pertaining to its retail plans in India.
The New York based high-end fashion retailer Saks Fifth Avenue has tied up with realty
major DLF Properties to set up shop in a mall in New Delhi.
Mukesh Ambani has announced a separate company, Reliance Retail Limited, which
would be 100 percent owned and would invest Rs.25, 000 crore in the retail business over
the years. Stores will be set up in phases, and around 1,600 stores will be in place by
2007.
Internet retailing will thrive in the coming decade.
Commercial Commercial
awareness awareness
Self-confidence Self-confidence
Flexibility Flexibility
Communication Communication
skills skills
Relationships are the building blocks for all Relationships are the building blocks for all
community organizing activities. community organizing activities. Whether you Whether you
want to organize a volleyball game or get rid of want to organize a volleyball game or get rid of
unfair housing practices in your town, you will unfair housing practices in your town, you will
need lots of good relationships. need lots of good relationships.
The relationships we have with our coworkers, the The relationships we have with our coworkers, the
communities we serve, and even our adversaries communities we serve, and even our adversaries
are the are the means means for achieving our goals. It is our for achieving our goals. It is our
relationships all added together that are the relationships all added together that are the
foundation of an organized effort for change. foundation of an organized effort for change.
It is also the It is also the people people who motivate us to reach our who motivate us to reach our
goals. As community builders, we care deeply goals. As community builders, we care deeply
about people and caring is part of our work. about people and caring is part of our work.
31
Why do we need to build and sustain
Why do we need to build and sustain
relationships?
relationships?
Community building occurs one-to-one Community building occurs one-to-one. You need . You need
to build relationships with people one-to-one if you to build relationships with people one-to-one if you
want them to become involved in your group or want them to become involved in your group or
organization. Many people become involved in a organization. Many people become involved in a
community group or organization, just because community group or organization, just because
they have a relationship with another person who they have a relationship with another person who
is already involved. is already involved.
We need relationships in order to win allies to our We need relationships in order to win allies to our
cause cause. In order to get support from people outside . In order to get support from people outside
our organizations, we need to build relationships in our organizations, we need to build relationships in
which people know and trust us. which people know and trust us.
Our relationships give meaning and richness to our Our relationships give meaning and richness to our
work and to our lives. work and to our lives. We all need a community of We all need a community of
people to share the joys and the struggles of people to share the joys and the struggles of
organizing and making community change. A little organizing and making community change. A little
bit of camaraderie goes a long way. bit of camaraderie goes a long way.
32
When do you build and sustain
When do you build and sustain
relationships?
relationships?
Relationships are the groundwork. Often Relationships are the groundwork. Often
building relationships is the groundwork that must building relationships is the groundwork that must
be laid before anything else gets done on a be laid before anything else gets done on a
project. The bigger the project, the more project. The bigger the project, the more
relationships you will usually need as a foundation. relationships you will usually need as a foundation.
Establish relationships before you need them Establish relationships before you need them
It's always better to build relationships It's always better to build relationships before before you you
need them or before a conflict arises. need them or before a conflict arises.
Volunteer to do some work for their organization (if they are Volunteer to do some work for their organization (if they are
not already in yours) not already in yours)
If you lend them a hand, they are likely to think well of you If you lend them a hand, they are likely to think well of you
and give something back in return. and give something back in return.
Be persistent
Be persistent
Setting objectives
Setting objectives
Long-term objectives.
Long-term objectives.
Resources required.
Resources required.
It is the effective blending of all the elements It is the effective blending of all the elements
of retail marketing mix activities within the of retail marketing mix activities within the
retail organization that determines the retail organization that determines the
success of retail marketing management. success of retail marketing management.
Discuss this statement and explain with retail Discuss this statement and explain with retail
examples how the elements of retail examples how the elements of retail
marketing mix could be blended to ensure the marketing mix could be blended to ensure the
success of retail operation. success of retail operation.
Mastering the process of trying to optimise Mastering the process of trying to optimise
the retail marketing mix still defies and the retail marketing mix still defies and
frustrates most retail managers. Explain why frustrates most retail managers. Explain why
personal guesswork and intuitions are used personal guesswork and intuitions are used
by retail managers most of the time. by retail managers most of the time.
47
STRATEGIC RETAIL MANAGEMENT
STRATEGIC RETAIL MANAGEMENT
Customer Patronage
Customer Patronage
-
Sales Objectives
Sales Objectives
-
Customer Traffic
Customer Traffic
-
Customer Loyalty
Customer Loyalty
55
MARKET OBJECTIVES
MARKET OBJECTIVES
Competitive Position
Competitive Position
-
Market Share
Market Share
-
Retail Image
Retail Image
-
Vendor Relations
Vendor Relations
56
FINANCIAL OBJECTIVES
FINANCIAL OBJECTIVES
Profitability
Profitability
-
Targeted Returns
Targeted Returns
-
Earning Per Share
Earning Per Share
-
Stockholder Dividends
Stockholder Dividends
57
FINANCIAL OBJECTIVES
FINANCIAL OBJECTIVES
Productivity
Productivity
-
Labor
Labor
-
Space
Space
-
Merchandise
Merchandise
58
SOCIETAL OBJECTIVES
SOCIETAL OBJECTIVES
Social Responsibility
Social Responsibility
Corporate Values
Corporate Values
59
CONDUCT A SITUATION
CONDUCT A SITUATION
ANALYSIS
ANALYSIS
+
Complete a Retail Audit
Complete a Retail Audit
+
Determine retail strengths and
Determine retail strengths and
weakness
weakness
+
Evaluate market opportunities and
Evaluate market opportunities and
threats
threats
+
Conduct a Competitive Analysis
Conduct a Competitive Analysis
60
DEVELOP STRATEGY
DEVELOP STRATEGY
Number of outlets
Number of outlets
Location
Location
Size.
Size.
Because of overlap of classification criteria,
Because of overlap of classification criteria,
some stores may qualify as under two
some stores may qualify as under two
different categories.
different categories.
67
1. 1.
General merchandise retailer
General merchandise retailer
: general
: general
merchandise retailer carry a variety of
merchandise retailer carry a variety of
product lines, with considerable depth.
product lines, with considerable depth.
Some major types of these
Some major types of these
stores include
stores include
supermarkets and hypermarkets ,
supermarkets and hypermarkets ,
discount stores and department stores.
discount stores and department stores.
o
Super market
Super market
: A supermarket is a large self
: A supermarket is a large self
service retail store that carries a wide
service retail store that carries a wide
variety of consumer products under one
variety of consumer products under one
roof , such as complete line of food products
roof , such as complete line of food products
, laundry requirement, household
, laundry requirement, household
maintenance items. In India cooperative
maintenance items. In India cooperative
have managed some supermarkets for
have managed some supermarkets for
quite sometime like super bazaar in Delhi,
quite sometime like super bazaar in Delhi,
apna bazaar shakari bhandar etc.
apna bazaar shakari bhandar etc.
68
o
Discount store
Discount store
:
:
these stores are self service,
these stores are self service,
standard general merchandise retailers
standard general merchandise retailers
regularly offering brand name and private
regularly offering brand name and private
brand items at low price, earn lower
brand items at low price, earn lower
margins and push for high sales turnover.
margins and push for high sales turnover.
The characteristics of true discount stores
The characteristics of true discount stores
include
include
GREATER COMPETITION
TRUST
TRANSPAARENCY
TOGETHERNESS
82
DRIVING CUSTOMER SATISFACTION
WHAT DRIVES CUSTOMER SATISFACTION
TOGETHERNESS -ATTITUDE
-UNDERSTANDS MY NEEDS
-SUPPORTS AND GUIDES
-SAFEGUARDS MY INTERESTS
-PERSONAL BOND (KNOWLEDGE
OF CUSTOMERS/ FAMILY DETAILS
-READY TO HELP CUSTOMER MAKE
MORE MONEY (PROMOTION,
PRICING, ETC.)
84
DRIVING CUSTOMER SATISFACTION
PASSION TO WIN
COMMITMENT TO OWNERSHIP
Who
Who
Where
Where
When
When
What
What
How
How
90
Customer Analysis
Customer Analysis
Consumers
Consumers
Business to Business
Business to Business
91
Customer Analysis
Customer Analysis
Consumers
Consumers
Brand loyalty
Brand loyalty
Repurchase
Repurchase
92
Customer Analysis
Customer Analysis
derived demand
derived demand
Invoice data
Invoice data
Warranty cards
Warranty cards
94
Customer Analysis
Customer Analysis
Demand variation
Demand variation
Recognition of problem
Recognition of problem
Purchase
Purchase
Postpurchase behavior
Postpurchase behavior
97
Customer Analysis
Customer Analysis
Problem recognition
Problem recognition
Depleted inventory
Depleted inventory
Advertising
Advertising
Promotions
Promotions
Store display
Store display
98
Customer Analysis
Customer Analysis
Past experience
Past experience
Brochures
Brochures
Catalogs
Catalogs
99
Customer Analysis
Customer Analysis
Evaluation of alternatives
Evaluation of alternatives
Dissonance-Attribution Hierarchy
Dissonance-Attribution Hierarchy
Cognitive (Perceptual)
Cognitive (Perceptual)
Conative (Purchase)
Conative (Purchase)
Conative (Purchase)
Conative (Purchase)
Affective (Like-Dislike)
Affective (Like-Dislike)
Cognitive (Perceptual)
Cognitive (Perceptual)
Salesperson important
Salesperson important
Early Maturity
Early Maturity
102
Low-Involvement Theory
Low-Involvement Theory
Cognitive (Perceptual)
Cognitive (Perceptual)
Conative (Purchase)
Conative (Purchase)
Broadcast/Late maturity
Broadcast/Late maturity
103
Customer Analysis
Customer Analysis
Friends
Friends
Social class
Social class
Personality
Personality
Lifestyle
Lifestyle
104
Customer Analysis
Customer Analysis
Purchase
Purchase
Store location
Store location
Availability of credit
Availability of credit
105
Customer Analysis
Customer Analysis
Postpurchase Behavior
Postpurchase Behavior
Speed of repairs
Speed of repairs
Product durability
Product durability
Extended warranty
Extended warranty
106
Customer Analysis
Customer Analysis
Customer Checklist
Customer Checklist
Plant tours
Plant tours
Customer visits
Customer visits
107
Customer Analysis
Customer Analysis
Encourages initiative
Encourages initiative
Builds trust
Builds trust
Session-VIII
Session-VIII
Learning, Attitude, Motivation,
Learning, Attitude, Motivation,
Perception
Perception
109
Learning
Learning
where to buy
where to buy
how to use
how to use
how to maintain
how to maintain
Behavioral
Behavioral
Theories
Theories
Based on Based on
observable observable
behaviors behaviors
(responses) that (responses) that
occur as the result occur as the result
of exposure to of exposure to
stimuli stimuli
Cognitive
Cognitive
Theories
Theories
Motivation
Motivation
Cues
Cues
Response
Response
Reinforcement
Reinforcement
112
Behavioral Learning
Behavioral Learning
Theories
Theories
Classical Conditioning
Classical Conditioning
Instrumental Conditioning
Instrumental Conditioning
Repetition
Repetition
Stimulus
Stimulus
generalization
generalization
Stimulus
Stimulus
discrimination
discrimination
Increases the
Increases the
association
association
between the
between the
conditioned and
conditioned and
unconditioned
unconditioned
stimulus
stimulus
Advertising
Advertising
wearout is a
wearout is a
problem
problem
Basic Concepts
115
Strategic Applications of
Strategic Applications of
Classical Conditioning
Classical Conditioning
Repetition
Repetition
Stimulus
Stimulus
generalization
generalization
Stimulus
Stimulus
discrimination
discrimination
Helps me-too
Helps me-too
products to
products to
succeed
succeed
Useful in product
Useful in product
extensions
extensions
Basic Concepts
116
Strategic Applications of
Strategic Applications of
Classical Conditioning
Classical Conditioning
Repetition
Repetition
Stimulus
Stimulus
generalization
generalization
Stimulus
Stimulus
discrimination
discrimination
Selection of a
Selection of a
specific stimulus
specific stimulus
from similar stimuli
from similar stimuli
This discrimination
This discrimination
is the basis of
is the basis of
positioning which
positioning which
looks for unique
looks for unique
ways to fill needs
ways to fill needs
Basic Concepts
117
Instrumental
Instrumental
(Operant)
(Operant)
Conditioning
Conditioning
A behavioral theory of
learning based on a
trial-and-error process,
with habits forced as
the result of positive
experiences
(reinforcement)
resulting from certain
responses or
behaviors.
118
Types of Reinforcement
Types of Reinforcement
Positive
Positive
Negative
Negative
Forgetting
Forgetting
Extinction
Extinction
iWon Video
119
Instrumental
Instrumental
Conditioning and
Conditioning and
Marketing
Marketing
Customer Satisfaction
Customer Satisfaction
(Reinforcement)
(Reinforcement)
Reinforcement Schedules
Reinforcement Schedules
Shaping
Shaping
Rehearsal
Rehearsal
Encoding
Encoding
124
Motivation
Motivation
Needs can be either innate or learned. Needs can be either innate or learned.
Needs are never fully satisfied. Needs are never fully satisfied.
Feelings and emotions (I.e., affect) Feelings and emotions (I.e., affect)
accompany needs accompany needs
Disgust Interest
Disgust Interest
Joy Surprise
Joy Surprise
Sadness
Sadness
Anger
Anger
Fear
Fear
Contempt
Contempt
Shame
Shame
Guilt
Guilt
127
Some General Theories of
Some General Theories of
Motivation
Motivation
Achievement motivation is seeking to get ahead, Achievement motivation is seeking to get ahead,
to strive for success, and to take responsibility to strive for success, and to take responsibility
for solving problems. for solving problems.
Need for affiliation motivates people to make Need for affiliation motivates people to make
friends, to become members of groups, and to friends, to become members of groups, and to
associate with others. associate with others.
Need for power refers to the desire to obtain and Need for power refers to the desire to obtain and
exercise control over others. exercise control over others.
Need for uniqueness refers to desires to perceive Need for uniqueness refers to desires to perceive
ourselves as original and different. ourselves as original and different.
128
Classical Conditioning
Classical Conditioning
A neutral
A neutral
stimulus, such as
stimulus, such as
a brand name, is
a brand name, is
paired with a
paired with a
stimulus that
stimulus that
elicits a response.
elicits a response.
Through a
Through a
repetition of the
repetition of the
pairing, the
pairing, the
neutral stimulus
neutral stimulus
takes on the
takes on the
ability to elicit the
ability to elicit the
response.
response.
129
Goal: identify powerful positive stimulus and Goal: identify powerful positive stimulus and
associate brand with it. associate brand with it.
Examples of powerful, emotion causing stimuli: Examples of powerful, emotion causing stimuli:
Also, negative stimuli can be associated with Also, negative stimuli can be associated with
competitors. competitors.
Credit card insignia may elicit spending Credit card insignia may elicit spending
responses responses
133
Perception
Perception
Sensory perception
Sensory perception
It is governed by
It is governed by
the five senses:
the five senses:
sight, smell, sound,
sight, smell, sound,
touch, and taste
touch, and taste
It focuses on
It focuses on
product specific
product specific
sense attributes
sense attributes
and how these are
and how these are
understood and
understood and
evaluated by
evaluated by
consumers
consumers
.
.
135
Factors Affecting
Factors Affecting
Sensory Perception
Sensory Perception
Visual cues: color, shape, and size Visual cues: color, shape, and size
Aural cues: tempo and pitch Aural cues: tempo and pitch
Olfactory cues (taste + smell): sweet, bitter, salty, and Olfactory cues (taste + smell): sweet, bitter, salty, and
floral floral
Tactile cues: soft, coarse, and silky Tactile cues: soft, coarse, and silky
Sensory acuity: the capacity to recognize and Sensory acuity: the capacity to recognize and
differentiate among certain sensory cues; the limin differentiate among certain sensory cues; the limin
Sensory preferences: sensory product features are Sensory preferences: sensory product features are
perceived and evaluated based on those liked or disliked perceived and evaluated based on those liked or disliked
Consumer expectation: affects how product features are Consumer expectation: affects how product features are
likely to be perceived/evaluated. When features match likely to be perceived/evaluated. When features match
expectations this yields more positive preference expectations this yields more positive preference
outcomes outcomes
136
Gestalt Theory of
Gestalt Theory of
Perception
Perception
Forms of attribution
Forms of attribution
Components of risk:
Components of risk:
Severity of consequences (how bad will it be) Severity of consequences (how bad will it be)
Assimilation (acceptable)
Assimilation (acceptable)
and contrast (too high or low)
and contrast (too high or low)
144
Attitude
Attitude
Attitudes are Learned We are not born with Attitudes are Learned We are not born with
Attitudes relative to purchase behavior are formed Attitudes relative to purchase behavior are formed
as a result of direct experience with the product as a result of direct experience with the product
word-of-mouth exposure to mass media word-of-mouth exposure to mass media
advertising, the internet, and direct marketing advertising, the internet, and direct marketing
Attitudes are not synonymous with behavior Attitudes are not synonymous with behavior
Attitudes may result from behavior Attitudes may result from behavior
Attitudes Have Consistency Attitudes are not Attitudes Have Consistency Attitudes are not
permanent and can and do change Once attitudes permanent and can and do change Once attitudes
develop, they are not always easy to change develop, they are not always easy to change
Often the goal of marketing is to change attitudes Often the goal of marketing is to change attitudes
about a product or company Circumstances about a product or company Circumstances
sometimes preclude consistency between sometimes preclude consistency between
attitudes and behavior attitudes and behavior
145
Attitudes Occur Within a
Attitudes Occur Within a
Situation
Situation
inconsistent with their attitudes From a inconsistent with their attitudes From a
marketers perspective, it is important to marketers perspective, it is important to
consider the situation in which the consider the situation in which the
behavior takes place, or one might misinterpret behavior takes place, or one might misinterpret
the relationship between attitude and behavior the relationship between attitude and behavior
146
Sources of Attitudes
Sources of Attitudes
Personal Experience The primary basis on which attitudes Personal Experience The primary basis on which attitudes
towards goods and services are formed Free products, towards goods and services are formed Free products,
cents-off promotions, etc. Marketers goal is to get cents-off promotions, etc. Marketers goal is to get
consumers to try a product and, hopefully, develop a consumers to try a product and, hopefully, develop a
positive attitude towards it positive attitude towards it
Influence of Family & Friends Family and friends are a Influence of Family & Friends Family and friends are a
major influence on our values, beliefs and attitudes We major influence on our values, beliefs and attitudes We
carry over into adulthood many of the attitudes we carry over into adulthood many of the attitudes we
developed as children Our peer and social groups also developed as children Our peer and social groups also
influence our attitudes influence our attitudes
Direct Marketing & Mass Media Direct marketers are able Direct Marketing & Mass Media Direct marketers are able
to use new technologies to target smaller and smaller to use new technologies to target smaller and smaller
market segments As a result, many solicitations are highly market segments As a result, many solicitations are highly
personalized and have the capacity to create favorable personalized and have the capacity to create favorable
attitudes towards their products attitudes towards their products
FAQs
FAQs
148
Questions
Questions
Q1: What is Retail management? Name top ten retail brands in the Q1: What is Retail management? Name top ten retail brands in the
world. world.
Ans: Retailing encompasses business activities involved in selling Ans: Retailing encompasses business activities involved in selling
goods & services to the final consumer for their personal, family or goods & services to the final consumer for their personal, family or
house hold use. house hold use.
Top ten brands are: Wal-Mart, Home Depot, Kroger, Sears Roebuck, Top ten brands are: Wal-Mart, Home Depot, Kroger, Sears Roebuck,
Target, Albertsons, Kmart, Costco, Safeway and J.C.Penney. Target, Albertsons, Kmart, Costco, Safeway and J.C.Penney.
Q2: What qualities should a one possess to pursue retail as career? Q2: What qualities should a one possess to pursue retail as career?
Ans: People person, effective team member, able to perform variety of Ans: People person, effective team member, able to perform variety of
tasks, make quick decisions, analytical skills, can work under tasks, make quick decisions, analytical skills, can work under
pressure. pressure.
Q3: What are the specific characteristics of retail? Q3: What are the specific characteristics of retail?
Ans: Small average sale, Impulse purchase, popularity of stores. Ans: Small average sale, Impulse purchase, popularity of stores.
Q4: Regardless of size & type, what are the retail strategies a retailer Q4: Regardless of size & type, what are the retail strategies a retailer
should employ? should employ?
Ans: Define the type of business, set long term & short term goals, Ans: Define the type of business, set long term & short term goals,
determine customer market to target, device a long run plan of determine customer market to target, device a long run plan of
general directions, Implement an integrated strategy, regularly general directions, Implement an integrated strategy, regularly
evaluate performance. evaluate performance.
149
Questions
Questions
Q5: What are the key success points for a target stores strategy? Q5: What are the key success points for a target stores strategy?
Ans: Growth oriented objectives, appeal to a prime market, distinctive Ans: Growth oriented objectives, appeal to a prime market, distinctive
company image, Strong customer service, multiple point of contact, company image, Strong customer service, multiple point of contact,
employee relation, innovation, commitment to technology, employee relation, innovation, commitment to technology,
community involvement, constant performance monitering. community involvement, constant performance monitering.
Q6: What is the retailing concept? Q6: What is the retailing concept?
Ans: Customer orientation, coordinated efforts, value driven, goal Ans: Customer orientation, coordinated efforts, value driven, goal
oriented. oriented.
