What are two types of nontraditional retailing
Video kiosks and airport retailing
What is single-channel retailing?
Single-channel retailing occurs when a retailer sells to consumers through one retail format. That format may be store- or nonstore-based
What is Multi-channel retailing?
Multi-channel retaining occurs when a retailer sells to consumers through multiple retail formats. It enables a firm to reach different customer groups, share costs among various formats, and diversify its supplier base
When do retailers engage in non-store retailing?
Retailers engage in non-store retailing when they use strategy mixes that are not store-based to reach consumers and complete transactions
What is the fastest-growing form of direct marketing?
The fastest-growing form of direct marketing involves electronic (Web-based) retailing
What is direct marketing in regards to retailing?
Direct marketing is a form of retailing in which a customer is first exposed to a good or service through a non-personal medium and then orders by mail, phone, or fax—and increasingly by computer
What are the two main categories direct marketing is divided into?
General and Specialty
What is general direct marketing?
General direct marketing firms (e.g., J.C. Penney and QVC) offer a full line of products
What is specialty direct marketing?
Specialty firms (e.g., L.L. Bean, Publishers Clearinghouse, and Franklin Mint) focus on more narrow product lines.
What is the 30-day rule?
The 30-day rule is a U.S. regulation that affects marketers, requires firms to ship orders within 30 days of their receipt or notify customers of delays
What is another definition of direct marketing?
Direct marketing is an interactive system of retailing that uses one or more advertising media to effect a measurable response and/or transaction at any location, with this activity stored on a data base.
What are forms of direct marketing?
any catalog; any mail, TV, radio, magazine, newspaper, phone directory, fax, or other ad; any computer-based transaction; or any other non-personal contact.
What are not considered forms of direct marketing?
direct selling or conventional vending machines.
Since direct marketers initiate contact with customers, what must they do?
it is imperative that they develop and maintain a comprehensive customer data base.
What is data-based retailing?
Data-base retailing is a way to collect, store, and use relevant information about customers
What do companies do to reduce advertising costs?
To help defray costs, some companies accept ads from noncompeting firms that are compatible with their own images
What do shopping networks do?
On a shopping network, the programming focuses on merchandise presentations and their sales
How do direct retails keep in touch with customers?
Direct selling includes both personal contact with consumers in their homes (and other nonstore locations) and phone solicitations initiated by a retailer
What does Avon do in correlation with direct selling and marketing?
Avon places greater emphasis on workplace sales, offers free training to sales personnel, rewards the best workers with better territories, pursues more global sales, and places cosmetic kiosks in shopping centers.
What does Mary Kay do in correlation with direct selling and marketing?
Mary Kay hires community residents as salespeople and has a party atmosphere rather than a strict door-to-door approach
What percentage of sales is all Web-based?
The Web accounts for only 3 to 4 percent of U.S. retail sales. It will be another choice for shoppers, like other forms of direct marketing
What advantages does Web-based retailing have?
It is less costly to have a Web site than a store.
The marketplace is huge and dispersed, yet easy to reach
The sites have multimedia capabilities.
People can visit Web sites at any time
A good location may let a retailer succeed even if its strategy mix is mediocre
A good location can still make it difficult for even the best retailer to overcome it
A poor location can make it difficult for even the best retailer to overcome it
What can be said about a good location of a store?
It is the least flexible element of a strategy. Once a location is utilized, it is usually hard to break a lease, convert facilities, find an acceptable buyer, or easily move to a new site
What could result from moving the location of a store?
Lost customers and employees
Dissimilar traits of the store or location
Lost costs in investments and renovation at the old site
What are the four steps retailers should preform when choosing the location of a store?
1. Evaluate alternate geographic (trading) areas in terms of the characteristics of residents and existing retailers.
2. Determine whether to locate as an isolated store, in an unplanned business district, or in a planned shopping center within the geographic area.
3. Select the general isolated store, unplanned business district, or planned shopping center location.
4. Analyze alternate sites contained in the specified retail location type
What is a trading area?
A trading area is a geographic area containing the customers of a particular firm or group of firms for specific goods and services.
What benefits are there in the analization of trading areas?
