Mar 3231 exam 4

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95 Terms

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discount orientation

low prices as a competitive orientation

ex: Walmart, TJ Maxx, Dollar general

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Examples of discount orientation

TJ Maxx, Dollar General, Walmart

Amazon is a threat to discounters

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e-commerce penetration

discount and variety stores have a relatively low level of _____________ ___________________

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at-the-market orientation

average prices

usually only have one other competitor

ex: Lowe's & Home Depot, Dicks & Academy, Petco & Petsmart

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upscale orientation

-Higher(est) prices

EX: Gucci; Rolex; Louis Vuitton; Givenchy; Burberry; Fendi; ..........

What are you "actually" buying?

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transparency pricing

a pricing strategy that involves making consumers aware of the cost breakdown of products

ex: Oliver Lane (shows breakdown of everything), Everlane

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-consumers -Government -Manufacturers -Wholesalers -Suppliers -current and potential competitors

Factors affecting retail price strategy

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consumers

(Factors affecting retail price strategy)

Misfits section showed that consumers were interested in buying imperfect veggies at lower prices

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Governments

(Factors affecting retail price strategy)

Min wage would impact retailer pricing strategy

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Manufacturers, wholesales, retailers

Ingredient prices increased and Toblerone decided to change their design to smaller to keep their same price

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Current and potential consumers

Fitbit took a stock hit when Apple watches included fitbit options and more

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price elasticity of demand

the sensitivity of customers to price changes in terms of the quantities they will buy

higher the number the more elastic it is

marketers job is to move from elastic to inelastic

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elastic

small percentage changes in price lead to substantial percentage changes in the number of units bought

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inelastic

large percentage changes in price lead to small percentage changes in the number of units bought

no matter what is charged you buy the same amount

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-number of substitutes -cost of switching -degree of necessity -proportion of income -peak and off-peak demand

Factors affecting elasticity

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  1. Economic consumers

  2. Status oriented consumers

  3. Assortment-oriented consumers

  4. Personalizing consumers

  5. Convenience-oriented consumers

Market segments by price sensitivity

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economic consumers

wants affordable option

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status-oriented consumers

status oriented

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assortment-oriented consumers

want a wide variety when choosing, will pay more when they can see more options

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personalizing consumers

like personalized experiences and products

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convenience-oriented consumers

look for the easiest option

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price skimming

strategy focuses on maximizing profits by charging a high price for early adopters

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aspects of price skimming

-insight into what consumers are willing to pay

-it can create an aura of prestige around a product

-late adopters might be pleased to get the older version of your prestigious product at bargain price

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penetration pricing

occurs when a company launches a low-priced product with the goal of securing market share

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aspects of penetration pricing

faster growth broad market potential combat competitors

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dynamic pricing

the practice of pricing items at a level determined by a particular customer's perceived ability/willingness to pay

aka "surge" pricing

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merchandising

the act of acquiring goods and making them available at the places, times, prices, and quantities that enable retailer to reach its goals

focuses on the "product" aspect of the marketing mix

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goal of merchandising

maximize sales & minimizing markdowns

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merchandising philosophy

sets the guiding principles for all merchandise decisions made by the retailer

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merchandising examples for target markets

  1. Urban Outfitters- 18-28 lifestyle brand

  2. Free people- 25-30 contemporary women, boho

  3. Anthropologie- 28-45 for women with a little more money in her pocket

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Petco & Petsmart example merchandising

  1. Petco- leaning towards healthy products so they are known as the health brand

  2. Petsmart- bought Chewy online, has strong grooming

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scope of merchandising- buying

involves selecting and purchasing goods sold by the retailer

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-assortment -advertising -point-of-sale displays -employee utilization -personal selling approaches

All merchandising functions

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micromerchandising

retailers adjust shelf-space allocations to respond to customer differences and other differences among local markets

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what decisions go into the process of effective micromerchandising?

-demographic of the area -location specific preferences -whats around it (FSU, UF)

  • preferences (women prefer meaningful organization of items) -new popular segment (women have 25% beer consumption, build your own 6 packs, wine-fied beers.)

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cross -merchandising

Retailers carry complementary goods and services to encourage shoppers to buy more

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What decisions go into the process of effective cross-merchandising?

-know what your customers is purchasing -too many firms focus on the product and not the benefit

ex: Bandaids next to bike stand & Grahman crackers next to marshmallows

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merchandising planning

the process retailers use to offer the right kind of product at the right place, and at the right price

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-innovativeness -assortment -forecasts -brands -allocation timing

Devising merchandise plans

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forecasts

projection of expected retail sales for given periods

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Forecasts components

-Overall company projections

-Product category projections

-Item-by-item projection

-Store-by-store projections (if a chain)

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Examples of forecasting companies

-WGSN -Arth-bomber

-Pantone- color of the year, every year

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timing can relate to:

-seasonality -special events -new product releases

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Advantages of private labels vs. national brands

-store loyalty

-differentiation strategy

-increased channel power over suppliers

-higher profit margins on private labels

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store loyalty

(Advantages of private labels vs. national brands )

10% increase in private label purchases, increases that retailers market share of that household by 3% points

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differentiation strategy

(Advantages of private labels vs. national brands)

opportunity to differentiate store on the basis of recipe, styling, value, features

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Increased channel power over suppliers

(Advantages of private labels vs. national brands)

depends on strength of private label vs. national brand

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Higher profit margins on private labels

(Advantages of private labels vs. national brands)

25-30% higher

(but no return privileges, co-op promotions, slotting fees, warehousing)

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  1. Gathering information

  2. Selecting interacting with merchandise sources

  3. Evaluation

  4. Negotiation

  5. Concluding purchases

  6. Receiving and stocking merchandise

  7. Reordering

  8. Re-evaluation

Implementing merchandise plans

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Gathering Information

(Step 1- Implementing merchandise plans)