Q7: Why value is an important concept for every retailer in any kind of Q7: Why value is an important concept for every retailer in any kind of
settings? settings?
Ans: Customer believes, they got their money worth, retail efforts are Ans: Customer believes, they got their money worth, retail efforts are
required in the manner the firm intends, value is different to required in the manner the firm intends, value is different to
different customers( for some: money, benefits drawn, satisfaction, different customers( for some: money, benefits drawn, satisfaction,
extra benefits etc.) customer comparison shopping for price, retail extra benefits etc.) customer comparison shopping for price, retail
differential is required, specific value/ price must be set for the differential is required, specific value/ price must be set for the
offerings. offerings.
Q8: What are the aspects of value based retail strategy? Q8: What are the aspects of value based retail strategy?
Ans: Expected retail strategy, augmented retail strategy, potential Ans: Expected retail strategy, augmented retail strategy, potential
retail strategy retail strategy
150
Questions
Questions
Q9: What are the pitfalls to be avoided while planning a value-oriented retail Q9: What are the pitfalls to be avoided while planning a value-oriented retail
strategy? strategy?
Ans: Planning value with just a price perspective, providing value added Ans: Planning value with just a price perspective, providing value added
services which customer doesnt need, competing in wrong value/price services which customer doesnt need, competing in wrong value/price
segment, believing augmented elements alone create value, paying lip segment, believing augmented elements alone create value, paying lip
service to customer service. service to customer service.
Q10: What fundamental decisions to be considered while developing a customer Q10: What fundamental decisions to be considered while developing a customer
service strategy? service strategy?
Ans: What customer service is expected & what is augmented to a particular Ans: What customer service is expected & what is augmented to a particular
retailer, what customer service is proper to complement a firms image, retailer, what customer service is proper to complement a firms image,
should their be a choice of customer service, should customer service be should their be a choice of customer service, should customer service be
free, how to measure the benefits of customer service against their costs, free, how to measure the benefits of customer service against their costs,
how customer services be terminated. how customer services be terminated.
Q11: Give examples of customer services provided in retail? Q11: Give examples of customer services provided in retail?
Ans: credit, delivery, alteration & installation, packaging (gift wrapping), Ans: credit, delivery, alteration & installation, packaging (gift wrapping),
complaints & returns handling, gift certificates, trade-ins, trial purchase, complaints & returns handling, gift certificates, trade-ins, trial purchase,
special sales for regular customers, extended store hours, mail and phone special sales for regular customers, extended store hours, mail and phone
orders. orders.
Q12: What are the customer loyalty programs? Q12: What are the customer loyalty programs?
Ans: Focus on customer concerns, empower frontline employees, show that you Ans: Focus on customer concerns, empower frontline employees, show that you
are listening, express sincere understanding, apologize & rectify the are listening, express sincere understanding, apologize & rectify the
situation situation
151
CASE STUDY
CASE STUDY
Maintenance & Enhancements to a Retail Banking Product Maintenance & Enhancements to a Retail Banking Product
The customer is one of the world's largest independent applications software product groups The customer is one of the world's largest independent applications software product groups
serving the international banking services market in separate geographical and functional areas. serving the international banking services market in separate geographical and functional areas.
They have been in the business for over 20 years, since formation in 1984. They have grown into They have been in the business for over 20 years, since formation in 1984. They have grown into
a worldwide organization with clients in more than 120 countries, supported by over 19,400 a worldwide organization with clients in more than 120 countries, supported by over 19,400
employees. They offer solutions around the world, including Europe, Asia-Pacific, Latin employees. They offer solutions around the world, including Europe, Asia-Pacific, Latin
America, Middle East and the USA. America, Middle East and the USA.
The customer serves more than 13,000 clients worldwide, including banks, broker-dealers, The customer serves more than 13,000 clients worldwide, including banks, broker-dealers,
credit unions, financial planners and investment advisers, insurance companies and agents, credit unions, financial planners and investment advisers, insurance companies and agents,
leasing companies, and mortgage lenders. leasing companies, and mortgage lenders.
BACKGROUND BACKGROUND
The customer has Retail Banking products (one product for US domestic banks and other for The customer has Retail Banking products (one product for US domestic banks and other for
, which cater to the needs of domestic banks in US and other international , which cater to the needs of domestic banks in US and other international
international banks) international banks)
banks. banks.
The Retail Banking product is available on IBMs mid-range platform - AS/400. Satyam The Retail Banking product is available on IBMs mid-range platform - AS/400. Satyam
developed the applications on AS/400, using tools such as RPG/400 and CL/400. All developed the applications on AS/400, using tools such as RPG/400 and CL/400. All
assignments were performed on the customers AS/400 machine using VPN. assignments were performed on the customers AS/400 machine using VPN.
152
The Retail Banking product supports multi-currency. Due to introduction of the new Euro The Retail Banking product supports multi-currency. Due to introduction of the new Euro
currency, there was a need to migrate legacy currency data to Euro currency at all affected currency, there was a need to migrate legacy currency data to Euro currency at all affected
customer installations. customer installations.
CHALLENGES To redesign and customize their Retail Banking product without disrupting application CHALLENGES To redesign and customize their Retail Banking product without disrupting application
integrity and functionality To deliver and implement application within three months Critical fields integrity and functionality To deliver and implement application within three months Critical fields
such as Balances and transaction Amounts needed to be converted Also to cater to banks outside such as Balances and transaction Amounts needed to be converted Also to cater to banks outside
the European Monetary Union (EMU) Grasping the linkages and application integrity of the the European Monetary Union (EMU) Grasping the linkages and application integrity of the
product within a short period product within a short period
THE SOLUTION Automation of conversion process of all the accounts in legacy currencies of 11 in THE SOLUTION Automation of conversion process of all the accounts in legacy currencies of 11 in
countries to Euro Implementation at various customer sites in various European countries countries to Euro Implementation at various customer sites in various European countries
TECHNOLOGY HIGHLIGHTS TECHNOLOGY HIGHLIGHTS
Hardware: IBM AS/400, OS/400 V4R4 Hardware: IBM AS/400, OS/400 V4R4
Software: RPG LE, CLLE, SQL RPG Software: RPG LE, CLLE, SQL RPG
Databases: DB2/400 Databases: DB2/400
Tools: Aldon Change Management System Tools: Aldon Change Management System
SATYAMS CONTRIBUTION AND VALUE DELIVERED Participated in Requirement Analysis, Functional SATYAMS CONTRIBUTION AND VALUE DELIVERED Participated in Requirement Analysis, Functional
Design, Technical Design and Coding Design, Technical Design and Coding
/ Unit Testing / System Testing Implementation across various financial institutions in the Europe (UK, / Unit Testing / System Testing Implementation across various financial institutions in the Europe (UK,
Poland, France, Poland, France,
Italy, Netherlands, Greece, Slovakia, Romania, Belgium, Cyprus) Implementation within scheduled Italy, Netherlands, Greece, Slovakia, Romania, Belgium, Cyprus) Implementation within scheduled
time at all locations time at all locations
CUSTOMER TESTIMONIALS Your team has performed an outstanding job in regard to the service, CUSTOMER TESTIMONIALS Your team has performed an outstanding job in regard to the service,
professionalism and competence that they have displayed in the work completed for the professionalism and competence that they have displayed in the work completed for the
UK office and that I am proud to be involved in the project. UK office and that I am proud to be involved in the project.
Sr. Business Analyst, Business Unit Support, A Banking Products Major Sr. Business Analyst, Business Unit Support, A Banking Products Major
153
Objective Questions
Objective Questions
__________________ is the process of evaluating each market __________________ is the process of evaluating each market
segment's attractiveness and selecting one or more segment's attractiveness and selecting one or more
segments to enter. segments to enter.
a. a. Mass marketing Mass marketing
b. b. Market segmentation Market segmentation
c. c. Market targeting Market targeting
d. d. Market positioning Market positioning
It is a fact that there are 24 million left-handed people in the It is a fact that there are 24 million left-handed people in the
United States, however, most marketers do not attempt to United States, however, most marketers do not attempt to
appeal to or design products for this group because there is appeal to or design products for this group because there is
little in the way of census data about this group. Therefore, little in the way of census data about this group. Therefore,
this group fails in one of the requirements for effective this group fails in one of the requirements for effective
segmentation. Which of the following is most likely to apply segmentation. Which of the following is most likely to apply
in this case? in this case?
a. a. actionable actionable
b. b. substantial substantial
c. c. differentiable differentiable
d. d. measurable measurable
The fact that services are sold, produced, and consumed at The fact that services are sold, produced, and consumed at
the same time refers to which of the following service the same time refers to which of the following service
characteristics? characteristics?
a. a. Intangibility Intangibility
b. b. Inseparability Inseparability
c. c. Variability Variability
d. d. Perishability Perishability
_______________ factors are the most popular bases for _______________ factors are the most popular bases for
segmenting customer groups. segmenting customer groups.
a. a. Geographic Geographic
b. b. Demographic Demographic
c. c. Psychographic Psychographic
d. d. Behavioral Behavioral
A manufacturer has four sponsorship options. A A manufacturer has four sponsorship options. A
_________________ is a brand created and owned by a reseller _________________ is a brand created and owned by a reseller
of a product or service. of a product or service.
a. a. licensed brand licensed brand
b. b. manufacturer's brand manufacturer's brand
c. c. private brand private brand
d. d. co-brand co-brand
When Michael Jordan and Tiger Woods use marketing to When Michael Jordan and Tiger Woods use marketing to
promote their careers and improve their impact and promote their careers and improve their impact and
incomes, they are using: incomes, they are using:
a. a. cause-related marketing. cause-related marketing.
b. b. idea marketing. idea marketing.
c. c. nonprofit marketing. nonprofit marketing.
d. d. person marketing. person marketing.
3M runs a Pollution Prevention Pays program that has led to 3M runs a Pollution Prevention Pays program that has led to
a substantial reduction in pollution and costs. This would be a substantial reduction in pollution and costs. This would be
an example of responding to which of the following? an example of responding to which of the following?
a. a. Nader's raiders. Nader's raiders.
b. b. The "green movement." The "green movement."
c. c. Governmental regulation. Governmental regulation.
d. d. International competition. International competition.
When an international seller sells a plant, equipment, or When an international seller sells a plant, equipment, or
technology to another country and agrees to take payment technology to another country and agrees to take payment
in the resulting products, it is called: in the resulting products, it is called:
a. a. barter. barter.
b. b. buy-back. buy-back.
c. c. counterpurchase. counterpurchase.
d. d. like-value exchange. like-value exchange.
154
Objective questions
Objective questions
The stage is the product life cycle that focuses on The stage is the product life cycle that focuses on
expanding market and creating product awareness and expanding market and creating product awareness and
trial is the: trial is the:
a. a. decline stage. decline stage.
b. b. introduction stage. introduction stage.
c. c. growth stage. growth stage.
d. d. maturity stage. maturity stage.
52. 52. Which of the following promotional budget Which of the following promotional budget
methods wrongly views sales as the cause of promotion methods wrongly views sales as the cause of promotion
rather than as the result? rather than as the result?
a. a. Affordable method Affordable method
b. b. Percentage-of-Sales method Percentage-of-Sales method
c. c. Competitive-parity method Competitive-parity method
d. d. Objective-and-task method Objective-and-task method
If the field salesforce has been supplied with new leads If the field salesforce has been supplied with new leads
(via the telephone) that have been qualified, they have (via the telephone) that have been qualified, they have
probably been assisted by: probably been assisted by:
a. a. master salespersons. master salespersons.
b. b. sales assistants. sales assistants.
c. c. technical support persons. technical support persons.
d. d. telemarketers. telemarketers.
________________ is setting the price steps between ________________ is setting the price steps between
various products in a product line based on cost various products in a product line based on cost
differences between the products, customer evaluations differences between the products, customer evaluations
of different features, and competitors' prices. of different features, and competitors' prices.
a. a. Optional-product pricing Optional-product pricing
b. b. Captive-product pricing Captive-product pricing
c. c. Product line pricing Product line pricing
d. d. By-product pricing By-product pricing
Rolls Royce uses which of the following distribution Rolls Royce uses which of the following distribution
formats? formats?
a. a. Intensive distribution Intensive distribution
b. b. Exclusive distribution Exclusive distribution
c. c. Selective distribution Selective distribution
d. d. Open distribution Open distribution
Drop shippers perform which of the following functions? Drop shippers perform which of the following functions?
a. a. Assumes title and ships coal, lumber, or heavy Assumes title and ships coal, lumber, or heavy
equipment to a buyer. equipment to a buyer.
b. b. Stocks the bread rack in a grocery store. Stocks the bread rack in a grocery store.
c. c. Maintains, owns, and stocks a CD display in a Maintains, owns, and stocks a CD display in a
grocery store. grocery store.
d. d. Sells jewelry out of a catalog. Sells jewelry out of a catalog.
A set of interdependent organizations involved in the A set of interdependent organizations involved in the
process of making a product or service available for use process of making a product or service available for use
or consumption by the consumer or business user is or consumption by the consumer or business user is
called a(n): called a(n):
a. a. retailer. retailer.
b. b. wholesaler. wholesaler.
c. c. distribution channel. distribution channel.
d. d. logistics. logistics.
______________ beliefs and values are open to some ______________ beliefs and values are open to some
degree of change. degree of change.
a. a. Crucial Crucial
b. b. Core Core
c. c. Primary Primary
d. d. Secondary Secondary
155
Objective questions
Objective questions
According to Engel's law, as income rises: According to Engel's law, as income rises:
a. a. the percentage spent on food rises. the percentage spent on food rises.
b. b. the percentage spent on housing increases. the percentage spent on housing increases.
c. c. the percentage spent on other categories the percentage spent on other categories
increases. increases.
d. d. the percentage spent on savings remains the percentage spent on savings remains
constant. constant.
The Wheeler-Lea Act gives the Federal Trade The Wheeler-Lea Act gives the Federal Trade
Commission the power to regulate: Commission the power to regulate:
a. a. interstate commerce. interstate commerce.
b. b. marketing ethics. marketing ethics.
c. c. unfair and deceptive acts or practices. unfair and deceptive acts or practices.
d. d. competitive advertising of objective product competitive advertising of objective product
benefits. benefits.
In evaluating messages for advertising, telling how the In evaluating messages for advertising, telling how the
product is better than the competing brands aims at product is better than the competing brands aims at
making the ad: making the ad:
a. a. meaningful. meaningful.
b. b. distinctive. distinctive.
c. c. believable. believable.
d. d. remembered. remembered.
When an importing country sets limits on the amount of When an importing country sets limits on the amount of
goods it will accept in certain product categories it is goods it will accept in certain product categories it is
called a(n): called a(n):
a. a. quota. quota.
b. b. barrier. barrier.
c. c. tariff. tariff.
d. d. embargo. embargo.
Answer: Answer:
1 1 c c
2 2 c c
3 3 d d
4 4 b b
5 5 b b
6 6 c c
7 7 d d
8 8 b b
9 9 b b
10 10 b b
11 11 b b
12 12 d d
13 13 c c
14. 14. b b
15 15 a a
16 16 c c
17 17 d d
18 18 c c
19. 19. c c
20. 20. b b
21 21 a a
156
Unit:I
Unit:I
I
I
(10
(10
Sessions)
Sessions)
2Web, Nonstore-based and other Forms 2Web, Nonstore-based and other Forms
of Non Traditional Retailing of Non Traditional Retailing
8The Store and its Image 8The Store and its Image
9The External Store, Internal Store 9The External Store, Internal Store
Independent
Independent
Chain
Chain
Franchise
Franchise
Leased department
Leased department
Consumer cooperative
Consumer cooperative
162
Chain Retailers
Chain Retailers
Defined Defined
management management
philosophy philosophy
Considerable Considerable
efforts in long-run efforts in long-run
planning planning
Disadvantages
Disadvantages
Complex Complex
managerial managerial
control control
Limited Limited
independence independence
among personnel among personnel
164
Competitive State of
Competitive State of
Independents
Independents
Advantages Advantages
Flexibility in Flexibility in
formats, locations, formats, locations,
and strategy and strategy
Strong Strong
entrepreneurial entrepreneurial
leadership leadership
Disadvantages Disadvantages
Over-dependence Over-dependence
on owner on owner
franchisee franchisee
acquires the acquires the
identity of a identity of a
franchisor by franchisor by
agreeing to sell agreeing to sell
products and/or products and/or
operate under the operate under the
franchisor name franchisor name
franchisee franchisee
operates operates
autonomously autonomously
franchisee franchisee
receives receives
assistance: assistance:
location, quality location, quality
control, control,
accounting accounting
systems, start-up systems, start-up
practices, practices,
management management
training training
Voluntary:
Voluntary:
A wholesaler sets up a
A wholesaler sets up a
franchise system and grants
franchise system and grants
franchises to individual retailers
franchises to individual retailers
Cooperative:
Cooperative:
A group of retailers
A group of retailers
sets up a franchise system and
sets up a franchise system and
shares the ownership and operations
shares the ownership and operations
of a wholesaling organization
of a wholesaling organization
168
Competitive State of
Competitive State of
Franchising
Franchising
Advantages Advantages
operating/manage operating/manage
ment skills taught ment skills taught
cooperative cooperative
marketing marketing
possible possible
oversaturation oversaturation
could occur could occur
ineffective ineffective
franchised units may franchised units may
damage resale damage resale
value, profitability value, profitability
provides one-
provides one-
stop shopping
stop shopping
to customers
to customers
lessees handle
lessees handle
management
management
reduces store
reduces store
costs
costs
provides a
provides a
stream of
stream of
revenue
revenue
Potential
Potential
Pitfalls
Pitfalls
lessees may
lessees may
negate store
negate store
image
image
procedures
procedures
may conflict
may conflict
with
with
department
department
store
store
problems may
problems may
be blamed on
be blamed on
department
department
store rather
store rather
than lessee
than lessee
172
Store-based Retail Strategy
Store-based Retail Strategy
Mix
Mix
Convenience
Convenience
store
store
Conventional
Conventional
supermarket
supermarket
Food-based
Food-based
superstore
superstore
Combination
Combination
store
store
Box store
Box store
Warehouse store
Warehouse store
Specialty store
Specialty store
Variety store
Variety store
Traditional
Traditional
department
department
store
store
Full-line discount
Full-line discount
store
store
Off-price chain
Off-price chain
Factory outlet
Factory outlet
Membership club
Membership club
Flea market
Flea market
173
Nonstore-based Retail
Nonstore-based Retail
Strategy Mix and
Strategy Mix and
Nontraditional Retailing
Nontraditional Retailing
Direct marketing
Direct marketing
Direct selling
Direct selling
Vending machine
Vending machine
CHALLENGES
CHALLENGES
product aesthetics not easily shown product aesthetics not easily shown
OPPORTUNTIES
OPPORTUNTIES
good navigability can promote related sales good navigability can promote related sales
Considerations:
Considerations:
Who is home shopping customer and what Who is home shopping customer and what
will they buy? will they buy?
Can all products be profitably delivered? Can all products be profitably delivered?