A retailer learns whether the location of a proposed branch store will service new customers or take away business from its existing stores in a chain or franchise
How do you compute overall net sale increase?
the total revised sales of the existing store + total sales of the new store – total previous sales of the existing store.
What is does GIS stand for?
Geographic Information Systems in Trading-Area Delineation and Analysis
What does GIS do?
Geographic information system (GIS) software combines digitized mapping with key locational data to graphically depict trading-area characteristics such as population demographics; data on customer purchases; and listings of current, proposed, and competitor locations
What are the 3 parts of a trading area?
primary (50 to 80 percent of customers), secondary (15 to 25 percent of customers), and fringe (all remaining customers)
Where is the primary trading area of a store?
The primary trading area is the area closest to the store and possesses the highest density of customers
Where is the secondary trading area of a store?
The secondary trading area is located outside the primary area, and customers are more widely dispersed
Where is the fringe trading area of a store?
The fringe area has the most dispersed customers.
What are trading area size and shape influenced by?
store type, store size, the location of competitors, housing patterns, travel time and traffic barriers (e.g., toll bridges), and media availability.
When is a trading area considered large?
Trading area size is large when a retailer offers a better assortment, promotes more, and/or creates a strong image.
A store with a large trading area is known as what?
A destination store
What is a parasite store?
A parasite store (e.g., a magazine stand in a hotel lobby) does not create its own traffic and has no real trading area of its own. It relies on customers who are drawn into the area for other reasons.
How should prospective trading areas be evaluated?
Prospective trading areas for a new store must normally be evaluated in terms of opportunities rather than current patronage and traffic patterns
What does trend analysis rely on?
Trend analysis (projecting the future based on the past) relies on government and other data concerning predictions for population, automobiles, housing, mass transit, highways, zoning, etc
What are the benefits of consumer surveys?
Consumer surveys can measure the time and distance people are willing to travel to retail locations, the features desired of a retail location, the addresses of those most apt to visit a new store, etc
What are the three types of computerized trading-analysis models?
Analog model, regression model, and a gravity model
What is an analog model?
An analog model is the simplest one. Potential sales are estimated on the basis of existing store revenues in similar areas, the competition at a prospective location, the new store’s expected market share at that location, and the size and density of the location’s primary trading area.
What is a regression model?
A regression model uses a series of mathematical equations showing the association between potential sales and independent variables at each location under consideration
What is a gravity model?
A gravity model is based on the premise that people are drawn to stores that are closer and more attractive than competitors’ stores
What is Reilly’s law of retail gravitation?
Reilly’s law of retail gravitation is the traditional means of trading-area delineation
What does the Reilly’s law do?
This law establishes a geographic point of indifference between two cities or communities, so the trading area of each can be determined
What is the point of indifference?
The point of indifference is the geographic breaking point between two cities (communities), based on distance and population
What is Huff’s Law of Shopper Attraction?
it delineates trading areas on the basis of the product assortment (of items desired) carried at various shopping locations, travel times from the shopper’s home to alternative locations, and the sensitivity of the kind of shopping to travel time (which entails the trip’s purpose and the type of good/service sought)
True/False Huffs Law:
Huff’s law considers the overall trading area for Location 1, the same type of computations would be made for consumers living 10, 15, 20 minutes and so on away.
True/False Huffs Law:
If new retail facilities in a product category are added to a locale, the percentage of people living at every travel time from that location would decrease
False; the percentage would increase.
True/False Huffs Law:
The probability of people shopping at a location depends on the effect of travel time for the product category.
True/False Huffs Law:
All the variables are very easy to calculate
False; It is very hard to calculate
True/ False Huffs Law:
Even though consumers buy different items on different shopping trips, the trading area remains the same by each trip
False; Since consumers buy different items on different shopping trips, the trading area varies by trip
What do economic based characteristics reflect?
a community’s commercial and industrial infrastructure and residents’ sources of income
Does A diverse economic base (a large number of nonrelated industries) provide the most stability for retailers
What is a narrow economic base most affected by?
What does the Nature of Competition and the Level of Saturation say about assessing an area?