A retailer gathers information about merchandise decisions from a variety of sources

Consumer Suppliers Manufacturers Wholesalers

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  1. Use a simple point system

  2. Use a tier system to reward loyalty

  3. Charge an upfront fee for VIP benefits

  4. Use a non-monetary programs around customer values

  5. Partner to provide all-inclusive offers

Retailers can most effectively track consumer preferences through consumer loyalty programs

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-company owned -outside, regularly used supplier -outside, new supplier

Selecting merchandise sources

(Step 2- Implementing merchandise plans)

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inspection

occurs on every single unit delivered

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sampling

used with regular purchases of large quantities of breakables, perishables, or expensive items

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description

items are not sampled or inspected

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retail image

the way a firm is perceived by its customers

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Aspects affecting retail image

-attributes of physical facilities -shopping experiences -community service -promotion tools

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-name -line of trade -claim to fame -price position -personality

In seconds a shopper should be able to determine a stores.....

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atmosphere

includes the physical characteristics of a retail store used to help create the retail image

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Store Retailer Atmosphere

the physical characteristics that project an image and draw customers

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non-store retailer atmosphere

it takes an online visitor less 2/10th of second to form an opinion of brand once they access the company's website

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retail employees

(store atmospherics)

compared to friendly salespeople, rude salespeople cause customer with low self-esteem to spend more

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other customers

(store atmospherics)

customers with negative self-image are less likely to purchase if they see someone more attractive trying on the same item

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side note

(store atmospherics)

when thinking about past experiences, we focus most heavily on the peaks (intensive positive or negative_ and the end. This applies to retail experiences, vacations and past romantic relationships

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Storefront Store entrances Display windows Exterior building height Surrounding stores and area Parking facilities

Exterior planning

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Flooring Colors Lighting Scents Crowds

General interior

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task shoppers

high need for control. These shoppers view customer density as crowding

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social shoppers

higher need for intimacy. These shoppers perceive customer density as positive

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straight traffic pattern disadvantages

-Impersonal atmosphere -More limited browsing by customers -Rushed shopping behavior

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straight traffic pattern advantages

-Efficient atmosphere is created -More floor space is devoted to product displays -People can shop quickly -Inventory control and security are simplified -Self-service is easy, thereby

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Curving (Free-Flowing) Traffic Pattern advantages

-A friendly atmosphere -Shoppers do not feel rushed -People are encouraged to walk through in any direction -Impulse or unplanned purchases increases

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Curving (free flowing) traffic pattern disavantages

-Possible customer confusion -Wasted floor space -Difficulties in inventory control -Higher labor intensity -Potential loitering -Displays may cost more

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Advertising Public relations Publicity Personal selling

Elements of the promotional mix

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advertising

paid, nonpersonal communication transmitted through out-of-store mass media by an identified sponsor

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key aspects of advertising

Paid form Non-personal presentation Out-of-store mass media Identified sponsor

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Goals of Advertising

  1. Inform customers about goods and services and/or company attributes

  2. Develop demand for private brands

  3. Develop and/or reinforce a retail image

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retail advertising

advertising for a retail business

Ex. Sephora making ads with urban decay brand -Have more concentrated target markets -Cannot utilize national media as readily as manufacturers

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manufacturing advertising

advertising aimed at increasing awareness of a brand More concerned with developing favorable attitudes

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Advertising advantages

  1. Attracts a large audience

  2. Low cost per contact

  3. Many alternatives available

  4. Control over message content

  5. Message can be standard

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Advertising Disadvantages

  1. Standardized messages lack flexibility

  2. Some media require large investments

  3. Geographic flexibility limited

  4. Some media have high throwaway rate

  5. Some media limit the ability to provide detailed information

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  1. Pioneering advertising

  2. Competitive advertising

Types of Advertising Content

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pioneer advertising

advertising that tries to stimulate demand for a product category rather than a specific brand by informing potential buyers about the product

has awareness as a goal

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pioneer advertising examples

Used for new products or customer education

Used for a product category instead of a specific brand

Rare in retail, if retailers advertise they want to drive sales to the store

Ex: new dental procedure available

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competitive advertising

Focuses on stimulating demand for a specific brand/retailers

Most of advertising

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public relations

Communication that fosters a favorable image for the retailers

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Key aspects of PR

Non Personal or personal

Paid or unpaid

Sponsor-controlled or not

Essentially reputation management

Lots of ambiguity

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PR objectives for retailers

Increase awareness of the retailer and its strategy mix

Maintain or improve the company image

Present a favorable message in a highly believable manner

Minimize total promotion costs

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PR advantages

Image can be presented or enhanced

More credible source

No costs for message's time or space

Mass audience addressed

Carryover effects possible

People pay more attention than clearly identified ads

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PR disadvantages

Some retailers do not believe in spending on image-related communication

More suitable for short run

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publicity

non personal form of communication whereby messages are transmitted by mass media

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Key Aspects of Publicity

The time or space provided by the media is not paid for

there is no identified commercial sponsor

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Why don't firms dedicate their entire promotional efforts to publicity?

no control over the message, timing, placement, etc.

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personal selling

oral communication with one or more prospective customers for the purpose of making a sale

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Advantages of Personal Selling

-Provides detailed explanation/demonstration of product

-Message can be varied according to motivations of each customer

-Can be directed only to qualified prospects

-Can purchase personal selling in small increments

-Most effective promotion form in obtaining sale and satisfying customer

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Disadvantages of Personal Selling

-Message inconsistency

-Conflict between sales force and management

-High cost

-Poor reach

-Ethical concerns