Layout should be logical and product categories Layout should be logical and product categories
easy to locate easy to locate
Atmosphere not easy to create, but some Atmosphere not easy to create, but some
targetted offers use artwork and effects to targetted offers use artwork and effects to
create unique image create unique image
178
NON STORE IMPLICATIONS:
NON STORE IMPLICATIONS:
PRICING
PRICING
Store retailing has advantage of immediacy: Store retailing has advantage of immediacy:
Non-store retailers must provide good product Non-store retailers must provide good product
information, fulfillment and delivery service information, fulfillment and delivery service
Dissatisfaction with service more difficult to Dissatisfaction with service more difficult to
detect in non-store detect in non-store
Some Internet retailers moving to availability Some Internet retailers moving to availability
details on-line details on-line
Market:
Market:
people or institutions
people or institutions
with sufficient purchasing power,
with sufficient purchasing power,
authority, and willingness to buy
authority, and willingness to buy
Target market:
Target market:
specific segment
specific segment
of consumers most likely to
of consumers most likely to
purchase a particular product
purchase a particular product
186
Types of Markets
Types of Markets
Consumer products:
Consumer products:
goods or
goods or
services purchased by an
services purchased by an
ultimate consumer for personal
ultimate consumer for personal
use
use
Business products:
Business products:
goods or
goods or
services purchased for use either
services purchased for use either
directly or indirectly in the
directly or indirectly in the
production of other goods and
production of other goods and
services for resale
services for resale
Geographic Segmentation:
Geographic Segmentation:
Dividing an overall market into
Dividing an overall market into
homogeneous groups on the basis of
homogeneous groups on the basis of
their locations
their locations
Using Geographic
Using Geographic
Segmentation
Segmentation
Northern consumers, for example, eat Northern consumers, for example, eat
more soup than Southerners more soup than Southerners
Southerners use more chlorine for their Southerners use more chlorine for their
swimming pools than Northern residents swimming pools than Northern residents
190
Geographic Information
Geographic Information
Service (GIS):
Service (GIS):
computer
computer
technology that records several
technology that records several
layers of data on a single map
layers of data on a single map
Demographic Segmentation:
Demographic Segmentation:
dividing consumer groups
dividing consumer groups
according to characteristics such
according to characteristics such
as sex, age, income, occupation,
as sex, age, income, occupation,
education, household size, and
education, household size, and
stage in the family life cycle
stage in the family life cycle
Segmenting by Gender
Segmenting by Gender
Segmenting by Age
Segmenting by Age
Cohert Effect
Cohert Effect
Baby Boomers
Baby Boomers
Seniors
Seniors
Hispanic Hispanic
Engels Laws,
Engels Laws,
as family income
as family income
increases:
increases:
The percentage spent on housing and The percentage spent on housing and
household operations and clothing household operations and clothing
remains constant remains constant
The percentage spent on other items The percentage spent on other items
(such as recreation and education) (such as recreation and education)
increases increases
199
Psychographic Segmentation
Psychographic Segmentation
Lifestyle
Lifestyle
: peoples decisions about
: peoples decisions about
how to live their daily lives, including
how to live their daily lives, including
family, job, social, and consumer
family, job, social, and consumer
activities
activities
Psychographic Segmentation
Psychographic Segmentation
of Global Markets
of Global Markets
like those
like those
done by Roper Starch can paint
done by Roper Starch can paint
useful pictures of the residents of
useful pictures of the residents of
various countries
various countries
Strivers Strivers
Devouts Devouts
Altruists Altruists
Intimates Intimates
Creatives Creatives
202
Product-Related Segmentation
Product-Related Segmentation
Dividing a consumer population
Dividing a consumer population
into homogeneous groups based
into homogeneous groups based
on characteristics of their
on characteristics of their
relationships to the product
relationships to the product
Benefits that people seek when they buy Benefits that people seek when they buy
Consumers brand loyalty toward a product Consumers brand loyalty toward a product
203
Benefits
Benefits
Usage Rates
Usage Rates
Undifferentiated Marketing:
Undifferentiated Marketing:
when a firm produces only one
when a firm produces only one
product or product line and
product or product line and
promotes it to all customers with a
promotes it to all customers with a
single marketing mix
single marketing mix
Differentiated Marketing:
Differentiated Marketing:
when
when
a firm produces numerous
a firm produces numerous
products and promotes them with
products and promotes them with
a different marketing mix designed
a different marketing mix designed
to satisfy smaller segments
to satisfy smaller segments
205
Micromarketing:
Micromarketing:
involves targeting
involves targeting
potential customers at a very basic
potential customers at a very basic
level, such as by ZIP code, specific
level, such as by ZIP code, specific
occupation, lifestyle, or individual
occupation, lifestyle, or individual
household
household
206
Determinants of a market-specific
Determinants of a market-specific
strategy:
strategy:
Positioning:
Positioning:
a marketing
a marketing
strategy that emphasizes serving a
strategy that emphasizes serving a
specific market segment by
specific market segment by
achieving a certain position in
achieving a certain position in
buyers minds
buyers minds
Attributes Attributes
Price/quality Price/quality
Competitors Competitors
Application Application
Positioning map
Positioning map
Graphic illustration that shows
Graphic illustration that shows
differences in consumers perceptions of
differences in consumers perceptions of
competing products
competing products
Reposition
Reposition
Marketing strategy to change the
Marketing strategy to change the
position of its product in consumers
position of its product in consumers
minds relative to the positions of
minds relative to the positions of
competing products
competing products
209
Gathering Information
Gathering Information
The major responsibility for identifying significant The major responsibility for identifying significant
marketplace changes falls to the companys marketplace changes falls to the companys
marketers. More than any other group in the marketers. More than any other group in the
company, they must be the trend trackers and company, they must be the trend trackers and
opportunity seekers. Although every manager in opportunity seekers. Although every manager in
an organization needs to observe the outside an organization needs to observe the outside
environment, marketers have the following environment, marketers have the following
advantages: advantages:
They have disciplined methods for collecting They have disciplined methods for collecting
information. information.
Additionally, they spend more time interacting Additionally, they spend more time interacting
with customers and observing competition with customers and observing competition
210
Gathering information
Gathering information
Some firms have developed marketing information Some firms have developed marketing information
systems that provide management with rich detail systems that provide management with rich detail
about buyer wants, preferences, and behavior. about buyer wants, preferences, and behavior.
Marketers also have extensive information about Marketers also have extensive information about
how consumption patterns vary across countries. how consumption patterns vary across countries.
The value chain is a tool for identifying key The value chain is a tool for identifying key
activities that creates value and costs in a specific activities that creates value and costs in a specific
business. business.
211
Gathering information
Gathering information
A marketing A marketing
information system information system
(MIS) consists of: (MIS) consists of:
People. People.
Equipment. Equipment.
Gather. Gather.
Sort. Sort.
Analyze. Analyze.
Evaluate. Evaluate.
The careful planning and strategic placement The careful planning and strategic placement
of marketing messages of marketing messages
Goals for communication include informing, Goals for communication include informing,
reminding, persuading the target consumer reminding, persuading the target consumer
about the organisations offering about the organisations offering
Complementary Complementary
Products Products
Coupons Coupons
Gain/Maintain Gain/Maintain
Distribution Distribution
Advertising Advertising any paid form of non personal any paid form of non personal
communication about an organization, product, communication about an organization, product,
service, or idea by an identified sponsor service, or idea by an identified sponsor
Direct marketing Direct marketing communication directly with communication directly with
target customers to generate a response and/or target customers to generate a response and/or
transaction transaction
Sales promotion Sales promotion marketing activities that marketing activities that
provide extra value or incentives to sales force, provide extra value or incentives to sales force,
distributors, or consumers to stimulate distributors, or consumers to stimulate
immediate sales immediate sales
Direct response advertising (on TV, radio or in Direct response advertising (on TV, radio or in
magazines or newspapers) magazines or newspapers)
Telemarketing Telemarketing
Catalogs Catalogs
The rapid changes in technology have led to The rapid changes in technology have led to
dramatic growth of communications through dramatic growth of communications through
interactive media, particularly the Internet. This interactive media, particularly the Internet. This
communication medium is unique in that it allows communication medium is unique in that it allows
for the back-and-forth flow of information in real for the back-and-forth flow of information in real
time. time.
Customers can perform a variety of functions on Customers can perform a variety of functions on
the Internet such as receive and alter information the Internet such as receive and alter information
and images, make inquires, respond to questions, and images, make inquires, respond to questions,
and, of course, make purchases. and, of course, make purchases.
221
Using the Internet as an IMC
Using the Internet as an IMC
Tool
Tool
The location of retail store has for along time been The location of retail store has for along time been
considered the most important considered the most important
P
P in retailing. in retailing.
Locating the retail store in the right place was Locating the retail store in the right place was
considered to be adequate for success. considered to be adequate for success.
225
O
Location becomes a critical decision for a retailer Location becomes a critical decision for a retailer
for several reasons. As like; for several reasons. As like;
O
Location is generally one of the most important Location is generally one of the most important
factors customers consider while choosing a store. factors customers consider while choosing a store.
O
A bad location may cause a retailer to fail even if A bad location may cause a retailer to fail even if
its strategic mix is excellent.. On the other hand , a its strategic mix is excellent.. On the other hand , a
good location may help a retailer succeed even if good location may help a retailer succeed even if
its strategic mix is mediocre. its strategic mix is mediocre.
O
Store location is least flexible element of Store location is least flexible element of
retailers strategic mix due to its fixed nature, the retailers strategic mix due to its fixed nature, the
amount of investment, and the length of lease amount of investment, and the length of lease
agreements agreements
226
Various option are available to the retailer for Various option are available to the retailer for
choosing the location of store. choosing the location of store.
The choice of the location of the store depends on The choice of the location of the store depends on
the target audience and the kind of merchandise the target audience and the kind of merchandise
to be sold. to be sold.
A retailer has to choosing among alternate types A retailer has to choosing among alternate types
of retail locations available . It may locate in an of retail locations available . It may locate in an
isolated place and pull the customer to the store isolated place and pull the customer to the store
on its own strength, such as a small grocery store on its own strength, such as a small grocery store
or paan shop in a colony which attracts the or paan shop in a colony which attracts the
customers staying close by. customers staying close by.
Types of Retail Location
Types of Retail Location
227
Typically a store location may be: Typically a store location may be:
1. 1.
Freestanding /Isolated store.
Freestanding /Isolated store.
2. 2.
Part of Business District/Centers (unplanned
Part of Business District/Centers (unplanned
Business Districts).
Business Districts).
3. 3.
Part of a Shopping Center (Planned Shopping
Part of a Shopping Center (Planned Shopping
Centers)
Centers)
228
1.
1.
Freestanding /Isolated store
Freestanding /Isolated store
Where there are no other outlets in the vicinity of Where there are no other outlets in the vicinity of
the store and therefore store depends on its own the store and therefore store depends on its own
pulling power and promotion to attracts pulling power and promotion to attracts
customers. customers.
A biggest advantages for freestanding stores is A biggest advantages for freestanding stores is
that there is no competition around. that there is no competition around.
This type of location has several advantages This type of location has several advantages
including no competition, low rent, often better including no competition, low rent, often better
visibility from the road, easy parking and lower visibility from the road, easy parking and lower
property . property .
Neighborhood Stores;
Neighborhood Stores; colony shops serves small colony shops serves small
locality. locality.
Highway Stores
Highway Stores :Ebony store in Ludhiana . :Ebony store in Ludhiana .
229
Business Associated Location:
Business Associated Location: These are location These are location
where a group of retail outlets offering a variety where a group of retail outlets offering a variety
of merchandise work together to attract of merchandise work together to attract
customers to their retail area, but also compete customers to their retail area, but also compete
against each other for the same customers.two against each other for the same customers.two
types includes in ; types includes in ;
1. 1.
Part of Business District/Centers (unplanned
Part of Business District/Centers (unplanned
Business Districts).
Business Districts).
2. 2.
Part of a Shopping Center (Planned Shopping
Part of a Shopping Center (Planned Shopping
Centers)
Centers)
230
2.
2.
Part of Business District/Centers (unplanned
Part of Business District/Centers (unplanned
Business Districts).
Business Districts).
A retail store can also be located as a part of a A retail store can also be located as a part of a
business district. Or we can refer this as unplanned business district. Or we can refer this as unplanned
business centers business centers
A business district is place of commerce in a city A business district is place of commerce in a city
which developed historically as the center of trade which developed historically as the center of trade
and commerce in the city or town. and commerce in the city or town.
A business districts can be a central, secondary or a A business districts can be a central, secondary or a
Neighborhood business district. Neighborhood business district.
A Central business District A Central business District CBD CBD is the main center of is the main center of
commerce and trade in the city. (high land rates , commerce and trade in the city. (high land rates ,
intense development) intense development)
231
A CBD is the hub of retailing activity in a city. A CBD is the hub of retailing activity in a city.
CBD served different sections of population for CBD served different sections of population for
Examples of Cannaught place in Delhi, Colaba in Examples of Cannaught place in Delhi, Colaba in
Mumbai, Commercial Street and in Bangalore are Mumbai, Commercial Street and in Bangalore are
up market CBDs. up market CBDs.
CBDs serving the upper and upper middle class CBDs serving the upper and upper middle class
customers across these cities like, chandani chowk customers across these cities like, chandani chowk
in Delhi, Kalbadevi-Bhuleswar in Mumbai, Chickpet in Delhi, Kalbadevi-Bhuleswar in Mumbai, Chickpet
in Bangalore. in Bangalore.
Secondary Business District are composed of Secondary Business District are composed of
unplanned cluster of store often located on a unplanned cluster of store often located on a
major intersection of city they a customers from a major intersection of city they a customers from a
large part large part of the city of the city
232
3.
3.
Part of a Shopping Center (Planned Shopping
Part of a Shopping Center (Planned Shopping
Centers)
Centers)
A shopping center has been defined as a group A shopping center has been defined as a group
of retail and other commercial establishments that of retail and other commercial establishments that
is planned , developed, owned and managed as a is planned , developed, owned and managed as a
single property single property
The basic configuration of a shopping centre is a The basic configuration of a shopping centre is a
Mall or Strip centre. Mall or Strip centre.
A mall is typically enclosed and climate controlled. A mall is typically enclosed and climate controlled.
A walkway is provided in front of the stores. A walkway is provided in front of the stores.
A strip centre is a row of stores with parking A strip centre is a row of stores with parking
provided in the front of the stores. provided in the front of the stores.
233
In India we can planned shopping centre can In India we can planned shopping centre can
categorize in two category categorize in two category
Regional shopping centers or Mall: Regional shopping centers or Mall: Regional Regional
shopping centers or mall are the largest planned shopping centers or mall are the largest planned
shopping centers.. shopping centers..
Often they are anchored by two or more major Often they are anchored by two or more major
department stores have enclosed mall serve a department stores have enclosed mall serve a
large trading area and have high rents. (ansal large trading area and have high rents. (ansal
plaza,spencers plaza crossroads, DLF city in plaza,spencers plaza crossroads, DLF city in
Gurgaon) Gurgaon)
In order to arrive at the decision on where to In order to arrive at the decision on where to
locate the retail store a retailer needs to first on locate the retail store a retailer needs to first on
the region that he wants to locate the store. the region that he wants to locate the store.
After identifying the region the following steps After identifying the region the following steps
Have to be followed . Have to be followed .
1. 1. Identifying the market in which to locate the Identifying the market in which to locate the
store. store.
2. 2. Evaluate the demand and supply within that Evaluate the demand and supply within that
market. i.e. determine the market potential. market. i.e. determine the market potential.
3. 3. Identify the most attractive sites Identify the most attractive sites
4. 4. Select the best site available Select the best site available
235
1. 1. Market Identification: Market Identification:
The first step in arriving at a decision on retail The first step in arriving at a decision on retail
location is to identify the market attractiveness location is to identify the market attractiveness
to a retailer. to a retailer.
This is important that retail needs to understand This is important that retail needs to understand
the market well. the market well.
2. 2. Determining the market Potential:: Determining the market Potential::
The retailer need to take into consideration The retailer need to take into consideration
various elements as shown in format. (features various elements as shown in format. (features
of population) of population)
The characteristics of the household in the area The characteristics of the household in the area
(average household income) (average household income)
Competition and compatibility (Need to know Competition and compatibility (Need to know
compatibility & competition in market) compatibility & competition in market)
Laws & regulations:( good understanding Laws & regulations:( good understanding of the of the
laws laws
236
A trade area is the geographic area that A trade area is the geographic area that
generates the majority of the customers for the generates the majority of the customers for the
store. store.
Primary trade area: Primary trade area: primary trading covers primary trading covers
between 50-80% of the stores customers. between 50-80% of the stores customers.
Secondary Trading Area Secondary Trading Area: this area contains the : this area contains the
additional 15- to 25% of the stores customers. additional 15- to 25% of the stores customers.
Tertiary trading area covers Tertiary trading area covers the balance the balance
customers customers
These trading areas are dependent on distance These trading areas are dependent on distance
and do not always have to be concentric in nature and do not always have to be concentric in nature
237
Types of Trades areas.
Types of Trades areas.
238
3 & 4 3 & 4 Identify Alternate sites and select the Identify Alternate sites and select the
site: site:
After taking decision on the location and market After taking decision on the location and market
potential the retailer has to select the site to potential the retailer has to select the site to
locate the store based on these locate the store based on these
Traffic Traffic
Accessibility of the market is also a key factor Accessibility of the market is also a key factor
The total number of stores and the type of store The total number of stores and the type of store
that exist in the area that exist in the area
Amenities Amenities
The product mix to be offered by the retailer The product mix to be offered by the retailer
Session-6
Session-6
Site selection
Site selection
240
Location, Location,
Location, Location,
Location!!!
Location!!!
Costs lots of $$
Costs lots of $$
Size &
Size &
characteristics of
characteristics of
population
population
Level of
Level of
competition
competition
Access to
Access to
transportation
transportation
Availability of
Availability of
parking
parking
Attributes of
Attributes of
nearby stores
nearby stores
Property costs
Property costs
Length of
Length of
agreement (if
agreement (if
lease)
lease)
Population trends
Population trends
Legal restrictions
Legal restrictions
242
Site Evaluation
Site Evaluation
Accessibility
Accessibility
Location advantages
Location advantages
Terms of occupancy
Terms of occupancy
Lifestyles of consumers
Income potential
Age makeup
Occupation mix
244
Checklist for Site Evaluations
Checklist for Site Evaluations
Traffic Flow and Accessibility
Type of zoning
247
Checklist for Site Evaluations
Checklist for Site Evaluations
Cost Factors
Length of lease
Local taxes
Store Image
Store Image
is the overall
is the overall
perception the customer has of the
perception the customer has of the
stores environment.
stores environment.
Space Productivity
Space Productivity
represents how
represents how
effectively the retailer utilizes its
effectively the retailer utilizes its
space and is usually measured by
space and is usually measured by
sales per square foot of selling space
sales per square foot of selling space
or gross margin dollars per square
or gross margin dollars per square
foot of selling space.
foot of selling space.
252
Store Image
Store Image
By incorporating a caf as an
By incorporating a caf as an
integral part of Barnes & Noble
integral part of Barnes & Noble
bookstores, a very relaxing and
bookstores, a very relaxing and
casual ambiance is created.
casual ambiance is created.
253
Objectives of the Store
Objectives of the Store
Environment
Environment
Shrinkage
Shrinkage
Represents merchandise that cannot
Represents merchandise that cannot
be accounted for due to theft, loss,
be accounted for due to theft, loss,
or damage.
or damage.
255
Store Planning
Store Planning
Floor Plan
Floor Plan
is a schematic that shows
is a schematic that shows
where merchandise and customer
where merchandise and customer
service departments are located,
service departments are located,
how customers circulate through the
how customers circulate through the
store, and how much space is
store, and how much space is
dedicated to each department.
dedicated to each department.
Stack-Outs
Stack-Outs
are pallets of
are pallets of
merchandise set out on the floor in
merchandise set out on the floor in
front of the main shelves.
front of the main shelves.
256
Allocating Space
Allocating Space
Back room
Back room
Free-Flow Layout Free-Flow Layout is a type of store layout in which is a type of store layout in which
fixtures and merchandise are grouped into free- fixtures and merchandise are grouped into free-
flowing patterns on the sales floor flowing patterns on the sales floor
.
.
Advantages Advantages
Flexibility Flexibility
Disadvantages
Loitering encouraged
Possible confusion
Waste of floor space
Cost
Difficulty of cleaning
259
Circulation: Free Flow
Circulation: Free Flow
Pg no.209, chap:9, Retail Management, Berman & Evans
260
Circulation: Grid Layout
Circulation: Grid Layout
Pg no.210, chap:9, Retail Management, Berman & Evans
261
Circulation
Circulation
Loop Layout
Loop Layout
is a type of store layout
is a type of store layout
in which a major customer aisle
in which a major customer aisle
begins at the entrance, loops
begins at the entrance, loops
through the store, usually in the
through the store, usually in the
shape of a circle, square, ar
shape of a circle, square, ar
rectangle, and then returns the
rectangle, and then returns the
customer the front of the store.
customer the front of the store.
Advantages
Advantages
Exposes customers to the greatest amount Exposes customers to the greatest amount
of merchandise of merchandise
262
Circulation: Loop Layout
Circulation: Loop Layout
Pg no.215, chap:9, Retail Management, Berman & Evans
263
Circulation
Circulation
Spine Layout
Spine Layout
is a type of store layout
is a type of store layout
in which a single main aisle runs
in which a single main aisle runs
from the front to the back of the
from the front to the back of the
store, transporting customers in both
store, transporting customers in both
directions, and where on either side
directions, and where on either side
of this spine, merchandise
of this spine, merchandise
departments using either a free-flow
departments using either a free-flow
or grid pattern branch off toward the
or grid pattern branch off toward the
back aisle walls.
back aisle walls.
264
Circulation: Spine Layout
Circulation: Spine Layout
Pg no.217, chap:9, Retail Management, Berman & Evans
265
Planning Fixtures and
Planning Fixtures and
Merchandise Presentation
Merchandise Presentation
On-Shelf Merchandising
On-Shelf Merchandising
Is the display of merchandise on
Is the display of merchandise on
counters, racks, shelves, and fixtures
counters, racks, shelves, and fixtures
throughout the store.
throughout the store.
Fixture Types
Fixture Types
Visual Merchandising
Visual Merchandising
266
Fixture Types
Fixture Types
Softlines Fixtures
Softlines Fixtures
Feature Fixture
Feature Fixture
is a display that
is a display that
draws special attention to selected
draws special attention to selected
features (e.g., color, shape, or style)
features (e.g., color, shape, or style)
of merchandise.
of merchandise.
267
Merchandise
Merchandise
Presentation Planning
Presentation Planning
Methods of Merchandise
Methods of Merchandise
Presentation:
Presentation:
Shelving
Shelving
Hanging
Hanging
Pegging
Pegging
Folding
Folding
Stacking
Stacking
Dumping
Dumping
268
Merchandise
Merchandise
Presentation Planning
Presentation Planning
Value/fashion image
Value/fashion image
Ambience
Ambience
Is the overall feeling or mood
Is the overall feeling or mood
projected by a store through its
projected by a store through its
aesthetic appeal to human senses.
aesthetic appeal to human senses.
Storefront Design
Storefront Design
Interior Design
Interior Design
Lighting Design
Lighting Design
Institutional Signage
Institutional Signage
Lifestyle Graphics
Lifestyle Graphics
271
Directional, Departmental,
Directional, Departmental,
and Category Signage
and Category Signage
Category Signage
Category Signage
are smaller than
are smaller than
directional and departmental signage and
directional and departmental signage and
are intended to be seen from a shorter
are intended to be seen from a shorter
distance; they are located on or close to
distance; they are located on or close to
the fixture itself where the merchandise is
the fixture itself where the merchandise is
displayed.
displayed.