The retailing opportunity of an area cannot be properly assessed until competition is studied.
In which ways can a trading area’s saturation be designated?
Understored, Overstored, and Saturated
What is Understored?
too few stores selling a specific good or service category to satisfy the needs of its population
What is Overstored?
too many stores for each retailer to earn an adequate profit
What is Saturated?
just enough facilities to satisfy customers and to enable retailers to prosper
What is an Isolated Store?
This is a freestanding retail outlet located on either a highway or a street. There are no adjacent retailers with which this type of store shares traffic
What are the top four advantages of an isolated store?
No competition, Low rental costs, Flexibility of Operations, and Possibility of one-stop shopping
What are the top four disadvatages of an isolated store?
Difficult to attract initial customers, Consumers unwilling to travel to one store, No variety of shopping, High advertised costs
What is an unplanned business district?
This is a type of retail location where two or more stores situate together (or in close proximity) in such a way that the mix of stores is not due to prior long-range planning
What are the four kinds of unplanned business districts?
A central business districts, A secondary business district, and a neighborhood business district
What is a central business district (CBD)?
it is the hub of retailing in a city, and is also known as downtown
What is a secondary business district (SBD)?
it is an unplanned shopping area in a city or town that is usually bounded by the intersection of two major streets
What is a neighborhood business district? (NBD)
it is an unplanned shopping area that appeals to the convenience shopping and service needs of a single residential area
What is a string?
is an unplanned shopping area comprising a group of retail stores, often with similar or compatible product lines, located along a street or highway (ex susquehanna shoppes)
What type of business assemble in a string?
Car dealers, antique stores, and apparel retailers
What is balanced tendency?
the stores in a planned shopping center complement each other as to the quality and variety of their product offerings, and the kind and number of stores are linked to overall population needs. Balance is maintained through strict requirements by center management
What are the top 3 advantages of a planned center?
well-rounded assortment, strong suburban population, and one-stop shopping
What are the top 3 disadvantages of a planned center?
Reduced retailer flexibility, rent high than an isolated store, and goods/services restrictions
There are three types of planned shopping centers?
regional shopping center, community shopping center, and neighborhood shopping center
What is a regional shopping center?
center is a large, planned shopping facility appealing to a geographically dispersed market
What is a community shopping center?
a moderate-sized, planned shopping facility with a branch department store and/or a category killer store, as well as several smaller stores (similar to those in a neighborhood center).
What is a neighborhod shopping center?
is a planned shopping facility with the largest store being a supermarket or a drugstore
What is the location and site evaluation?
The assessment of general locations and the specific sites contained within them requires extensive analysis
What is the one-hundred percent location?
the optimum site for a particular store in any location; the location differs by kinds of store
What does store composition include?
the number and size of stores
What is Affinity?
a store’s attraction to an area because of its ability to complement, blend in with, and cooperate with the other stores in the area.
If affinity is strong,will the sales of each store be
greater than if the if the stores are apart?
What is retail balance?
the mix of stores within a district or shopping center
When does a retail balance occur?
when stores satisfy market needs, there is one-stop shopping, there is an adequate assortment within any category, and there is a proper mix of store types.
What are the different types of leases?
Straight lease, Percentage lease, Graduated lease, and Net lease
What is a straight lease?
This is the simplest arrangement, whereby a retailer pays a fixed dollar amount per month over the life of the lease.
What is a percentage lease?
This stipulates that rent is related to sales or profits. This format can specify minimum or maximum rent or set a sliding scale based on the amount of sales.
What is a graduated lease?
This calls for precise rent increases over a stated period of time
What is a net lease?
This calls for all maintenance costs to be paid by the retailer.
What jobs are retail tasks grouped into?
sales personnel, cashier(s), inventory personnel, display personnel, credit personnel, customer service personnel, janitorial personnel, and management personnel.
What are job descriptions?
they outline the job titles, objectives, duties, and responsibilities for every position. They are used in hiring, supervision, and evaluation
What are the four classifications jobs are broadly categorized in?
1. Functional (e.g., sales promotion).
2. Product (e.g., clothing department).
3. Geographic (e.g., branch store).
4. Combination (e.g., sales promotion manager for clothing in branch stores).
What is the hierarchy of authority?
The hierarchy of authority outlines the job interactions within a company by describing the reporting relationships among employees. It provides coordination and control.
What is a flat organization?
has many workers reporting to one manager. It enhances communication, results in quicker handling of problems, and allows for better employee identification with the job. The major problem is too many employees reporting to one manager
What is a tall organization?
has several management levels. It leads to close supervision and fewer employees reporting to each manager. The problems are long communication channels, impersonal impressions to employees, and inflexible rules
What four functional areas of retail activities does the Mazur plan divide into?
c. Store management
d. Accounting and control
True/False The mazur plan derivatives
The merchandising division is responsible for buying and selling
What is the main store control?
Headquarters executives oversee and operate branches
Does each store have its own buying responsibilities?
What attributes does the variety chain generally have?
1. Many functional divisions.
2. Centralized authority, with store managers responsible for sales.
3. Standardized operations.
4. Elaborate control systems.
What is a diversified retailer?
a multi-line firm operating under central ownership
What is HR management?
involves recruiting, selecting, training, compensating, and supervising personnel in a manner consistent with the retailer’s organization structure and strategy mix.
What 2 Premises does diversity involve?
Employees should be hired and promoted in a fair and open way.
The workplace should be representative of the diverse society.
What type of compensations are used?
Direct monetary payments (based salary)
Indirect payments (paid vacation)
What happens under a straight salary plan?
a worker is paid a fixed amount per hour, week, month, or year.
What are the advantages for a straight salary plan?
retailer control, employee security, and known expenses
What are the disadvantages for a straight salary plan?
retailer inflexibility, limited employee incentive, and fixed costs
What is a straight commission plan?
earnings are directly tied to product. and the lack of limits on worker earnings.
What are the advantages of a straight commission plan?
retailer flexibility, the link to productivity, no fixed costs, and employee incentive
What are the disadvantages of a straight commission plan?
retailer’s potential lack of control over the tasks performed, employee risk of low earnings, cost variability, and the lack of limits on worker earnings
What is a salary plus commission plan?
it combines the attributes of salary and commission plans
True/False Management Styles
One style of management assumes employees must be closely supervised and controlled and that only economic inducements really motivate
True/False Management Style
Management assumes employees can be self-managers and assigned authority, motivation is social and psychological, and supervision can be decentralized and participatory
True/False Management Style
Management applies a self-management approach and also advocates more employee involvement in defining jobs and sharing overall decision making. Mutual loyalty and enthusiasm from both parties benefit the company in the long run.
What is associated with a merchandise-oriented philosophy?
The buyer’s expertise is used in selling
What is micro-merchandising?
a retailer adjusts shelf-space allocations to respond to customer and other differences among local markets
What is cross-merchandising?
a retailer carries complementary goods and services to encourage shoppers to buy more. Like scrambled merchandising, it can be ineffective if taken too far. Yet, it has tremendous potential.
Where do centralized buying decisions come from ?
all purchase decisions emanate from one office
Where do De-centralized buying decisions come from?
purchase decisions are made locally or regionally.
What is centralized buying?
an integrated effort, strict controls, a consistent image, proximity to top management, staff support, and volume discounts. It can result in inflexibility, time delays, poor morale at local stores, and excessive uniformity
What is De-centralized buying?
adaptable, fast, and good for employee morale. It can be disjointed, inconsistent, uncontrollable, unsupported by staff personnel, and more expensive
What are personnel resources used for?
An inside buying organization is staffed by a retailer’s personnel, and merchandise decisions are made by permanent employees
How are resource personnel’s compensated?
who is a resource personnel hired by?
by a outside buying organization
What are resident buying offices?
offices that are situated in important merchandise centers so buyers can keep in close touch with key market trends
What is cooperative buying?
a group of retailers gets together to make quantity purchases from suppliers and obtain volume discounts. It is most popular among food, hardware, and drugstore retailers
What are forecasts?
Forecasts are projections of expected retail sales for given periods.