272
Point-of-Sale (POS)
Point-of-Sale (POS)
Signage
Signage
Point-of-Sale Signage
Point-of-Sale Signage
Is relatively small signage that is
Is relatively small signage that is
placed very close to the
placed very close to the
merchandise and is intended to give
merchandise and is intended to give
details about specific items.
details about specific items.
Name
Name
Line of trade
Line of trade
Claim to fame
Claim to fame
Price position
Price position
Personality
Personality
275
Atmosphere
Atmosphere
Storefront
Storefront
Marquee
Marquee
Store entrances
Store entrances
Display windows
Display windows
Parking facilities
Parking facilities
278
Alternatives in Planning a
Alternatives in Planning a
Basic Storefront
Basic Storefront
Modular structure
Modular structure
Prefabricated structure
Prefabricated structure
Prototype store
Prototype store
Recessed storefront
Recessed storefront
Flooring
Flooring
Colors
Colors
Lighting
Lighting
Scents
Scents
Sounds
Sounds
Store fixtures
Store fixtures
Wall textures
Wall textures
Temperature
Temperature
Aisle space
Aisle space
Dressing
Dressing
facilities
facilities
In-store
In-store
transportation
transportation
(elevator,
(elevator,
escalator, stairs)
escalator, stairs)
Dead areas
Dead areas
Personnel
Personnel
Merchandise
Merchandise
Price levels
Price levels
Displays
Displays
Technology
Technology
Store cleanliness
Store cleanliness
281
Allocation of Floor Space
Allocation of Floor Space
Selling space
Selling space
Merchandise space
Merchandise space
Personnel space
Personnel space
Customer space
Customer space
282
Straight Traffic Pattern
Straight Traffic Pattern
Advantages
Advantages
An efficient An efficient
atmosphere is atmosphere is
created created
Impersonal Impersonal
atmosphere atmosphere
A friendly
A friendly
atmosphere
atmosphere
Shoppers do not
Shoppers do not
feel rushed
feel rushed
People are
People are
encouraged to
encouraged to
walk through in
walk through in
any direction
any direction
Impulse or
Impulse or
unplanned
unplanned
purchases are
purchases are
enhanced
enhanced
Disadvantages
Disadvantages
Possible
Possible
customer
customer
confusion
confusion
Wasted floor
Wasted floor
space
space
Difficulties in
Difficulties in
inventory control
inventory control
Higher labor
Higher labor
intensity
intensity
Potential
Potential
loitering
loitering
Displays may
Displays may
cost more
cost more
284
Interior (Point-of-Purchase)
Interior (Point-of-Purchase)
Displays
Displays
Assortment display
Assortment display
Theme-setting display
Theme-setting display
Ensemble display
Ensemble display
Rack display
Rack display
Case display
Case display
Cut case
Cut case
Dump bin
Dump bin
285
Online Store
Online Store
Considerations
Considerations
Advantages Advantages
Flooring
Flooring
Colors
Colors
Lighting
Lighting
Scents
Scents
Sounds
Sounds
Store fixtures
Store fixtures
Wall textures
Wall textures
Temperature
Temperature
Aisle space
Aisle space
Dressing
Dressing
facilities
facilities
In-store
In-store
transportation
transportation
(elevator,
(elevator,
escalator, stairs)
escalator, stairs)
Dead areas
Dead areas
Personnel
Personnel
Merchandise
Merchandise
Price levels
Price levels
Displays
Displays
Technology
Technology
Store cleanliness
Store cleanliness
Session-10
Session-10
Display :Visual Merchandising
Display :Visual Merchandising
and Atmospherics
and Atmospherics
295
Retail Store Design & Visual Merchandising
Retail Store Design & Visual Merchandising
Store design and layout tells a customer what the Store design and layout tells a customer what the
store is all about and it is very strong tool in the store is all about and it is very strong tool in the
hands of the retailer for communicating and hands of the retailer for communicating and
creating the image of the store in the mind of the creating the image of the store in the mind of the
customers. customers.
The design and layout of the store are a means of The design and layout of the store are a means of
communicating the image of the retail store. communicating the image of the retail store.
The environment which is creates in the retail store, The environment which is creates in the retail store,
is a combination of the exterior look of the store, is a combination of the exterior look of the store,
the store interiors, the atmosphere in the store and the store interiors, the atmosphere in the store and
the events, promotions and the themes. the events, promotions and the themes.
296
The overall look of a store and the series of mental The overall look of a store and the series of mental
pictures and feelings it evokes within the beholder. pictures and feelings it evokes within the beholder.
For the retailer, developing a powerful image For the retailer, developing a powerful image
provides the opportunity to embody a single provides the opportunity to embody a single
message, stand out from the competition and be message, stand out from the competition and be
remembered. remembered.
297
Elements of store design
Elements of store design
Store
design
Building
architecture
Frontage &
Entrance
Ext.
Display
space
Target
Customers
Health &
Safety
Location
Store
theme
Merchand
ise Mix
Parking
Access
298
Exterior Store Design & Interior Design
Exterior Store Design & Interior Design
Exterior
Exterior
Location Location
Parking Parking
Interior
Interior
Fixtures Fixtures
Lighting Lighting
Atmospherics Atmospherics
299
Visual merchandising
Visual merchandising
VM is the art of presentation, which puts the VM is the art of presentation, which puts the
merchandise in focus. It educates the customers, merchandise in focus. It educates the customers,
creates desire and finally augments the selling creates desire and finally augments the selling
process. process.
300
www.pantaloons.com
www.pantaloons.com
301
www.shoppersstop.in
302
METHODS OF DISPLAYS
METHODS OF DISPLAYS
Branding Branding
Long-Term Long-Term
Employee attitude Employee attitude customer satisfaction and customer satisfaction and
loyalty loyalty long-term performance long-term performance
Emphasis on Cost
Emphasis on Cost
Control
Control
Employees
Unskilled
Part-Time
Diverse
Backgrounds
High Turnover
High Turnover
318
Special HR
Special HR
Considerations Facing
Considerations Facing
Retailers
Retailers
International HR Issues
International HR Issues
319
Strategic Issues
Strategic Issues
Facing Retail HR
Facing Retail HR
Professionals
Professionals
Develop a retail
Develop a retail
strategy
strategy
Design organizational
Design organizational
structure
structure
Select locations
Select locations
322
Merchandise Management Tasks
Performed in a Retail Firm
Recruit, hire, and train store Recruit, hire, and train store
personnel personnel
Distribute merchandise
Distribute merchandise
Merchandise Management
Merchandise Management
Merchandise Division
Merchandise Division
attending trade and fashion shows attending trade and fashion shows
A category manager
A category manager
Is motivated to eliminate me to
Is motivated to eliminate me to
products and keep essential niche
products and keep essential niche
products
products
Support services and counsel to operating Support services and counsel to operating
divisions divisions
Logistics, distribution, and operations functions Logistics, distribution, and operations functions
Services all proprietary and VISA credit card Services all proprietary and VISA credit card
accounts accounts
Performance of most other non-store services for Performance of most other non-store services for
customers and employees customers and employees
Reduce costs
(overhead falls with
fewer managers)
Coordinated buying
achieve lower prices
from suppliers
Opportunity to have
the best people make
decisions for the entire
corporation
Increases efficiency
Disadvantages of Centralization
332
Winning the Talent War
Winning the Talent War
Starbucks
Starbucks Love What You Do Love What You Do
Southwest
Southwest Free to Actually Enjoy What Free to Actually Enjoy What
You Are Doing You Are Doing
Employment marketing (branding)
334
Attracting Talent Employment
Attracting Talent Employment
Marketing
Marketing
JCPenney
JCPenney
To build its employment brand,
To build its employment brand,
JCPenney uses the tagline
JCPenney uses the tagline
A Perfect
A Perfect
Fit
Fit
on all correspondence and
on all correspondence and
advertising directed toward potential
advertising directed toward potential
employees
employees
335
Developing Talent
Developing Talent
Selection and Training
Selection and Training
Selective Hiring:
Selective Hiring:
Simply seeking the best and the brightest may not Simply seeking the best and the brightest may not
always be the most effective approach always be the most effective approach
Training:
Training:
Incentives
Incentives
Organization Culture
Organization Culture
Aligns Employee
Aligns Employee
and Company
and Company
Goals
Goals
Strong Motivating
Strong Motivating
Force
Force
Disadvantages
Employees Only
Focus on Sales
Less Commitment
to Retailer
338
Developing and
Developing and
Maintaining a Culture
Maintaining a Culture
Stories
Stories
Symbols
Symbols
CEO Leadership
CEO Leadership
339
Keeping Talent
Keeping Talent
Building Employee
Building Employee
Commitment
Commitment
Empowering Employees
Empowering Employees
Empowerment is the process of managers sharing Empowerment is the process of managers sharing
power and decision-making authority with power and decision-making authority with
employees employees
Provides greater opportunity to provide service to Provides greater opportunity to provide service to
customers customers
Employees are more committed to firms success Employees are more committed to firms success
Compensation Compensation
Operations Blueprint
Operations Blueprint
Personnel Utilization
Personnel Utilization
Inventory Management
Inventory Management
Store Security
Store Security
Insurance
Insurance
Credit Management
Credit Management
Computerization
Computerization
Outsourcing
Outsourcing
Crisis Management
Crisis Management
347
Operations Blueprint
An operations blueprint operations blueprint systematically lists all
the operating functions to be performed, their
characteristics, and their timing.
The retailer specifies, in detail, every operating
function from the stores opening to closing
and those responsible for them.
348
Maximizing Personnel
Maximizing Personnel
Productivity
Productivity
Hiring Process
Hiring Process
Workload Forecasts
Workload Forecasts
Compensation
Compensation
Self-Service
Self-Service
Length of Employment
Length of Employment
349
Inventory Management
Inventory Management
Decisions
Decisions
How can handling of merchandise from How can handling of merchandise from
different suppliers be coordinated? different suppliers be coordinated?
How much inventory should be on the sales How much inventory should be on the sales
floor versus in a warehouse or storeroom? floor versus in a warehouse or storeroom?
How often should inventory be moved from How often should inventory be moved from
nonselling to selling areas of a store? nonselling to selling areas of a store?
What inventory functions can be done during What inventory functions can be done during
nonstore hours? nonstore hours?
What are the trade-offs between faster What are the trade-offs between faster
supplier delivery and higher shipping costs? supplier delivery and higher shipping costs?
What supplier support is expected in storing What supplier support is expected in storing
merchandise or setting up displays? merchandise or setting up displays?
What level of in-store merchandise breakage What level of in-store merchandise breakage
is acceptable? is acceptable?
Which items require customer delivery? When? Which items require customer delivery? When?
By whom? By whom?
350
Store Security
Store Security
Undercover personnel
Undercover personnel
Brighter lighting
Brighter lighting
Curfews
Curfews
Rising premiums
Rising premiums
There should be contingency plans for There should be contingency plans for
as many different crisis situations as as many different crisis situations as
possible possible
Cooperation not conflict among the Cooperation not conflict among the
involved parties is essential involved parties is essential
The chain of command should be clear The chain of command should be clear
and decision makers given adequate and decision makers given adequate
authority authority
Session
Session
Retail organization & financial
Retail organization & financial
Dimension
Dimension
355
Profit Planning
Profit Planning
Profit-and-loss (income)
Profit-and-loss (income)
statement
statement
Summary of a retailers
Summary of a retailers
revenues and expenses over
revenues and expenses over
a given period of time
a given period of time
Net Sales
Net Sales
Cost of Goods
Cost of Goods
Sold
Sold
Gross Profit
Gross Profit
(Margin)
(Margin)
Operating
Operating
Expenses
Expenses
Taxes
Taxes
Net Profit
Net Profit
After Taxes
After Taxes
Net Sales $330,000
CGS $180,000
Gross Profit $150,000
Operating
Expenses
$ 95,250
Other Costs $ 20,000
Total Costs $115,250
Net Profit before
Taxes
$ 34,750
Taxes $ 15,500
Net Profit after
Taxes
$ 19,250
357
Asset Management
Asset Management
Assets Assets
Liabilities Liabilities
Quick Ratio
Quick Ratio
Current Ratio
Current Ratio
Collection Period
Collection Period
Funding sources
Funding sources
Mergers, consolidations,
Mergers, consolidations,
spinoffs
spinoffs
Bankruptcies and
Bankruptcies and
liquidations
liquidations
Questionable accounting
Questionable accounting
and financial reporting
and financial reporting
practices
practices
360
Funding Sources
Funding Sources
Budgeting outlines a
Budgeting outlines a
retailers planned
retailers planned
expenditures for a given
expenditures for a given
time based on expected
time based on expected
performance
performance
Costs can be adjusted as goals are Costs can be adjusted as goals are
revised revised
Resources are allocated to the right Resources are allocated to the right
areas areas
Planned budgets versus actual budgets Planned budgets versus actual budgets
can be compared can be compared
Capital expenditures
Capital expenditures
Fixed costs
Fixed costs
Direct costs
Direct costs
Natural account
Natural account
expenses
expenses
365
Ongoing Budgeting Process
Ongoing Budgeting Process
Set goals
Set goals
Monitor results
Monitor results
Adjust budget
Adjust budget
366
Resource Allocation
Resource Allocation
Capital
Capital
Expenditures
Expenditures
Long-term Long-term
investments in investments in
fixed assets fixed assets
Operating
Operating
Expenditures
Expenditures
Short-term Short-term
selling and selling and
administrative administrative
costs in running costs in running
a business a business
367
Enhancing Productivity
Enhancing Productivity
Supporting Facility:
Supporting Facility:
The physical
The physical
resources that must be in place
resources that must be in place
before a service can be sold.
before a service can be sold.
Examples
Examples
are golf course, ski lift,
are golf course, ski lift,
hospital, airplane.
hospital, airplane.
Facilitating Goods:
Facilitating Goods:
The material
The material
purchased or consumed by the buyer
purchased or consumed by the buyer
or items provided by the consumer.
or items provided by the consumer.
Examples
Examples
are food items, auto parts,
are food items, auto parts,
legal documents, golf clubs.
legal documents, golf clubs.
371
The Service Package
The Service Package
(cont.)
(cont.)
Explicit Services:
Explicit Services:
Benefits readily
Benefits readily
observable by the senses. The
observable by the senses. The
essential or intrinsic features.
essential or intrinsic features.
Examples
Examples
are quality of meal,
are quality of meal,
attitude of the waiter, on-time
attitude of the waiter, on-time
departure.
departure.
Implicit Services
Implicit Services
: Psychological
: Psychological
benefits or extrinsic features which
benefits or extrinsic features which
the consumer may sense only
the consumer may sense only
vaguely.
vaguely.
Examples
Examples
are privacy of
are privacy of
loan office, security of a well lighted
loan office, security of a well lighted
parking lot.
parking lot.
372
From pure to quasi-
From pure to quasi-
manufacturing services
manufacturing services
Pure service:
Pure service:
high contact
high contact
Mixed service:
Mixed service:
medium contact
medium contact
(front-office)
(front-office)
Quasi-manufacturing:
Quasi-manufacturing:
low contact
low contact
(boundary functions and technical
(boundary functions and technical
core)
core)
Location
Location
:
:
near
near
customer
customer
Layout:
Layout:
customer
customer
physical,
physical,
psychological needs
psychological needs
and expectations
and expectations
Product Design:
Product Design:
environment as well
environment as well
as physical product
as physical product
Low
Low
Near supply,
Near supply,
transport, labor
transport, labor
Enhance
Enhance
production
production
Product defined by
Product defined by
fewer attributes
fewer attributes
374
Degree of contact and
Degree of contact and
management decisions
management decisions
(cont)
(cont)
High
High
Process design:
Process design:
stages have direct,
stages have direct,
immediate effect
immediate effect
Scheduling:
Scheduling:
customer is in the
customer is in the
schedule,
schedule,
immediate service
immediate service
Production
Production
planning:
planning:
orders
orders
cannot be stored
cannot be stored
Low
Low
Customer not
Customer not
involved in
involved in
majority of steps
majority of steps
Customer
Customer
concerned with
concerned with
completion dates
completion dates
Backlogging and
Backlogging and
smoothing are
smoothing are
possible
possible
375
Degree of contact and
Degree of contact and
management decisions
management decisions
(cont)
(cont)
High
High
Worker skills:
Worker skills:
PR
PR
Quality:
Quality:
variable
variable
standards and
standards and
expectations
expectations
Time standards:
Time standards:
depends on
depends on
customer needs,
customer needs,
loose
loose
Low
Low
Technical skills
Technical skills
Standards
Standards
measurable and
measurable and
fixed
fixed
Time can be
Time can be
known
known
376
Degree of contact and
Degree of contact and
management decisions
management decisions
(cont)
(cont)
High
High
Wages:
Wages:
variable
variable
o/p, time based
o/p, time based
wage systems
wage systems
Capacity
Capacity
Planning:
Planning:
meet
meet
peak demand
peak demand
Forecasting:
Forecasting:
short-
short-
term, time oriented
term, time oriented
Low
Low
Storable output,
Storable output,
average demand
average demand
Workforce is a signficant PR
Workforce is a signficant PR
component
component
Intangibility:
Intangibility:
I
I
mportance of reputation
mportance of reputation
381
Unique Characteristics of
Unique Characteristics of
Services
Services
Barriers to entry
Barriers to entry
382
Unique Characteristics of
Unique Characteristics of
Services
Services
Simultaneity:
Simultaneity:
non-inventoriable
non-inventoriable
output
output
Cost of idle capacity inventory holding Cost of idle capacity inventory holding
cost cost
Simultaneity
Simultaneity
(cont)
(cont)
I
I
nteraction creates customer
nteraction creates customer
perceptions of quality
perceptions of quality
; eliminates
; eliminates
opportunites for QC
opportunites for QC
O
O
pportunities for
pportunities for
promotional
promotional
strategies,
strategies,
personal selling
personal selling
384
Unique Characteristics of
Unique Characteristics of
Services
Services
Perishability
Perishability
of demand
of demand
: cannot
: cannot
inventory, opportunity loss of idle
inventory, opportunity loss of idle
capacity, need to match supply with
capacity, need to match supply with
demand
demand
Heterogeneity:
Heterogeneity:
variability in output
variability in output
Due to
Due to
customer
customer
presence and
presence and
intangibility
intangibility
Field inspection
Field inspection
386
Unique Characteristics of
Unique Characteristics of
Services
Services
Labor intensiveness
Labor intensiveness
Customer/worker interface
Customer/worker interface
marketing/production interface
marketing/production interface
International transportability
International transportability
Legal restrictions
Legal restrictions
Advertisability
Advertisability
Political stability
Political stability
Distance
Distance
Language
Language
389
Service Process
Service Process
Orientation
Orientation
Customer as Coproducer
Customer as Coproducer
Quality (perceptions vs
Quality (perceptions vs
expectations)
expectations)
Use IT as
Use IT as
an
an
Enabler for Both
Enabler for Both
Internal and External Customers
Internal and External Customers
Session
Session
Managing retail services
Managing retail services
391
Retailing
Retailing
Nonstore retailing
Direct selling
Direct marketing
Telemarketing
Television direct-response
marketing
Electronic shopping
Automatic vending
Buying service
392
Retailing
Marketing Decisions
Target Market
Breadth
Depth
393
Retailing
Price Decision
Promotion Decision
Place Decision
Community centers
A A brand brand is a name, term, sign, symbol, or design which is intended is a name, term, sign, symbol, or design which is intended
to to identify identify the goods or services of one seller or group of sellers and the goods or services of one seller or group of sellers and
to to differentiate differentiate them from those of competitors. them from those of competitors.
More recent views More recent views
Brand is what is Brand is what is experienced and valued experienced and valued by customers in everyday by customers in everyday
social life. social life.
Brand is the culture of the product shared taken for-granted Brand is the culture of the product shared taken for-granted
brand stories, images, and associations brand stories, images, and associations
Brand is the mental and emotional file we have for a product or Brand is the mental and emotional file we have for a product or
service or entity. service or entity.
398
Savvy consumers
Savvy consumers
Increased competition
Increased competition
Banking Banking
trying to get into banking but thwarted by trying to get into banking but thwarted by
regulators, instead it offers check cashing, bill payment, & regulators, instead it offers check cashing, bill payment, &
money orders & boasts 28 Wal-Mart Money Centres operated money orders & boasts 28 Wal-Mart Money Centres operated
by Sun Trust Banks plus it has I-store bank branches with by Sun Trust Banks plus it has I-store bank branches with
other banks other banks
Gasoline Gasoline 1555 stations on Wal-Mart properties, 300 of 1555 stations on Wal-Mart properties, 300 of
which are operated by Sams Club, rest by Murphy which are operated by Sams Club, rest by Murphy
Fashion Fashion
bought #1 selling British apparel brand George bought #1 selling British apparel brand George
from Asda, licenses Mary-Kate & Ashley lines from the Olsen from Asda, licenses Mary-Kate & Ashley lines from the Olsen
twins twins
400
customers
customers
brands
brands
Differential effect
Differential effect
Customer is
Customer is
aware
aware
of and
of and
familiar
familiar
with the
with the
brand
brand
PERCEPTION = VALUE
PERCEPTION = VALUE
408
The
The
strategic brand management process
strategic brand management process
is
is
defined as involving four main steps:
defined as involving four main steps:
1) Identifying and establishing brand positioning and values 1) Identifying and establishing brand positioning and values
2) Planning and implementing brand marketing programs 2) Planning and implementing brand marketing programs
3) Measuring and interpreting brand performance 3) Measuring and interpreting brand performance
4) Growing and sustaining brand equity 4) Growing and sustaining brand equity
409
Major Branding Decisions
Major Branding Decisions
Sunkist, Spic and Span, DieHard, Easy-Off Sunkist, Spic and Span, DieHard, Easy-Off
Tide, Aim, Puffs, but I Cant Believe Its Tide, Aim, Puffs, but I Cant Believe Its
Not Butter works too! Not Butter works too!