What 4 components does forecasts include?
a. Overall company projections.
b. Product category projections.
c. Item-by-item projections.
d. Store-by-store projections (if a chain)
What is a vertical fashion trend?
occurs when a fashion is first accepted by upscale consumers and undergoes changes in its basic form before it is sold to the general public. It goes from distinctive to emulation to economic emulation.
What is a horizontal fashion trend?
a new fashion is accepted by a broad spectrum of people upon its introduction while retaining its basic form. It depends on innovative customers within any social class who act as opinion leaders and convince other members of the same class to buy an item
What is assortment?
An assortment is the selection of merchandise a retailer carries. It includes both the breadth of product categories and the variety within each category
What is the width of assortment?
refers to the number of distinct goods/service categories (product lines) a retailer carries
What is the depth of assortment?
refers to the variety in any one goods/service category a retailer carries
What kind of assortment does a box store have?
What kind of assortment does a department store have?
What are manufacturer brands?
are usually well known, well advertised, and pre-sold. They require limited retailer investment in marketing and often represent maximum quality.
What are private brands?
also known as store brands, are more profitable to retailers, are better controlled by retailers, are not sold by competing retailers, are less expensive, and lead to customer loyalty
True/False private brands
In a private brand, retailers are not responsible for the line up suppliers, arrange for distribution and warehousing, sponsor ads, create displays, and absorb losses from unsold items
false; Retailers must line up suppliers, arrange for distribution and warehousing, sponsor ads, create displays, and absorb losses from unsold items
What are generic brands?
are no-frills goods stocked by some retailers
What percentage of brands are manufacturer brands?
what is the percentage of generic brands?
They account for less than one percent of supermarket sales but 60 percent of sales in the prescription drug industry
When does the battle of the brands exist?
when manufacturer, private, and generic brands fight each other for more space and control
What is category management?
a way to manage a retail business that focuses on the performance of product category results rather than individual brands
What is sampling evaluation of merchandise?
used with regular purchases of large quantities of breakable, perishable, or expensive items. Items are sampled for quality and condition.
What is description buying and when is it used?
used with standardized, nonbreakable, and nonperishable merchandise. Items are not inspected or sampled; they are ordered in quantity based on a verbal, written, or pictorial description.
what is a consignment purchase?
a retailer has no risk because title is not taken; the supplier owns the goods until sold
What is a memorandum purchase?
risk is also low, but a retailer takes title on delivery and is responsible for damages
In both consignment and memorandum purchases do retailers pay for items if they are not sold ?
In reordering merchandise what four factors are critical in devising a plan?
a. Order and delivery time.
b. Inventory turnover.
c. Financial outlays.
d. Inventory versus ordering costs.
When is reordering merchandise necessary?
A procedure is necessary for the items a retailer purchases more than once
What is the RFID (radio frequency identification) method?
It is a method of remotely storing and retrieving data using RFID tags or transponders. At present, its use is quite limited
What is logistics?
Logistics is the total process of planning, implementing, and coordinating the physical movement of merchandise from manufacturer (wholesaler) to retailer to customer in the most timely, effective, and cost-efficient manner possible.
What ordering process do many retailers use?
Many retailers are using quick response (QR) inventory planning, which allows retailers to reduce the amount of inventory they hold by ordering more frequently and in lower quantity
What is floor-ready merchandise?
refers to items that are received at the store in condition to be put directly on display without any preparation by retail workers.
What firms use QR?
Dillard’s, Giant Food, Home Depot, Limited Brands, Macy’s, J.C. Penney, Sears, Target Corporation, and Wal-Mart
A QR system works best in conjunction with what?
Floor-ready merchandise, lower minimum order sizes, properly formatted store fixtures, and electronic data interchange (EDI).
What is EDI?
lets retailers do QR inventory planning efficiently—via a paperless, computer-to-computer relationship between retailers and their vendors. An example is provided in the text for Wal-Mart
What is reverse logistics?
encompasses all merchandise flows from the customer and/or retailer back through the supply channel. It typically involves items returned because of shopper second thoughts, damages, defects, or retailer overstocking.
How much is lost in returns in retail?
returned products cost U.S. firms about $50 billion annually for handling, transportation, and processing costs