Distinctive Distinctive
Translates easily into foreign languages Translates easily into foreign languages
Capable of registration and legal protection Capable of registration and legal protection
410
Major Branding Decisions
Major Branding Decisions
But they can be expensive to develop But they can be expensive to develop
Do existing associations work for the new Do existing associations work for the new
product? product?
411
Major Branding Decisions
Major Branding Decisions
Line
Extension
Brand
Extension
Multibrands
New
Brands
Product Category
Existing New
Brand
Name
Existing
New
Source: Kotler and Armstrong (1999). Principles of Marketing, 8th edition. Upper Saddle River, NJ: Prentice Hall
Decision #3:
Brand Strategy
412
International Branding
International Branding
Strategies
Strategies
One brand name everywhere
(greater identification of the
product worldwide, but are all
consumer needs the same?)
One brand name everywhere
(greater identification of the
product worldwide, but are all
consumer needs the same?)
Adaptions and
modifications
(modifying elements to
fit each market will
this help you achieve
economies of scale?)
Adaptions and
modifications
(modifying elements to
fit each market will
this help you achieve
economies of scale?)
Different brand names
in different markets
(new marketing mixes
for each market
will this make you
more effective?)
Different brand names
in different markets
(new marketing mixes
for each market
will this make you
more effective?)
413
Brand Equity
Brand Equity
avoid short-term actions which undermine the avoid short-term actions which undermine the
brand in the long-term brand in the long-term
415
Five levels of brand
Five levels of brand
familiarity
familiarity
Brand rejection Brand rejection: wont buy unless a relevant factor : wont buy unless a relevant factor
changes changes
Brand non-recognition: Brand non-recognition: consumers dont pay consumers dont pay
attention to brands (commoditization) attention to brands (commoditization)
Brand recognition: Brand recognition: consumers are aware of the consumers are aware of the
brand and recognize it with/without prompting brand and recognize it with/without prompting
Brand preference: Brand preference: consumers usually choose a consumers usually choose a
specific brand specific brand
Brand insistence: Brand insistence:consumers are willing to prolong consumers are willing to prolong
search to find the desired brand search to find the desired brand
Session
Session
Service Quality
Service Quality
417
Introduction
Introduction
A
A
service recovery
service recovery
is satisfying a
is satisfying a
previously dissatisfied customer and
previously dissatisfied customer and
making them a loyal customer.
making them a loyal customer.
418
Dimensions of Service
Dimensions of Service
Quality
Quality
Reliability
Reliability
: Perform promised service
: Perform promised service
dependably and accurately.
dependably and accurately.
Example
Example
: receive mail at same time
: receive mail at same time
each day.
each day.
Responsiveness
Responsiveness
: Willingness to help
: Willingness to help
customers promptly.
customers promptly.
Example
Example
: avoid
: avoid
keeping customers waiting for no
keeping customers waiting for no
apparent reason.
apparent reason.
419
Dimensions of Service
Dimensions of Service
Quality
Quality
Assurance
Assurance
: Ability to convey trust
: Ability to convey trust
and confidence.
and confidence.
Example
Example
: being
: being
polite and showing respect for
polite and showing respect for
customer.
customer.
Empathy
Empathy
: Ability to be
: Ability to be
approachable.
approachable.
Example
Example
: being a
: being a
good listener.
good listener.
Tangibles
Tangibles
: Physical facilities and
: Physical facilities and
facilitating goods.
facilitating goods.
Example
Example
:
:
cleanliness.
cleanliness.
420
Perceived Service
Perceived Service
Quality
Quality
Word of
mouth
Personal
needs
Past
experience
Expected
service
Perceived
service
Service Quality
Dimensions
Reliability
Responsiveness
Assurance
Empathy
Tangibles
Service Quality Assessment
1. Expectations exceeded
ES<PS (Quality surprise)
2. Expectations met
ES~PS (Satisfactory quality)
3. Expectations not met
ES>PS (Unacceptable quality)
Pg:124, Ch:4, Service Quality, ICFAI
421
Service Quality Gap
Service Quality Gap
Model
Model
Customer
Perceptions
Customer
Expectations
Service
Delivery
Service
Standards
Management
Perceptions
of Customer
Expectations
Managing the
Evidence
Conformance
Service Design
Understanding
the Customer
Customer Satisfaction
GAP 5
Customer /
Marketing Research
GAP 1
Conformance
GAP 3
Communication
GAP 4
Design GAP 2
Service Quality Gap Model
Gap model, pg no:126, Ch:4, Service Marketing ,ICFAI
Gap model, Pg:234,CH:9 Service Marketing, ICFAI
422
Quality Service by
Quality Service by
Design
Design
Poka-yoke (fail-safing)
Poka-yoke (fail-safing)
Height bar at amusement park
Height bar at amusement park
Cost of Quality
Cost of Quality
Unconditional
Unconditional
Meaningful
Meaningful
Easy to invoke
Easy to invoke
Easy to collect
Easy to collect
426
Unconditional Service
Unconditional Service
Guarantee: Management
Guarantee: Management
View
View
The average business only hears from 4% of their The average business only hears from 4% of their
customers who are dissatisfied with their products or customers who are dissatisfied with their products or
services. Of the 96% who do not bother to complain, 25% services. Of the 96% who do not bother to complain, 25%
of them have serious problems. of them have serious problems.
The 4% complainers are more likely to stay with the The 4% complainers are more likely to stay with the
supplier than are the 96% non-complainers. supplier than are the 96% non-complainers.
About 60% of the complainers would stay as customers if About 60% of the complainers would stay as customers if
their problem was resolved and 95% would stay if the their problem was resolved and 95% would stay if the
problem was resolved quickly. problem was resolved quickly.
A dissatisfied customer will tell between 10 and 20 other A dissatisfied customer will tell between 10 and 20 other
people about their problem. people about their problem.
A customer who has had a problem resolved by a A customer who has had a problem resolved by a
company will tell about 5 people about their situation. company will tell about 5 people about their situation.
429
Walk-Through-Audit
Walk-Through-Audit
Case-by-case
Case-by-case
addresses each
addresses each
customers complaint individually but
customers complaint individually but
could lead to perception of unfairness.
could lead to perception of unfairness.
Systematic response
Systematic response
uses a protocol to
uses a protocol to
handle complaints but needs prior
handle complaints but needs prior
identification of critical failure points
identification of critical failure points
and continuous updating.
and continuous updating.
Early intervention
Early intervention
attempts to fix
attempts to fix
problem before the customer is
problem before the customer is
affected.
affected.
Substitute service
Substitute service
allows rival firm to
allows rival firm to
provide service but could lead to loss of
provide service but could lead to loss of
customer.
customer.
431
Example to illustrate the
Example to illustrate the
process
process
5 percent of the
5 percent of the
weight advertised on the box.
weight advertised on the box.
Decrease Variation
Decrease Variation
Center Process
Center Process
Increase
Increase
Specifications
Specifications
437
Step 4 Improve How good is
Step 4 Improve How good is
good enough?
good enough?
Motorolas Six Sigma
Motorolas Six Sigma
438
Step 5 Control
Step 5 Control
Estimate distributions
Estimate distributions
Culture Culture
Now present a general RIS. The retailer begins Now present a general RIS. The retailer begins
with its business philosophy and objectives, which with its business philosophy and objectives, which
are influenced by environmental factors (such as are influenced by environmental factors (such as
competitors and the economy). The philosophy competitors and the economy). The philosophy
and goals provides broad guidelines that direct and goals provides broad guidelines that direct
strategic planning. Some aspects of plans are strategic planning. Some aspects of plans are
routine and need little reevaluation. Others are routine and need little reevaluation. Others are
non routine and need evaluation each time they non routine and need evaluation each time they
arise. arise.
Once a strategy is outlined, the data needed to Once a strategy is outlined, the data needed to
enact it are collected, analyzed, and interpreted. If enact it are collected, analyzed, and interpreted. If
data already exist, they are retrieved from files. data already exist, they are retrieved from files.
When new data are acquired, files are updated. All When new data are acquired, files are updated. All
of this occurs in the information control center. of this occurs in the information control center.
Based on data in the control center, decisions are Based on data in the control center, decisions are
enacted. enacted.
454
RIS
RIS
Performance results are fed back to the Performance results are fed back to the
information control center and compared with pre- information control center and compared with pre-
set criteria. Data are retrieved from files or further set criteria. Data are retrieved from files or further
data are collected. Routine adjustments are made data are collected. Routine adjustments are made
promptly. promptly.
Regulars reports and exception reports (to explain Regulars reports and exception reports (to explain
deviations from expected performance) are given deviations from expected performance) are given
to the right managers. Sometimes managers may to the right managers. Sometimes managers may
react in a way that affects the overall philosophy react in a way that affects the overall philosophy
or goals (such as revising an old-fashioned image or goals (such as revising an old-fashioned image
or sacrificing short-run profits to introduce a or sacrificing short-run profits to introduce a
computer system). computer system).
455
RIS
RIS
A good RIS has several strengths. Information A good RIS has several strengths. Information
gathering is organized and company focused. Data gathering is organized and company focused. Data
are regularly gathered and stored so that are regularly gathered and stored so that
opportunities are foreseen and crises averted. opportunities are foreseen and crises averted.
Strategic element can be coordinated. New Strategic element can be coordinated. New
strategies can be devised more quickly. strategies can be devised more quickly.
Quantitative results are accessible, and cost- Quantitative results are accessible, and cost-
benefits analysis can be done. Information is benefits analysis can be done. Information is
routed to the right personnel. However, developing routed to the right personnel. However, developing
an RIS may require high initial time and labor an RIS may require high initial time and labor
costs, and complex decision may be needed to set costs, and complex decision may be needed to set
such a system. such a system.
456
ENVIRONMENT RETAILERS PHILOSPHY &
OBJECTIVES
STRATEGIC
PLANS
Data collection, Information Data Storage & Retrieval Updating of
Analysis, and files
Interpretation Control center
Retail Operations
Implementation
Feedback
Retail Information System, pg:342, Ch:11, Berman & Evans
457
Decisions in building RIS
Decisions in building RIS
How active a role should the RIS have? How active a role should the RIS have? Will it Will it
proactively search for use any relevant information or will it proactively search for use any relevant information or will it
reactively respond to requests from managers when reactively respond to requests from managers when
problems arise? The best systems are more proactive since problems arise? The best systems are more proactive since
they anticipate events. they anticipate events.
How much should an RIS cost? How much should an RIS cost? Retailers typically spend Retailers typically spend
0.5 to 1.5% of their sales on an RIS. This lags behind most 0.5 to 1.5% of their sales on an RIS. This lags behind most
of the suppliers from which retailers buy goods and of the suppliers from which retailers buy goods and
services. services.
458
Decisions
Decisions
continued
continued
How technology-driven should an RIS be? How technology-driven should an RIS be? Although retailers Although retailers
can gather data from trade associations, surveys, and so forth, can gather data from trade associations, surveys, and so forth,
more firms now rely on technology to drive the information process. more firms now rely on technology to drive the information process.
With the advent of personal computers, inexpensive networks, and With the advent of personal computers, inexpensive networks, and
low-priced software, technology is easy to use. Even a low-priced software, technology is easy to use. Even a
neighborhood deli can generate sales data by product and offer neighborhood deli can generate sales data by product and offer
specials on slow-sellers. specials on slow-sellers.
How much data are enough? How much data are enough? The purpose of an RIS is to provide The purpose of an RIS is to provide
enough information, on a regular basis, for a retailer to make the enough information, on a regular basis, for a retailer to make the
proper strategy choice not to overwhelm retail managers. This proper strategy choice not to overwhelm retail managers. This
means a balancing act between too little information and means a balancing act between too little information and
information overload. To avoid overload, data should be carefully information overload. To avoid overload, data should be carefully
edited to eliminate redundancies. edited to eliminate redundancies.
How should data be disseminated throughout the firm? How should data be disseminated throughout the firm? This This
requires decisions as to who receives various reports, the frequency requires decisions as to who receives various reports, the frequency
of data distribution, and access to data bases. When a firm has of data distribution, and access to data bases. When a firm has
multiple divisions or operates in several regions, information access multiple divisions or operates in several regions, information access
and distribution must be coordinated. and distribution must be coordinated.
459
Benefits of RIS
Benefits of RIS
Information collecting is organized quite broad Information collecting is organized quite broad
(company wide) in scope. (company wide) in scope.
Data regularly gathered & stored. It helps in Data regularly gathered & stored. It helps in
foreseeing the opportunities & avoiding the crises foreseeing the opportunities & avoiding the crises
New strategies can be devised more quickly New strategies can be devised more quickly
Quantitative results are obtainable & cost benefits Quantitative results are obtainable & cost benefits
analysis can be done. analysis can be done.
Session
Session
Merchandising Management
Merchandising Management
461
Product and merchandising management is key Product and merchandising management is key
activity in the management of retail business. activity in the management of retail business.
The primary function of the retailing Is to sell The primary function of the retailing Is to sell
Merchandise. Merchandise.
One of the most strategic aspects of the retail One of the most strategic aspects of the retail
business is to decide the merchandise mix and business is to decide the merchandise mix and
quantity to be purchased . quantity to be purchased .
Merchandising can be termed as the planning, Merchandising can be termed as the planning,
buying and the selling of merchandising . buying and the selling of merchandising .
Merchandising,
Merchandising,
Basis of retail merchandising
Basis of retail merchandising
,
,
462
Define Merchandising as The analysis, planning, Define Merchandising as The analysis, planning,
acquisition, handling and control of merchandise acquisition, handling and control of merchandise
investments of a retail operation. investments of a retail operation.
The function of merchandising is an integral part The function of merchandising is an integral part
of retailing and also one of the most challenging of retailing and also one of the most challenging
functions. functions.
AMA define The planning involved in marketing AMA define The planning involved in marketing
the right merchandise at the right place at the the right merchandise at the right place at the
right time in the right quantities at the right price. right time in the right quantities at the right price.
463
Achieving these Achieving these five Right five Right is the key to is the key to
successful merchandising and many a times, this successful merchandising and many a times, this
remains an elusive goal for most retailers. remains an elusive goal for most retailers.
Analysis Analysis: because retailers must be able to : because retailers must be able to
correctly identify their customers before they can correctly identify their customers before they can
ascertain consumer desires and their ascertain consumer desires and their
needs/requirements for making a good buying needs/requirements for making a good buying
decision. decision.
Acquisitions Acquisitions because the merchandise needs to be because the merchandise needs to be
procured from others, either distributors or procured from others, either distributors or
manufactures. manufactures.
Handling Handling involves seeing that the merchandise is involves seeing that the merchandise is
where it is needed and in the proper condition to where it is needed and in the proper condition to
be sold. be sold.
Control Control is required since the function of is required since the function of
merchandise involves spending money for merchandise involves spending money for
acquiring products it is necessary to control the acquiring products it is necessary to control the
amount of money spent on buying amount of money spent on buying
465
Factors Affecting the Merchandising Function
Factors Affecting the Merchandising Function
Merchandising does not function in isolation. Merchandising does not function in isolation.
It is affected by various factors like the It is affected by various factors like the
organization structure, the size of the retail organization structure, the size of the retail
organization and the merchandise to be carried. organization and the merchandise to be carried.
Rarely are any two stores organized in the same Rarely are any two stores organized in the same
way. way.
The function of the merchandising is vary from one The function of the merchandising is vary from one
organization to another. organization to another.
Size Size: The needs of the individual retailers vary : The needs of the individual retailers vary
from those of large chain store operation. from those of large chain store operation.
466
Merchandise to be carried: Merchandise to be carried: The buying for basic The buying for basic
merchandise is fairly different from buying fashion merchandise is fairly different from buying fashion
merchandise. merchandise.
A merchandisers who I handling fashion products A merchandisers who I handling fashion products
will need to spend more time in the market, and will need to spend more time in the market, and
looking for the products which is more suitable for looking for the products which is more suitable for
the customers. the customers.
Organization structure that Organization structure that the retail organization the retail organization
adopts also affects the merchandising function. adopts also affects the merchandising function.
Some organization may differentiate the role of Some organization may differentiate the role of
the buyer and the role of a merchandisers the buyer and the role of a merchandisers
separately. separately.
467
The Merchandises Role & Responsibilities
The Merchandises Role & Responsibilities
Planning: Planning: Thought the merchandising may not be Thought the merchandising may not be
directly involved in the actual purchase of directly involved in the actual purchase of
merchandise. merchandise.
They formulate the policies for the areas in which They formulate the policies for the areas in which
they are responsible. they are responsible.
Forecasting sale for the forth coming budget Forecasting sale for the forth coming budget
period and can estimate the consumer demand period and can estimate the consumer demand
and the impact of changes in the retail and the impact of changes in the retail
environment. environment.
Directing: Guiding and training buyers as and Directing: Guiding and training buyers as and
when the need arises, is also a function of the when the need arises, is also a function of the
merchandiser. merchandiser.
The buyers have to be guided to take additional The buyers have to be guided to take additional
markdowns for products which may not be doing markdowns for products which may not be doing
too well in the stores. too well in the stores.
468
They need to coordinate the buying effort in terms They need to coordinate the buying effort in terms
of how well it fits in with the store image and with of how well it fits in with the store image and with
the other products being bought by other buyers. the other products being bought by other buyers.
Controlling: assessing the buyers performance , is Controlling: assessing the buyers performance , is
a also part of the merchandise managers Job. a also part of the merchandise managers Job.
This includes evaluated on the basis of net sale, This includes evaluated on the basis of net sale,
maintain mark up percentage, gross margin % and maintain mark up percentage, gross margin % and
stock turn stock turn
469
Role of the Buyer
Role of the Buyer
Buyers plays an important role in the retail Buyers plays an important role in the retail
industry. they select and order merchandise to industry. they select and order merchandise to
be sold. be sold.
Buyers may be responsible for buying for a Buyers may be responsible for buying for a
department, an entire store, or a chain of stores department, an entire store, or a chain of stores
1. 1. Developing the merchandising strategies for the Developing the merchandising strategies for the
product line product line
2. 2. Planning and selecting merchandise assortments Planning and selecting merchandise assortments
3. 3. Vendor Selection Vendor Selection
4. 4. Pricing of the merchandise Pricing of the merchandise
5. 5. Inventory Management Inventory Management
Session
Session
Pricing
Pricing
471
What is a Price?
What is a Price?
Narrow definition.
Narrow definition.
Broad definition.
Broad definition.
Dynamic pricing.
Dynamic pricing.
Nature of the
Nature of the
market.
market.
Demand.
Demand.
Competitor.
Competitor.
Economic state.
Economic state.
Reseller needs.
Reseller needs.
Government
Government
actions.
actions.
Social concerns.
Social concerns.
Internal Factors
Marketing
objectives.
Marketing mix.
Costs
Fixed
Variable
Organization style.
Target market.
Positioning
objectives.
474
Pricing in Different Markets
Pricing in Different Markets
Pure competition.
Pure competition.
Many buyers and sellers where each has little effect Many buyers and sellers where each has little effect
on the going market price. on the going market price.
Monopolistic competition.
Monopolistic competition.
Many buyers and sellers who trade over a range of Many buyers and sellers who trade over a range of
prices. prices.
Oligopolistic competition.
Oligopolistic competition.
Few sellers and sensitive to each others Few sellers and sensitive to each others
pricing/marketing strategies. pricing/marketing strategies.
Pure monopoly.
Pure monopoly.
Demand.
Demand.
Elasticity.
Elasticity.
Product costs.
Product costs.
Cost-based approach.
Cost-based approach.
Cost-plus pricing.
Cost-plus pricing.
Break-even analysis.
Break-even analysis.
Value-based approach.
Value-based approach.
Competition-based approach.
Competition-based approach.
Skimming pricing.
Skimming pricing.
Penetration pricing.
Penetration pricing.
Product line
Product line
pricing levels to deliver
pricing levels to deliver
value to different segments.
value to different segments.
Optional products
Optional products
separate options
separate options
available for the main product.
available for the main product.
Captive products
Captive products
needed to make
needed to make
main product usable.
main product usable.
By-products
By-products
created from the
created from the
manufacture of the main product.
manufacture of the main product.
Product bundles
Product bundles
combinations.
combinations.
480
Product Line Pricing
Product Line Pricing
Competitors prices.
Competitors prices.
481
Optional/Captive Product
Optional/Captive Product
Pricing
Pricing
Optional-product.
Optional-product.
FOB origin, uniform (averaged freight), zone (zone FOB origin, uniform (averaged freight), zone (zone
averaging), basing-point (freight from base), freight- averaging), basing-point (freight from base), freight-
absorption (seller takes hit) absorption (seller takes hit)
Price Cuts
Excess
capacity.
Falling market
share.
Dominate
market through
lower costs.
Price Increases
Cost inflation.
Over-demand.
Cannot supply
all customers
needs.
484
Responding to
Responding to
Competitor Price
Competitor Price
Changes
Changes
Competitors
Competitors
Retail price maintenance (same price to Retail price maintenance (same price to
same level of trade) same level of trade)
Deceptive pricing (bait and switch up Deceptive pricing (bait and switch up
stock out) stock out)
487
Pricing Decisions
Pricing Decisions
Pricing strategies
Pricing strategies
Pricing exercise
Pricing exercise
Premium pricing
Premium pricing
Uses a high price, but gives a good Uses a high price, but gives a good
product/service exchange e.g. Concorde, product/service exchange e.g. Concorde,
The Ritz Hotel The Ritz Hotel
Penetration pricing
Penetration pricing
offers low price to gain market share - offers low price to gain market share -
then increases price then increases price
e.g. France Telecom - to attract new e.g. France Telecom - to attract new
corporate clients (or Telewest cable) corporate clients (or Telewest cable)
Economy pricing
Economy pricing
e.g. Soups, spaghetti, beans - economy e.g. Soups, spaghetti, beans - economy
brands brands
489
Price skimming
Price skimming
where prices are high - usually during introduction where prices are high - usually during introduction
e.g new albums or films on release e.g new albums or films on release
ultimately prices will reduce to the parity ultimately prices will reduce to the parity
Psychological pricing
Psychological pricing
.e.g 99p not 1.01 price point perspective .e.g 99p not 1.01 price point perspective
e.g. MARS 32p, Four-pack 99p, Bite-size 1.29 e.g. MARS 32p, Four-pack 99p, Bite-size 1.29
Pricing variations
Pricing variations
off-peak pricing, early booking discounts,etc off-peak pricing, early booking discounts,etc
e.g Grundig offers a cash back incentive for e.g Grundig offers a cash back incentive for
expensive goods expensive goods
490
Optional product-pricing
Optional product-pricing
e.g. optional extras - BMW famously e.g. optional extras - BMW famously
under-equipped under-equipped
e.g Gillette razors (low price) and blades e.g Gillette razors (low price) and blades
(high price) (high price)
Product-bundle pricing
Product-bundle pricing
sellers combine several products at the sellers combine several products at the
same price same price
Promotional pricing
Promotional pricing
Geographical pricing
Geographical pricing
different prices for customers in different different prices for customers in different
parts of the world parts of the world
e.g.Include shipping costs, or place onPLC e.g.Include shipping costs, or place onPLC
Value pricing
Value pricing
Profit maximization Profit maximization: management sets increasing : management sets increasing
levels of profitability as its objective. levels of profitability as its objective.
Target return Target return: desired profitability is stated in terms of : desired profitability is stated in terms of
return on sales or investment. return on sales or investment.
Sales maximization Sales maximization: management sets an acceptable : management sets an acceptable
level of profitability and then tries to maximize sales. level of profitability and then tries to maximize sales.
Market share Market share: : it is a percentage of a market controlled it is a percentage of a market controlled
by a certain company or product. by a certain company or product.
Meeting competition Meeting competition: : Some prices are set to Some prices are set to beat beat
competition competition by beating the pricing leader's prices. by beating the pricing leader's prices.
496
Other Pricing Objectives
Other Pricing Objectives
Product line pricing Product line pricing is setting the price steps between various products in is setting the price steps between various products in
a product line based on cost differences between the products, customer a product line based on cost differences between the products, customer
evaluations of different features, and competitors prices. evaluations of different features, and competitors prices.
Optional-product pricing Optional-product pricing is the pricing of optional or accessory products is the pricing of optional or accessory products
along with a main product. along with a main product.
Captive-product pricing Captive-product pricing is setting a price for products that must be used is setting a price for products that must be used
along with a main product, such as blades for a razor and film for a camera. along with a main product, such as blades for a razor and film for a camera.
By-product pricing By-product pricing is setting a price for by-products in order to make the is setting a price for by-products in order to make the
main products price more competitive. main products price more competitive.
Product bundle pricing Product bundle pricing is combining several products and offering the is combining several products and offering the
bundle at a reduced price. bundle at a reduced price.
499
Psychological Pricing
Psychological Pricing
Reference pricing Reference pricing where there are prices that where there are prices that
the buyer carries in their minds and refer to the buyer carries in their minds and refer to
when looking at a given product. when looking at a given product.
Odd pricing Odd pricing is the practice of choosing such is the practice of choosing such
prices as $19.95, $.99, or $99.99. prices as $19.95, $.99, or $99.99.
500
Discounts and Allowances
Discounts and Allowances
Discount and allowance pricing Discount and allowance pricing has the effect of has the effect of
reducing prices to reward customer responses such as reducing prices to reward customer responses such as
paying early or promoting the product. paying early or promoting the product.
Discount pricing Discount pricing is an idea of is an idea of flexible pricing policy flexible pricing policy. .
functional functional or or trade discounts trade discounts are given to an intermediary for are given to an intermediary for
performing certain functions. performing certain functions.
Cash discounts Cash discounts are price reductions to buyers who pay their are price reductions to buyers who pay their
bills promptly. bills promptly.
Quantity discounts Quantity discounts are given due to economies of purchasing are given due to economies of purchasing
large quantities. large quantities.
Seasonal discounts Seasonal discounts are price reductions to buyers who buy are price reductions to buyers who buy
merchandise or services out of season. merchandise or services out of season.
501
Discounts and Allowances
Discounts and Allowances
Trade in allowances Trade in allowances are price reductions are price reductions
granted for turning in a used item when granted for turning in a used item when
purchasing a new one. purchasing a new one.
Promotional allowances Promotional allowances are money paid by are money paid by
manufacturers to retailers in return for an manufacturers to retailers in return for an
agreement to feature the manufacturers products agreement to feature the manufacturers products
in some way. in some way.
502
Geographic Pricing Policies
Geographic Pricing Policies
FOB-origin pricing FOB-origin pricing is a geographical pricing strategy in which goods are is a geographical pricing strategy in which goods are
placed free on board a carrier; the customer pays the actual freight from the placed free on board a carrier; the customer pays the actual freight from the
factory to the destination. factory to the destination.
Uniform-delivered pricing Uniform-delivered pricing is a geographical pricing strategy in which the is a geographical pricing strategy in which the
company charges the same price plus freight to all customers, regardless of company charges the same price plus freight to all customers, regardless of
their location. their location.
Zone pricing Zone pricing means that different areas pay different prices on freight but means that different areas pay different prices on freight but
all customers within the same area pay the same freight charges. all customers within the same area pay the same freight charges.
Basing-point pricing Basing-point pricing means that all customers are charged freight from a means that all customers are charged freight from a
specified billing location. specified billing location.
freight-absorption pricing freight-absorption pricing in this case, the seller pays all shipping costs in this case, the seller pays all shipping costs
to get the desired business. to get the desired business.
Session
Session
Developing & implementing
Developing & implementing
plan
plan
504
Marketing Is A Complex
Marketing Is A Complex
Activity
Activity
u
Marketing is more than selling a
Marketing is more than selling a
commodity
commodity
u
Marketing should begin before you plant,
Marketing should begin before you plant,
not after you harvest (year around)
not after you harvest (year around)
u
Production & marketing are integrated
Production & marketing are integrated
u
No single best marketing strategy exists:
No single best marketing strategy exists:
s
varies over time, location, commodity,
varies over time, location, commodity,
financial situation, etc.
financial situation, etc.
505
A Marketing Plan Is Necessary,
A Marketing Plan Is Necessary,
But Not Sufficient
But Not Sufficient
u
What else?
What else?
u
A farm plan:
A farm plan:
s
goals: short term and long term
goals: short term and long term
s
objectives: quantifiable with a time
objectives: quantifiable with a time
frame
frame
u
Financial statements:
Financial statements:
s
know your financial situation:
know your financial situation:
risk bearing capacity, cash flow needs
risk bearing capacity, cash flow needs
s
where you are today and where you
where you are today and where you
are going
are going
506
Customize Marketing Plan
Customize Marketing Plan
u
A marketing plan works only if it fits
A marketing plan works only if it fits
your
your
operation, your goals,
operation, your goals,
your
your
objectives and
objectives and
your
your
financial situation
financial situation
507
Purpose Of Marketing Plan
Purpose Of Marketing Plan
:
:
u
Reduces pressures which can result in
Reduces pressures which can result in
selling at a bad time
selling at a bad time
u
help establish price targets:
help establish price targets:
s
compatible with market conditions
compatible with market conditions
s
compatible with financial situation
compatible with financial situation
u
Identify times when market is offering an
Identify times when market is offering an
acceptable price
acceptable price
u
Tool to help manage price risk
Tool to help manage price risk
508
Marketing Plan Prerequisites
Marketing Plan Prerequisites
u
Know your cost of production
Know your cost of production
u
Understand the market:
Understand the market:
s
historical
historical
s
current
current
u
Form price expectations
Form price expectations
u
Develop market price objectives
Develop market price objectives
u
Understand marketing alternatives
Understand marketing alternatives
u
A willingness to follow plan
A willingness to follow plan
509
Marketing Plan Defined
Marketing Plan Defined
u
A course of action which allows a
A course of action which allows a
producer to sell a commodity at a time
producer to sell a commodity at a time
that offers an
that offers an
acceptable
acceptable
profit potential
profit potential
u
A process to assist in choosing between
A process to assist in choosing between
various methods of marketing a product
various methods of marketing a product
510
A Marketing Plan Should
A Marketing Plan Should
Answer Four Questions
Answer Four Questions
s
When to sell? When to sell?
s
Where to sell? Where to sell?
s
What to sell? What to sell?
s
How to sell? How to sell?
s
Time of year Time of year
s
Location Location
s
Product form Product form
s
Compare alternatives Compare alternatives
511
Essential Elements In
Essential Elements In
Developing A Marketing Plan
Developing A Marketing Plan
u
Outlook
Outlook
s
whats going to happen?
whats going to happen?
u
Marketing alternatives
Marketing alternatives
s
which alternatives are viable?
which alternatives are viable?
u
A marketing strategy
A marketing strategy
s
what am I going to do?
what am I going to do?
u
Disciplined marketing management
Disciplined marketing management
s
following the plan!
following the plan!
512
Market Outlook Using
Market Outlook Using
Fundamentals
Fundamentals
u
Market fundamentals:
Market fundamentals:
s
supply & demand
supply & demand
u
Balance sheet approach:
Balance sheet approach:
beginning stocks beginning stocks
+ + production production
- - utilization utilization
= = ending stocks ending stocks
u
Look at changes as well as absolute levels
Look at changes as well as absolute levels
513
Market Outlook Using
Market Outlook Using
Technical Analysis (Charting
Technical Analysis (Charting
)
)
u
Charts give picture of past price
Charts give picture of past price
behavior
behavior
u
Charting forces you to follow the
Charting forces you to follow the
market regularly
market regularly
u
Charting helps you identify
Charting helps you identify
s
market direction
market direction
s
market trends
market trends
s
market cycles
market cycles
514
Marketing Alternatives
Marketing Alternatives
u
Open (spot) cash market
Open (spot) cash market
u
Pre-season contracts
Pre-season contracts
u
Forward cash sales
Forward cash sales
u
Consignment
Consignment
u
Basis contracts
Basis contracts
u
Futures contracts
Futures contracts
u
Government programs
Government programs
515
Marketing Alternatives
Marketing Alternatives
u
Factors to consider:
Factors to consider:
s
method of delivery
method of delivery
s
place of delivery
place of delivery
s
time of delivery
time of delivery
s
cost of using
cost of using
s
pricing mechanism
pricing mechanism
s
payment schedule
payment schedule
s
contingencies
contingencies
516
Marketing Alternatives
Marketing Alternatives
u
Advantages/Disadvantages:
Advantages/Disadvantages:
s
risk
risk
s
cash flow
cash flow
s
market access
market access
s
price level
price level
s
marketing cost (including time)
marketing cost (including time)
s
flexibility
flexibility
s
negotiating power
negotiating power
517
Developing A Marketing
Developing A Marketing
Strategy
Strategy
u
Set objectives
Set objectives
u
Define how to meet objectives
Define how to meet objectives
u
Establish decision rules
Establish decision rules
s
fixed vs. flexible sales
fixed vs. flexible sales
s
time-limited vs. open-ended
time-limited vs. open-ended
s
fail-safe vs. default
fail-safe vs. default
518
Developing A Marketing
Developing A Marketing
Strategy (cont.)
Strategy (cont.)
u
Test the strategy
Test the strategy
s
evaluate what ifs
evaluate what ifs
s
forecast the end result
forecast the end result
s
refine
refine
u
Establish criteria for changing strategy
Establish criteria for changing strategy
s
establish a contingency plan
establish a contingency plan
s
avoid second guessing trap
avoid second guessing trap
u
Clearly define decision making
Clearly define decision making
responsibilities
responsibilities
519
Marketing Management
Marketing Management
u
Implement, Follow and Evaluate plan!
Implement, Follow and Evaluate plan!
u
Remember:
Remember:
s
discipline is important
discipline is important
s
good planning improves the chance
good planning improves the chance
of success
of success
s
good decisions sometimes have bad
good decisions sometimes have bad
outcomes
outcomes
s
evaluate decisions relative to
evaluate decisions relative to
objectives
objectives
s
no one goes broke making a small
no one goes broke making a small
profit
profit
s
your
your
marketing plan must fit
marketing plan must fit
your
your
operation
operation
Session
Session
People in retail
People in retail
521
Types of Retailers
Types of Retailers
Types of Retailers
Types of Retailers
Specialty Shop:
Specialty Shop:
Built on having the right product assortment Built on having the right product assortment
and knowing customers well and knowing customers well
Department Store
Department Store
Generally higher margins and greater service Generally higher margins and greater service
Issue: Do consumers value service and quality Issue: Do consumers value service and quality
of assortment more than the increase in costs? of assortment more than the increase in costs?
522
Types of Retailers
Types of Retailers
(continued)
(continued)
Types of Retailers
Types of Retailers
(continued)
(continued)
Mass Merchandisers
Mass Merchandisers
(discounters)
(discounters)
Catalog Showrooms
Catalog Showrooms
Warehouse Clubs
Warehouse Clubs
Convenience Stores
Convenience Stores
Social identity
Social identity
: How others perceive us.
: How others perceive us.
Where do you promote Where do you promote destination destination merchandise merchandise
(e.g., a suit)? (e.g., a suit)?
through ads - through ads - before before the consumer leaves home the consumer leaves home
in-store locations, high traffic areas in-store locations, high traffic areas
Session
Session
International Retail
International Retail
531
Introduction
Introduction
Maison Liberty, Paris, 1890, divested 1932 Maison Liberty, Paris, 1890, divested 1932
Practice outpaced academic study until Hollander Practice outpaced academic study until Hollander
(1970) (1970) Multinational Retailing Multinational Retailing
Food retailers contribution to distribution systems Food retailers contribution to distribution systems
development nationally and subsequently development nationally and subsequently
internationally (Goldman, 1974) internationally (Goldman, 1974)
Specialist retailers exploiting market appeal of a Specialist retailers exploiting market appeal of a
distinctive brand distinctive brand
2008 - the worlds largest company (top of the 2008 - the worlds largest company (top of the
Fortune 500) Wal-Mart, is an international retailer Fortune 500) Wal-Mart, is an international retailer
532
Early stages
Early stages
Internationalisation to and from the US provided initial Internationalisation to and from the US provided initial
locus of interest (Hollander, 1970, Ball, 1980) locus of interest (Hollander, 1970, Ball, 1980)
Sears Roebuck: Cuba 1942 & Mexico 1947 Sears Roebuck: Cuba 1942 & Mexico 1947
1980s 1980s
Initial conceptualisation global, multinational etc Initial conceptualisation global, multinational etc
Impact of supermarket technology on developing economies Impact of supermarket technology on developing economies
Individual experiences of some retailers Laura Ashley, Ikea Individual experiences of some retailers Laura Ashley, Ikea
1990s 1990s
Direction and extent of international activity cross border Direction and extent of international activity cross border
Individual international retail companies Ikea, H&M Individual international retail companies Ikea, H&M
Evolution of
Evolution of
why
why
and
and
where
where
to
to
how
how
retailers internationalise
retailers internationalise
Methodological diversity
Methodological diversity
534
Evolution
Evolution
continued
continued
Power in the distribution system big-box operations Power in the distribution system big-box operations
US (11), Germany (5), France (2), Japan (1), UK (1) US (11), Germany (5), France (2), Japan (1), UK (1)
Q Companies Q Companies
Smaller, specialist retailers with international brand Smaller, specialist retailers with international brand
appeal across a range of sectors and delivery systems appeal across a range of sectors and delivery systems
US (12), Japan (3), Sweden, Spain, UK, Australia, South US (12), Japan (3), Sweden, Spain, UK, Australia, South
Africa Africa
535
Evolution
Evolution
continued
continued
These distinctions mirror how academic research These distinctions mirror how academic research
of retail sectors has evolved of retail sectors has evolved
Move from study of those firms that dominate the Move from study of those firms that dominate the
distribution system to the study of international distribution system to the study of international
retail brands retail brands
536
Evolution
Evolution
continued
continued
Increasing focus on the methods retailers use to Increasing focus on the methods retailers use to
enter international markets enter international markets
Franchising Franchising
(Quinn, 1998, 1999; Doherty and Quinn, 1999; Quinn and (Quinn, 1998, 1999; Doherty and Quinn, 1999; Quinn and
Doherty, 2000; Doherty and Alexander, 2004, 2006; Doherty, 2000; Doherty and Alexander, 2004, 2006;
Doherty, 2007a, 2007b, 2009) Doherty, 2007a, 2007b, 2009)
(Wrigley, 1997, 1998, 2002, 2002) (Wrigley, 1997, 1998, 2002, 2002)
1980s and early 1990s Europe, US, Japan 1980s and early 1990s Europe, US, Japan
sources of both academic and practical interest sources of both academic and practical interest
Since 1990s, academic interest has evolved Since 1990s, academic interest has evolved
Russia (Rogers, Ghauri and George, 2005) Russia (Rogers, Ghauri and George, 2005)
South America (Alexander and de Lira e Silva, 2002; South America (Alexander and de Lira e Silva, 2002;
Bianchi and Arnold, 2004) Bianchi and Arnold, 2004)
China (Sternquist and Chen, 2006) China (Sternquist and Chen, 2006)
538
Change
Change
continued
continued
India India
2006, regulation allowed international retailers 51% 2006, regulation allowed international retailers 51%
ownership of a single brand operation ownership of a single brand operation
Franchising Franchising
2005-08, franchising increased by 60% year on year with 2005-08, franchising increased by 60% year on year with
expectations to increased to 100% by 2013 expectations to increased to 100% by 2013
it is not practically possible to know all the local languages it is not practically possible to know all the local languages
whereas for forays into Tier II and Tier III towns it is very whereas for forays into Tier II and Tier III towns it is very
important to know the local language. The best way to enter important to know the local language. The best way to enter
these markets is through the franchise route these markets is through the franchise route
Planet Retail - Marks and Spencer, Guess and Next Planet Retail - Marks and Spencer, Guess and Next
International retailers have to create an Indian solution for an International retailers have to create an Indian solution for an
Indian opportunity franchising with a local partner can create Indian opportunity franchising with a local partner can create
that solution that solution
539
Change
Change
continued
continued
Russia
Russia
Significant challenges despite 14-16% retail Significant challenges despite 14-16% retail
growth rate growth rate
Road network, HR, property, import regulations Road network, HR, property, import regulations
Carrefour, Ikea, Auchan in the market Carrefour, Ikea, Auchan in the market
Fashion retailers Zara, Mango, Benetton Fashion retailers Zara, Mango, Benetton
Franchising Franchising
Mothercare, Next, The Body Shop and Peacocks Mothercare, Next, The Body Shop and Peacocks
Luxury Luxury
540
Change
Change
continued
continued
China
China
China is one country but with 32 markets, each with its China is one country but with 32 markets, each with its
own tastes and shopping habits. Understanding the own tastes and shopping habits. Understanding the
diverse, fragmented and constantly evolving needs of diverse, fragmented and constantly evolving needs of
the consumer will be the biggest challenge (IGD, 2005) the consumer will be the biggest challenge (IGD, 2005)
Carrefour, Wal-Mart, Metro, Tesco, Auchan Carrefour, Wal-Mart, Metro, Tesco, Auchan
hypermarket hypermarket
Now moving to second and third tier cities for Now moving to second and third tier cities for
expansion expansion
Dior, Louis Vuitton, Pink, Pilgrim, Zara, Benetton Dior, Louis Vuitton, Pink, Pilgrim, Zara, Benetton
541
Change
Change
continued
continued
Future Markets
Future Markets
Africa Africa
Egypt - Claires and Mothercare(Alshaya), Carrefour Egypt - Claires and Mothercare(Alshaya), Carrefour
Morocco Tiffany, Yves Rocher, Casino, Auchan and Morocco Tiffany, Yves Rocher, Casino, Auchan and
Metro Metro
Tunisia Carrefour, Casino, Yves Rocher Tunisia Carrefour, Casino, Yves Rocher
Saudi Arabia and United Arab Emirates Saudi Arabia and United Arab Emirates
Globalization Globalization in its literal sense is the process of in its literal sense is the process of
transformation of local or regional phenomena into transformation of local or regional phenomena into
global ones. It can be described as a process by global ones. It can be described as a process by
which the people of the world are unified into a which the people of the world are unified into a
single society and function together. single society and function together.
Globalization is a widely-used term that can be defined in a Globalization is a widely-used term that can be defined in a
number of different ways. When used in an economic number of different ways. When used in an economic
context, it refers to the reduction and removal of barriers context, it refers to the reduction and removal of barriers
between national borders in order to facilitate the flow of between national borders in order to facilitate the flow of
goods, capital, services and labour...although considerable goods, capital, services and labour...although considerable
barriers remain to the flow of labour...Globalization is not a barriers remain to the flow of labour...Globalization is not a
new phenomenon. new phenomenon.
It began in the late nineteenth century, but its spread It began in the late nineteenth century, but its spread
slowed during the period from the start of the First World slowed during the period from the start of the First World
War until the third quarter of the twentieth century. This War until the third quarter of the twentieth century. This
slowdown can be attributed to the inward looking policies slowdown can be attributed to the inward looking policies
pursued by a number of countries in order to protect their pursued by a number of countries in order to protect their
respective industries.. however, the pace of globalization respective industries.. however, the pace of globalization
picked up rapidly during the fourth quarter of the twentieth picked up rapidly during the fourth quarter of the twentieth
century..." century..."
545
History
History
The term " The term "globalization globalization" has been used by economists " has been used by economists
since the 1980s although it was used in social sciences in since the 1980s although it was used in social sciences in
the 1960s; however, its concepts did not become popular the 1960s; however, its concepts did not become popular
until the latter half of the 1980s and 1990s. The earliest until the latter half of the 1980s and 1990s. The earliest
written theoretical concepts of globalization were penned written theoretical concepts of globalization were penned
by an American entrepreneur-turned-minister by an American entrepreneur-turned-minister Charles Charles Taze Taze
Russell Russell who coined the term 'corporate giants' in 1897. who coined the term 'corporate giants' in 1897.
The Islamic Golden Age is also an example, when Muslim The Islamic Golden Age is also an example, when Muslim
traders and explorers established an early global economy traders and explorers established an early global economy
across the Old World resulting in a globalization of crops, across the Old World resulting in a globalization of crops,
trade, knowledge and technology; and later during the trade, knowledge and technology; and later during the
Mongol Empire, when there was greater integration along Mongol Empire, when there was greater integration along
the Silk Road. Globalization in a wider context began shortly the Silk Road. Globalization in a wider context began shortly
before the turn of the 16th century, with two Kingdoms of before the turn of the 16th century, with two Kingdoms of
the Iberian Peninsula - the Kingdom of Portugal and the the Iberian Peninsula - the Kingdom of Portugal and the
Kingdom of Castile. Kingdom of Castile.
546
History
History
Portugal's global explorations in the 16th century, especially, linked Portugal's global explorations in the 16th century, especially, linked
continents, economies and cultures to a massive extent. Portugal's continents, economies and cultures to a massive extent. Portugal's
exploration and trade with most of the coast of Africa, Eastern exploration and trade with most of the coast of Africa, Eastern
South America, and Southern and Eastern Asia, was the first major South America, and Southern and Eastern Asia, was the first major
trade based form of globalization. A wave of global trade, trade based form of globalization. A wave of global trade,
colonization, and enculturation reached all corners of the world. colonization, and enculturation reached all corners of the world.
In the 17th century, globalization became a business phenomenon In the 17th century, globalization became a business phenomenon
when the British East India Company (founded in 1600), which is when the British East India Company (founded in 1600), which is
often described as the first multinational corporation, was often described as the first multinational corporation, was
established, as well as the Dutch East India Company (founded in established, as well as the Dutch East India Company (founded in
1602) and the Portuguese East India Company (founded in 1628). 1602) and the Portuguese East India Company (founded in 1628).
Because of the large investment and financing needs and the high Because of the large investment and financing needs and the high
risks involved with international trade, the British East India risks involved with international trade, the British East India
Company became the first company in the world to share risk and Company became the first company in the world to share risk and
enable joint ownership of companies through the issuance of shares enable joint ownership of companies through the issuance of shares
of stock: an important driver for globalization. of stock: an important driver for globalization.
547
History
History
Globalization was achieved by the Globalization was achieved by the British Empire British Empire
(the largest empire in history) due to its sheer size (the largest empire in history) due to its sheer size
and power. British ideals and culture were imposed and power. British ideals and culture were imposed
on other nations during this period. on other nations during this period.
The 19th century is sometimes called "The First The 19th century is sometimes called "The First
Era of Globalization." It was a period characterized Era of Globalization." It was a period characterized
by rapid growth in international trade and by rapid growth in international trade and
investment between the European imperial investment between the European imperial
powers, their colonies, and, later, the United powers, their colonies, and, later, the United
States. States.
The "First Era of Globalization" later collapsed The "First Era of Globalization" later collapsed
during the gold standard crisis and Great during the gold standard crisis and Great
Depression in the late 1920s and early 1930s. Depression in the late 1920s and early 1930s.
548
Measuring Globalization
Measuring Globalization
Goods and services, e.g. exports plus imports as Goods and services, e.g. exports plus imports as
a proportion of national income or per capita of a proportion of national income or per capita of
population population
Labor/people, e.g. net migration rates; inward or Labor/people, e.g. net migration rates; inward or
outward migration flows, weighted by population outward migration flows, weighted by population
Capital, e.g. inward or outward direct investment Capital, e.g. inward or outward direct investment
as a proportion of national income or per head of as a proportion of national income or per head of
population population
Technology, e.g. international research & Technology, e.g. international research &
development flows; proportion of populations (and development flows; proportion of populations (and
rates of change thereof) using particular rates of change thereof) using particular
inventions (especially 'factor-neutral' technological inventions (especially 'factor-neutral' technological
advances such as the telephone, motorcar, advances such as the telephone, motorcar,
broadband) broadband)
549
Measuring
Measuring
continued.
continued.
As globalization is not only an economic phenomenon, a As globalization is not only an economic phenomenon, a
multivariate approach to measuring globalization is the multivariate approach to measuring globalization is the
recent index calculated by the Swiss think tank KOF. recent index calculated by the Swiss think tank KOF.
The index measures the three main dimensions of The index measures the three main dimensions of
globalization: economic, social, and political. In addition to globalization: economic, social, and political. In addition to
three indices measuring these dimensions, an overall index three indices measuring these dimensions, an overall index
of globalization and sub-indices referring to actual of globalization and sub-indices referring to actual
economic flows, economic restrictions, data on personal economic flows, economic restrictions, data on personal
contact, data on information flows, and data on cultural contact, data on information flows, and data on cultural
proximity is calculated. proximity is calculated.
Data is available on a yearly basis for 122 countries, as Data is available on a yearly basis for 122 countries, as
detailed in Dreher, Gaston and Martens (2008).According to detailed in Dreher, Gaston and Martens (2008).According to
the index, the world's most globalized country is Belgium, the index, the world's most globalized country is Belgium,
followed by Austria, Sweden, the United Kingdom and the followed by Austria, Sweden, the United Kingdom and the
Netherlands. The least globalized countries according to the Netherlands. The least globalized countries according to the
KOF-index are Haiti, Myanmar the Central African Republic KOF-index are Haiti, Myanmar the Central African Republic
and Burundi. and Burundi.
550
Effects of Globalization
Effects of Globalization
Economic
Economic
- realization of a global common
- realization of a global common
market, based on the freedom of
market, based on the freedom of
exchange of goods and capital. The
exchange of goods and capital. The
interconnectedness of these markets,
interconnectedness of these markets,
however meant that an economic collapse
however meant that an economic collapse
in any one given country could not be
in any one given country could not be
contained.
contained.
Competition Competition - Survival in the new global business - Survival in the new global business
market calls for improved productivity and market calls for improved productivity and
increased competition. Due to the market increased competition. Due to the market
becoming worldwide, companies in various becoming worldwide, companies in various
industries have to upgrade their products and use industries have to upgrade their products and use
technology skillfully in order to face increased technology skillfully in order to face increased
competition. competition.
553
Effects
Effects
continued
continued
Ecological - the advent of global environmental challenges Ecological - the advent of global environmental challenges
that might be solved with international cooperation, such as that might be solved with international cooperation, such as
climate change, cross-boundary water and air pollution, climate change, cross-boundary water and air pollution,
over-fishing of the ocean, and the spread of invasive over-fishing of the ocean, and the spread of invasive
species. Since many factories are built in developing species. Since many factories are built in developing
countries with less environmental regulation, globalism and countries with less environmental regulation, globalism and
free trade may increase pollution. On the other hand, free trade may increase pollution. On the other hand,
economic development historically required a "dirty" economic development historically required a "dirty"
industrial stage, and it is argued that developing countries industrial stage, and it is argued that developing countries
should not, via regulation, be prohibited from increasing should not, via regulation, be prohibited from increasing
their standard of living. their standard of living.
Cultural - growth of cross-cultural contacts; advent of new Cultural - growth of cross-cultural contacts; advent of new
categories of consciousness and identities which embodies categories of consciousness and identities which embodies
cultural diffusion, the desire to increase one's standard of cultural diffusion, the desire to increase one's standard of
living and enjoy foreign products and ideas, adopt new living and enjoy foreign products and ideas, adopt new
technology and practices, and participate in a "world technology and practices, and participate in a "world
culture". Some bemoan the resulting consumerism and loss culture". Some bemoan the resulting consumerism and loss
of languages. of languages.
554
Effects
Effects
continued
continued
Social
Social
- development of the system of
- development of the system of
non-governmental organizations
non-governmental organizations
as main
as main
agents of global public policy, including
agents of global public policy, including
humanitarian aid and developmental
humanitarian aid and developmental
efforts.
efforts.
Technical-
Technical-
Development of a global
Development of a global
telecommunications infrastructure and
telecommunications infrastructure and
greater transborder data flow, using such
greater transborder data flow, using such
technologies as the Internet,
technologies as the Internet,
communication satellites, submarine fiber
communication satellites, submarine fiber
optic cable, and wireless telephones.
optic cable, and wireless telephones.
Session
Session
Shopping at world stores
Shopping at world stores
556
Emerging Trends
Emerging Trends
Evolving activities
Evolving activities
Increasing competition
Increasing competition
Competitive prices
Competitive prices
Printed
Printed
catalogs
catalogs
Direct-mail ads
Direct-mail ads
and brochures
and brochures
Inserts with
Inserts with
monthly credit
monthly credit
card and other
card and other
bills
bills
(statement
(statement
stuffers)
stuffers)
Freestanding
Freestanding
displays
displays
Ads or
Ads or
programs in
programs in
mass media
mass media
Banner ads or
Banner ads or
hot links on the
hot links on the
Web
Web
Video kiosks
Video kiosks
559
Outcome Measures
Outcome Measures
Captive audience
Captive audience
Difficulty in replenishment
Difficulty in replenishment
Confusing promotions
Confusing promotions
Poor service
Poor service
Long lines
Long lines
564
What Are the Effects?
What Are the Effects?
Procrastination
Procrastination
Consumer Engagement
Consumer Engagement
: Making
: Making
consumers needs salient in specific
consumers needs salient in specific
retail settings
retail settings
Purchase conversion
Purchase conversion
: Turning
: Turning
shoppers into buyers
shoppers into buyers
567
Enhancing Retail
Enhancing Retail
Shoppability
Shoppability
1. 1.
Show the Product
Show the Product
2. 2.
Provide Effective Navigational Aids
Provide Effective Navigational Aids
3. 3.
Simplify Product Organization and
Simplify Product Organization and
Presentation
Presentation
4. 4.
Minimize Clutter
Minimize Clutter
5. 5.
Maximize Product Affordance
Maximize Product Affordance
568
Enhancing Retail
Enhancing Retail
Shoppability
Shoppability
6. 6.
Showcase Whats New
Showcase Whats New
7. 7.
Make the Experience Convenient
Make the Experience Convenient
8. 8.
Make the Experience Enjoyable
Make the Experience Enjoyable
9. 9.
Speak with Authority
Speak with Authority
10. 10.
Maintain Flexibility
Maintain Flexibility
569
Measuring Retail
Measuring Retail
Shoppability
Shoppability
Product characteristics
Product characteristics
Talk to Customers
Talk to Customers
Consumer surveys
Consumer surveys
Exit interviews
Exit interviews
Shopper suggestions
Shopper suggestions
571
Measuring Retail
Measuring Retail
Shoppability (cont.)
Shoppability (cont.)
Talk to Customers
Talk to Customers
Customer traffic
Customer traffic
Traffic flow (speed and direction)
Traffic flow (speed and direction)
Aisle penetration
Aisle penetration
Category dwell time and product
Category dwell time and product
interaction
interaction
Purchase conversion
Purchase conversion
Queue lengths and crowding
Queue lengths and crowding
Shopper demographics
Shopper demographics
572
Measuring Retail
Measuring Retail
Shoppability (cont.)
Shoppability (cont.)
Talk to Customers
Talk to Customers
Captive audience
Captive audience
Difficulty in replenishment
Difficulty in replenishment
Reactive
Reactive
(from reaction - to receive
(from reaction - to receive
information, then act)
information, then act)
regulations - environmental/work
regulations - environmental/work
safety may be easier overseas
safety may be easier overseas
chance occurrence
chance occurrence
additional reasons on page 240 - 241
576
Reactive, continued
Reactive, continued
If a companies customers go
If a companies customers go
international, then it may be required
international, then it may be required
to follow.
to follow.
eg. if an auto parts supplier to Magna sees
eg. if an auto parts supplier to Magna sees
Magna beginning to make some important
Magna beginning to make some important
component in Mexico, then it may also
component in Mexico, then it may also
have to go to Mexico so it can mfg. there
have to go to Mexico so it can mfg. there
and continue to supply Magna - it would
and continue to supply Magna - it would
be too expensive to ship the parts from
be too expensive to ship the parts from
Canada
Canada
577
Reasons for going
Reasons for going
international
international
Proactive
Proactive
(to actively look for an
(to actively look for an
opportunity)
opportunity)
incentives
incentives
IBM employees in the end of the 1960s IBM employees in the end of the 1960s
studied values related to organizational behavior studied values related to organizational behavior
==> four cultural dimensions related to common basic ==> four cultural dimensions related to common basic
problems: problems:
1. 1. power distance power distance: the extent to which power differences are : the extent to which power differences are
accepted accepted
2. 2. uncertainty avoidance uncertainty avoidance: the extent to which uncertain, : the extent to which uncertain,
ambiguous situations are seen as threatening --> formal rules, ambiguous situations are seen as threatening --> formal rules,
norms, experts norms, experts
3. 3. individualism individualism: the extent to which people feed responsible : the extent to which people feed responsible
only for themselves (and very close ones) only for themselves (and very close ones)
4. 4. masculinity masculinity: the extent to which assertiveness, work, and : the extent to which assertiveness, work, and
career is important in life career is important in life
583
Internationalization Process
Internationalization Process
Model
Model
Psychic distance
Psychic distance
In which sequence are foreign markets In which sequence are foreign markets
typically entered typically entered
The order in which operational forms are The order in which operational forms are
applied in a specific country applied in a specific country
586
The mechanism of
The mechanism of
internationalization
internationalization
When investing abroad the lack of knowledge creates When investing abroad the lack of knowledge creates
substantial uncertainty and high perceived risk substantial uncertainty and high perceived risk
The managers are risk-averse and will not start The managers are risk-averse and will not start
projects that exceed a certain level of risk projects that exceed a certain level of risk
Market risk = uncertainty x market investments Market risk = uncertainty x market investments
The uncertainty can be reduced by increased The uncertainty can be reduced by increased
knowledge of the market knowledge of the market
The critical market knowledge is mainly gained by The critical market knowledge is mainly gained by
experiential activities in the particular market experiential activities in the particular market
(experiential knowledge related to the specific (experiential knowledge related to the specific
context) context)
587
Implications
Implications
Successful foreign expansion is a costly and time- Successful foreign expansion is a costly and time-
consuming process (no short-cuts), as consuming process (no short-cuts), as
experiential knowledge is: experiential knowledge is:
Continuums
Continuums
Mental files
Mental files
Natural
Natural
Useful
Useful
Can be misused
Can be misused
595
Ethnocentrism
Ethnocentrism
Continuums
Continuums
Stereotyping
Stereotyping
Ethnocentrism
Ethnocentrism
Understand ourselves
Understand ourselves
Understand others
Understand others
Order of
Order of
inequality
inequality
Special privileges
Special privileges
Subordinates are
Subordinates are
different from
different from
superiors
superiors
Minimize
Minimize
inequalities
inequalities
Equal rights
Equal rights
Subordinates and
Subordinates and
superiors are
superiors are
equals
equals
Paternalistic (father-like)
Paternalistic (father-like)
management style
management style
Avoid risks
Avoid risks
Dissonance is
Dissonance is
dangerous
dangerous
Time is money
Time is money
Need written
Need written
rules and
rules and
regulations
regulations
Believe in
Believe in
experts
experts
Low Low
Accept Accept
disagreements disagreements
Responsible for
Responsible for
self and
self and
immediate family
immediate family
Identity based on
Identity based on
the individual
the individual
Autonomy,
Autonomy,
variety, pleasure
variety, pleasure
and individual
and individual
financial security
financial security
Individual
Individual
decisions
decisions
Extended
Extended
families,
families,
loyalty,
loyalty,
protection
protection
Identity in the
Identity in the
social system
social system
Expertise,
Expertise,
order, duty,
order, duty,
security
security
provided by the
provided by the
in-group
in-group
Group
Group
decisions
decisions
604
Affect of High Uncertainty
Affect of High Uncertainty
Avoidance on Employees
Avoidance on Employees
Career stability
Career stability
Consistency
Consistency
Avoid conflict/disagreement
Avoid conflict/disagreement
Resist change
Resist change
Fear of failure
Fear of failure
Stable employees
Stable employees
605
Locus of Control
Locus of Control
Internal
Internal
Belief in ones
Belief in ones
ability to control
ability to control
fate
fate
Focus on self
Focus on self
rather than others
rather than others
Discomfort with
Discomfort with
lack of control
lack of control
External
External
Belief that
Belief that
something outside
something outside
oneself is in control
oneself is in control
Harmony and
Harmony and
responsiveness
responsiveness
Focus on other
Focus on other
Comfortable with
Comfortable with
changes
changes
606
Neutral/Affective
Neutral/Affective
Neutral
Neutral
Hide feelings
Hide feelings
Tension
Tension
accidentally
accidentally
revealed
revealed
Admire poise
Admire poise
Monotone
Monotone
Affective
Affective
Openly reveal
Openly reveal
emotions
emotions
Expressive
Expressive
Animated
Animated
expressions
expressions
Touching, and
Touching, and
broad gestures
broad gestures
admired
admired
Expression and
Expression and
emotion
emotion
607
Diffuse (High context)
Diffuse (High context)
/Specific (low context)
/Specific (low context)
Diffuse (high context) Diffuse (high context)
Indirect Indirect
Report Report
conclusions and conclusions and
important points important points
first first
608
Cultural Dimensions Summary
Cultural Dimensions Summary
Masculine/Feminine material
Masculine/Feminine material
rewards or quality of life
rewards or quality of life
Individualism/Collectivism I
Individualism/Collectivism I
versus we
versus we
Universalistic/Particularistic
Universalistic/Particularistic
treat all equally versus do favors
treat all equally versus do favors
for friends
for friends
609
Cultural Dimensions
Cultural Dimensions
Summary
Summary
Business definition as
Business definition as
strategy
strategy
content
content
:
:
Over time, industry changes occur -- shifts in Over time, industry changes occur -- shifts in
customer demographics and preferences. customer demographics and preferences.
Few business schools offer courses in Few business schools offer courses in
creativity. creativity.
Business world seeks to quantify everything. Business world seeks to quantify everything.
Rollo May: Rollo May: Need for creativity is in direct Need for creativity is in direct
proportion to degree of change the proportion to degree of change the
profession is undergoing profession is undergoing. .
614
Business Definition as a
Business Definition as a
Creative Process
Creative Process
(cont.)
(cont.)
2. Effective business definitions
2. Effective business definitions
rarely emerge without an
rarely emerge without an
extensive
extensive
knowledge
knowledge
of the competitive
of the competitive
landscape.
landscape.
Rarely the result of luck or whims -- instead, Rarely the result of luck or whims -- instead,
are outcome of expertise and hard work. are outcome of expertise and hard work.
Examples: Head skis, Goodyears vulcanized Examples: Head skis, Goodyears vulcanized
rubber, and PC products from Wozniak and rubber, and PC products from Wozniak and
Jobs. Jobs.
615
Business Definition as a
Business Definition as a
Creative Process
Creative Process
(cont.)
(cont.)
3. Effective business definition will
3. Effective business definition will
not only answer the Who, What,
not only answer the Who, What,
and How questions, but it will also
and How questions, but it will also
be much
be much
more creative and unique
more creative and unique
than any corporate mission
than any corporate mission
statement.
statement.
Usually the inspiration of a key entrepreneurial Usually the inspiration of a key entrepreneurial
thinker. thinker.
616
Business Definition as a
Business Definition as a
Creative Process
Creative Process
(cont.)
(cont.)
4. The business definition process
4. The business definition process
implies that firms will
implies that firms will
engage in
engage in
some activities and not engage in
some activities and not engage in
others
others
.
.
Business definitions can sometimes result Business definitions can sometimes result
from not deciding or maintaining the status from not deciding or maintaining the status
quo. quo.
However, most business definitions are However, most business definitions are
redefined over time in order to maintain redefined over time in order to maintain
alignment with the larger competitive alignment with the larger competitive
environment. environment.
Example of Ziebart evolving from rustproofing to Example of Ziebart evolving from rustproofing to
supplying window tinting, sunroof installations, supplying window tinting, sunroof installations,
auto detailing, and security systems. auto detailing, and security systems.
617
Business Definition as a
Business Definition as a
Creative Process
Creative Process
(cont.)
(cont.)
5. Final characteristic of business
5. Final characteristic of business
definition process is its
definition process is its
fleeting
fleeting
nature
nature
.
.
Many business definitions quickly become Many business definitions quickly become
dated or irrelevant due to changes in dated or irrelevant due to changes in
competitive environment or actions by competitive environment or actions by
managers. managers.
Examples: transistor technology vs. vacuum Examples: transistor technology vs. vacuum
tubes and Coors national marketing strategy vs. tubes and Coors national marketing strategy vs.
their previous Rocky Mountain area focus. their previous Rocky Mountain area focus.
618
Business Definition and
Business Definition and
Competitive Advantage
Competitive Advantage
Business definition
Business definition
positions
positions
a
a
firm or business in its competitive
firm or business in its competitive
space or industry environment.
space or industry environment.
Microbreweries serve only small, local markets. Microbreweries serve only small, local markets.
Both aggressively defend against imitators. Both aggressively defend against imitators.
619
Business Definition and
Business Definition and
Competitive Advantage
Competitive Advantage
(cont.)
(cont.)
Example of Williams Companies and their Example of Williams Companies and their
decision to enter fiber optic cable business. decision to enter fiber optic cable business.
621
Business Definition and
Business Definition and
Competitive Advantage
Competitive Advantage
(cont.)
(cont.)
Can be more tangible and motivational than Can be more tangible and motivational than
financial objectives. financial objectives.
Motorolas quality improvements, HPs technical Motorolas quality improvements, HPs technical
contributions, and Nordstroms exemplary contributions, and Nordstroms exemplary
customer service. customer service.
622
CEO Sloan decided that each GM car line CEO Sloan decided that each GM car line
should serve different, but overlapping price should serve different, but overlapping price
points points (see illustration on following slide). (see illustration on following slide).
Illustrations of Effective
Illustrations of Effective
Business Definitions
Business Definitions
623
Characteristics of Effective
Characteristics of Effective
Business Definitions
Business Definitions
Distinctiveness
Distinctiveness
Profit advantage
Competitive pressures
Unique products
Overproduction
Technological advantage
Declining domestic sales
Excess capacity
Managerial commitment
Saturated domestic
markets
Tax benefit
Proximity to customers
and ports
627
What drives Globalization?
A Technological Triggers
B Institutional Triggers
628
Hill, C. W. L. (2000): International Business, 3thd ed., Boston et al.
A. Technological Triggers
Transport
goods
raw material
humans
Information and
Communication
Technology
information
know-how
monitoring control
629
Hill, C. W. L. (2000): International Business, 3thd ed., Boston et al.
ad B. Institutional Triggers
Legal changes
e. g. declining trade and investment
barriers
- less protectionism (tariffs, subsidies,
regulations or quotas), because of
WTO, ETC
- less capital restrictions
Political changes
revolutions,
new governments,
wars
...
Consumer tastes
growing individualization
630
2. Institutional Environment of International Business
Three layers of analysis
[Cf. Williamson (1996), The institutions and governance of economic development and reform, in: Williamson, O. E. (1996),
The mechanisms of governance, New York, p. 326.]
Institutional
Framework
Contractual
Governance
Individual
Behavioral
Attributes
Shift
Parameters
Strategic
Endogenous
Preferences
Framework effects
The same management tools
might induce different effects in
different environments.
Behavioral expectations can
vary much more when crossing
framework borders.
631
[cf. Klein, P. G. (2000), The New Institutional Economics, p. 3, http://encyclo.findlaw.com/0530book.pdf, pp. 458 ff.;
cf. Wolff, B. (1999): Anreizkompatible Reorganisation von Unternehmen, Stuttgart, p. 197 ff.]
refers to the
background constraints,
or rules of the game
Institutional
Environment
formal, explicit
rules
informal, often
implicit rules
e.g.
constitutions,
laws
e.g.
social
conventions,
norms
The institutional environment forms the framework in which human action
takes place. It defines property rights and how they can be transferred.
Explicit Institutional Environment
632
2. Institutional Environment of International Business
Institutional
Environment
formal, explicit
rules
informal, often
implicit rules
solves problems of
coordination and
motivation by altering the
payoff structure in each
game
solves problems of
coordination and
motivation by repeating
the game (social rewards
and sanctions)
Formal rules and informal rules are not necessarily substitutes, but complements.
They influence each other.
dominant
principle
2.2 Implicit Institutional Environment
633
Multinational corporation
What exactly is a Multinational Corporation?
- enterprises that own or control production or service facilities outside the
country in which they are based (United Nations in Czinkota et al.: 395)
quantitative criteria
- must have operations in at least two
countries (sometimes subsidiaries in
even 6 or more countries are required)
- proportion of overall revenue generated
abroad: 25-30 percent is most often cited
- involvement in foreign markets should be
substantial enough to make a difference
in decision making or
- the owners of the corporation must be of
several nationalities
qualitative criteria
- management must consider the firm as
multinational and must act accordingly
(view their domestic operations as part of
worldwide operations)
- ...
634
Alternative Modes of Foreign Entry
Alternative Modes of Foreign Market Entry
Internal strategies: Using your own assets
1. Exporting
2. Licensing
3. Franchising
4. Joint Ventures
5. Sales Office
6. Production Plant
7. Full Scale Subsidiaries
8. Turnkey contracts
External strategies: Combining your and your partners assets
Corporate Networks
Strategic Alliances ( International Management II)
Reference: Hill (2000)
FAQS,
FAQS,
636
Questions
Questions
Q1 What is Merchandising? Q1 What is Merchandising?
Activities involved in acquiring particular goods and/or services and making them available at the Activities involved in acquiring particular goods and/or services and making them available at the
places, times, and prices and in the quantity that enable a retailer to reach its goals. places, times, and prices and in the quantity that enable a retailer to reach its goals.
Q2 What IS Micro merchandising? Q2 What IS Micro merchandising?
Retailer adjusts shelf-space allocations to respond to customer and other differences among local Retailer adjusts shelf-space allocations to respond to customer and other differences among local
markets markets
Q3What is Cross merchandising? Q3What is Cross merchandising?
Retailers carry complementary goods and services to encourage shoppers to buy more Retailers carry complementary goods and services to encourage shoppers to buy more
Q4 What are the different factors considered while devising a merchandising plan? Q4 What are the different factors considered while devising a merchandising plan?
Forecast Forecast
Allocation Allocation
Timing Timing
Brands Brands
Assortment Assortment
Innovativeness Innovativeness
Q5 What are the different types of merchandising? Q5 What are the different types of merchandising?
Staple merchandise Staple merchandise
Assortment merchandise Assortment merchandise
Fashion merchandise Fashion merchandise
Seasonal merchandise Seasonal merchandise
Fad merchandise Fad merchandise
637
Questions
Questions
Q6 What is Retail Information System ? Q6 What is Retail Information System ?
Anticipates the information needs of retail managers Anticipates the information needs of retail managers
Collects, organizes, and stores relevant data on a continuous basis Collects, organizes, and stores relevant data on a continuous basis
Directs the flow of information to the proper decision makers Directs the flow of information to the proper decision makers
Q7 What does supplier need to know from Retailer and customer? Q7 What does supplier need to know from Retailer and customer?
From the Retailer, Estimates of category sales From the Retailer, Estimates of category sales
Inventory turnover rates, Feedback on competitors Inventory turnover rates, Feedback on competitors
Level of customer returns, From the Customer Level of customer returns, From the Customer
Attitudes toward styles and models Attitudes toward styles and models
Extent of brand loyalty, Willingness to pay a premium for superior quality Extent of brand loyalty, Willingness to pay a premium for superior quality
Q8 what does Retailer need to know from Supplier and Customer Q8 what does Retailer need to know from Supplier and Customer
From the Supplier, Advance notice of new models and model changes From the Supplier, Advance notice of new models and model changes
Training materials, Sales forecasts Training materials, Sales forecasts
Justifications for price changes, From the Customer Justifications for price changes, From the Customer
Why people shop there Why people shop there
What they like and dislike What they like and dislike
Where else people shop Where else people shop
Q9 What does Customer need to know from Supplier and Retailer? Q9 What does Customer need to know from Supplier and Retailer?
From the Supplier From the Supplier
Assembly and operating instructions Assembly and operating instructions
Extent of warranty coverage Extent of warranty coverage
638
Questions
Questions
Q16 What are the different categories of pricing? Q16 What are the different categories of pricing?
Cost Oriented Pricing Cost Oriented Pricing
Demand Oriented pricing Demand Oriented pricing
Competition oriented pricing Competition oriented pricing
Q17 What are the basic pricing strategies adopted by a retailer? Q17 What are the basic pricing strategies adopted by a retailer?
Customary Pricing Customary Pricing
Everyday Low Pricing Everyday Low Pricing
Variable Pricing Variable Pricing
Yield Management Pricing Yield Management Pricing
One-Price Policy One-Price Policy
Flexible Pricing Flexible Pricing
Contingency Pricing Contingency Pricing
Q18 How can people be managed in Retail Q18 How can people be managed in Retail
Mutual trust Mutual trust
Open communications Open communications
Common goals Common goals
Credible commitments Credible commitments
639
Case Study
Case Study
TRENT - Powered by SAP NetWeaver, mySAP ERP TRENT - Powered by SAP NetWeaver, mySAP ERP
Headquartered at Mumbai, Trent Ltd. was already a successful Headquartered at Mumbai, Trent Ltd. was already a successful
department store enterprise when it decided on a bold department store enterprise when it decided on a bold
move to branch out into hypermarket retailing. move to branch out into hypermarket retailing.
Based on the new model, the hypermarket retailing would Based on the new model, the hypermarket retailing would
require the support of a new kind of IT infrastructure. For require the support of a new kind of IT infrastructure. For
this they searched and evaluated several players in the this they searched and evaluated several players in the
market and finally Trent tapped SAP solutions. market and finally Trent tapped SAP solutions.
We evaluated several vendors, and only SAP met all We evaluated several vendors, and only SAP met all
our criteria. Said Mr. K.V.S. Seshasai, Head of IT our criteria. Said Mr. K.V.S. Seshasai, Head of IT
and Corporate Quality, Trent Ltd. Trent is the part of and Corporate Quality, Trent Ltd. Trent is the part of
the Tata Group, one of India's largest and most the Tata Group, one of India's largest and most
respected business conglomerates. Trent already respected business conglomerates. Trent already
had 12 Westside department stores focused on had 12 Westside department stores focused on
fashion retailing that were operating across India. fashion retailing that were operating across India.
However, in October 2004, the company launched its However, in October 2004, the company launched its
first hypermarket discount format store, Star India first hypermarket discount format store, Star India
Bazaar Bazaar
640
Case Study
Case Study
Star India bazaar, being a Greenfield project, Trent had the enviable advantage Star India bazaar, being a Greenfield project, Trent had the enviable advantage
of starting from scratch, with no outdated legacy systems or applications of starting from scratch, with no outdated legacy systems or applications
that had to be upgraded or integrated into the new infrastructure. They that had to be upgraded or integrated into the new infrastructure. They
envisioned creating a state-of-the-art, integrated IT infrastructure that envisioned creating a state-of-the-art, integrated IT infrastructure that
incorporated the latest in best practices. incorporated the latest in best practices.
Why SAP Solutions: Why SAP Solutions:
The flexible state-of-the-art solution incorporates retail best practices. The flexible state-of-the-art solution incorporates retail best practices.
SAP's partner relationship with Tata Consultancy Services (TCS) guaranteed SAP's partner relationship with Tata Consultancy Services (TCS) guaranteed
high levels of support. high levels of support.
The SAP solutions could be localized to meet special country requirements. The SAP solutions could be localized to meet special country requirements.
Trent finally decided to go ahead with a host solutions from SAP including, Trent finally decided to go ahead with a host solutions from SAP including,
mySAP ERP; SAP for Retail solution portfolio; SAP NetWeaver platform, mySAP ERP; SAP for Retail solution portfolio; SAP NetWeaver platform,
including the SAP NetWeaver Business Intelligence and SAP NetWeaver including the SAP NetWeaver Business Intelligence and SAP NetWeaver
Application Server components and the SAP NetWeaver Portal component Application Server components and the SAP NetWeaver Portal component
with knowledge management functionalities. A small, separate, point-of-sale with knowledge management functionalities. A small, separate, point-of-sale
(POS) system between the store and Trent's headquarters office was also to (POS) system between the store and Trent's headquarters office was also to
be implemented be implemented
Key Business Process: Key Business Process:
Trent is already realizing benefits from the infrastructure. There are some Trent is already realizing benefits from the infrastructure. There are some
specific advantages that we are already enjoying. For example, we are specific advantages that we are already enjoying. For example, we are
making good use of SAP NetWeaver BI analytic and data warehouse making good use of SAP NetWeaver BI analytic and data warehouse
functionalities, which provide an invaluable window into the business, said functionalities, which provide an invaluable window into the business, said
Mr. Seshasai Mr. Seshasai
641
Multiple questions
Multiple questions
__________ is concerned with the acquisition, financing, and management __________ is concerned with the acquisition, financing, and management
of assets with some overall goal in mind. of assets with some overall goal in mind.
Financial management Financial management
Profit maximization Profit maximization
Agency theory Agency theory
Social responsibility Social responsibility
Jensen and Meckling showed that __________ can assure themselves that Jensen and Meckling showed that __________ can assure themselves that
the __________ will make optimal decisions only if appropriate the __________ will make optimal decisions only if appropriate
incentives are given and only if the __________ are monitored. incentives are given and only if the __________ are monitored.
principals; agents; agents principals; agents; agents
agents; principals; principals agents; principals; principals
principals; agents; principals principals; agents; principals
agents; principals; agents agents; principals; agents
__________ is concerned with the maximization of a firm's earnings after __________ is concerned with the maximization of a firm's earnings after
taxes. taxes.
Shareholder wealth maximization Shareholder wealth maximization
Profit maximization Profit maximization
Stakeholder maximization Stakeholder maximization
EPS maximization EPS maximization
What is the most appropriate goal of the firm? What is the most appropriate goal of the firm?
Shareholder wealth maximization. Shareholder wealth maximization.
Profit maximization. Profit maximization.
Stakeholder maximization. Stakeholder maximization.
EPS maximization. EPS maximization.
Which of the following statements is correct regarding profit maximization Which of the following statements is correct regarding profit maximization
as the primary goal of the firm? as the primary goal of the firm?
Profit maximization considers the firm's risk level. Profit maximization considers the firm's risk level.
Profit maximization will not lead to increasing short-term profits at the Profit maximization will not lead to increasing short-term profits at the
expense of lowering expected future profits. expense of lowering expected future profits.
Profit maximization does consider the impact on individual shareholder's Profit maximization does consider the impact on individual shareholder's
EPS. EPS.
Profit maximization is concerned more with maximizing net income than Profit maximization is concerned more with maximizing net income than
the stock price. the stock price.
__________ is concerned with the branch of economics relating the __________ is concerned with the branch of economics relating the
behavior of principals and their agents. behavior of principals and their agents.
Financial management Financial management
Profit maximization Profit maximization
Agency theory Agency theory
Social responsibility Social responsibility
A concept that implies that the firm should consider issues such as A concept that implies that the firm should consider issues such as
protecting the consumer, paying fair wages, maintaining fair hiring protecting the consumer, paying fair wages, maintaining fair hiring
practices, supporting education, and considering environmental practices, supporting education, and considering environmental
issues. issues.
Financial management Financial management
Profit maximization Profit maximization
Agency theory Agency theory
Social responsibility Social responsibility
Which of the following is not normally a responsibility of the treasurer of Which of the following is not normally a responsibility of the treasurer of
the modern corporation but rather the controller? the modern corporation but rather the controller?
Budgets and forecasts Budgets and forecasts
Asset management Asset management
Investment management Investment management
Financing management Financing management
642
Multiple questions
Multiple questions
The __________ decision involves determining the appropriate make-up of The __________ decision involves determining the appropriate make-up of
the right-hand side of the balance sheet. the right-hand side of the balance sheet.
asset management asset management
financing financing
investment investment
capital budgeting capital budgeting
To whom does the Treasurer most likely report? To whom does the Treasurer most likely report?
Chief Financial Officer. Chief Financial Officer.
Vice President of Operations. Vice President of Operations.
Chief Executive Officer. Chief Executive Officer.
Board of Directors. Board of Directors.
The authors of your textbook suggest that you need to understand The authors of your textbook suggest that you need to understand
financial management even if you have no intention of becoming a financial management even if you have no intention of becoming a
financial manager. One reason is that the successful manager of financial manager. One reason is that the successful manager of
the not-too-distant future will need to be much more of a __________ the not-too-distant future will need to be much more of a __________
who has the knowledge and ability to move not just vertically who has the knowledge and ability to move not just vertically
within an organization but horizontally as well. Developing within an organization but horizontally as well. Developing
__________ will be the rule, not the exception. __________ will be the rule, not the exception.
specialist; specialties specialist; specialties
generalist; general business skills generalist; general business skills
technician; quantitative skills technician; quantitative skills
team player; cross-functional capabilities team player; cross-functional capabilities
The __________ decision involves a determination of the total amount of The __________ decision involves a determination of the total amount of
assets needed, the composition of the assets, and whether any assets needed, the composition of the assets, and whether any
assets need to be reduced, eliminated, or replaced. assets need to be reduced, eliminated, or replaced.
asset management asset management
financing financing
investment investment
accounting accounting
How are earnings per share calculated? How are earnings per share calculated?
Use the income statement to determine earnings after taxes (net Use the income statement to determine earnings after taxes (net
income) and divide by the previous period's earnings after taxes. income) and divide by the previous period's earnings after taxes.
Then subtract 1 from the previously calculated value. Then subtract 1 from the previously calculated value.
Use the income statement to determine earnings after taxes (net Use the income statement to determine earnings after taxes (net
income) and divide by the number of common shares outstanding. income) and divide by the number of common shares outstanding.
Use the income statement to determine earnings after taxes (net Use the income statement to determine earnings after taxes (net
income) and divide by the number of common and preferred shares income) and divide by the number of common and preferred shares
outstanding. outstanding.
Use the income statement to determine earnings after taxes (net Use the income statement to determine earnings after taxes (net
income) and divide by the forecasted period's earnings after taxes. income) and divide by the forecasted period's earnings after taxes.
Then subtract 1 from the previously calculated value. Then subtract 1 from the previously calculated value.
According to the text's authors, what is the most important of the three According to the text's authors, what is the most important of the three
financial management decisions? financial management decisions?
Asset management decision. Asset management decision.
Financing decision. Financing decision.
Investment decision. Investment decision.
Accounting decision. Accounting decision.
The __________ decision involves efficiently managing the assets on the The __________ decision involves efficiently managing the assets on the
balance sheet on a day-to-day basis, especially current assets. balance sheet on a day-to-day basis, especially current assets.
asset management asset management
financing financing
investment investment
accounting accounting
Which of the following is not a perquisite (perk)? Which of the following is not a perquisite (perk)?
Company-provided automobile. Company-provided automobile.
Expensive office. Expensive office.
Salary. Salary.
Country club membership. Country club membership.
643
Multiple questions
Multiple questions
Which of the following is not a perquisite (perk)? Which of the following is not a perquisite (perk)?
Company-provided automobile. Company-provided automobile.
Expensive office. Expensive office.
Salary. Salary.
Country club membership. Country club membership.
Which of the following is not normally a responsibility of the controller of Which of the following is not normally a responsibility of the controller of
the modern corporation? the modern corporation?
Budgets and forecasts. Budgets and forecasts.
Asset management. Asset management.
Financial reporting to the IRS. Financial reporting to the IRS.
Cost accounting. Cost accounting.
All constituencies with a stake in the fortunes of the company are known All constituencies with a stake in the fortunes of the company are known
as __________. as __________.
shareholders shareholders
stakeholders stakeholders
creditors creditors
customers customers
Which of the following statements is not correct regarding earnings per Which of the following statements is not correct regarding earnings per
share (EPS) maximization as the primary goal of the firm? share (EPS) maximization as the primary goal of the firm?
EPS maximization ignores the firm's risk level. EPS maximization ignores the firm's risk level.
EPS maximization does not specify the timing or duration of expected EPS maximization does not specify the timing or duration of expected
EPS. EPS.
EPS maximization naturally requires all earnings to be retained. EPS maximization naturally requires all earnings to be retained.
EPS maximization is concerned with maximizing net income. EPS maximization is concerned with maximizing net income.
__________ is concerned with the maximization of a firm's stock price. __________ is concerned with the maximization of a firm's stock price.
Shareholder wealth maximization Shareholder wealth maximization
Profit maximization Profit maximization
Stakeholder welfare maximization Stakeholder welfare maximization
EPS maximization EPS maximization
Answers
Answers
1a, 2a, 3b, 4c, 5d, 6c, 7a 8d , 1a, 2a, 3b, 4c, 5d, 6c, 7a 8d ,
9a,10d, 9a,10d,
11a, 12d, 13a, 14c, 15a, 16b, 11a, 12d, 13a, 14c, 15a, 16b,
17b, 18a, 19c, 20d. 17b, 18a, 19c, 20d.