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discount orientation
low prices as a competitive orientation
ex: Walmart, TJ Maxx, Dollar general
Examples of discount orientation
TJ Maxx, Dollar General, Walmart
Amazon is a threat to discounters
e-commerce penetration
discount and variety stores have a relatively low level of _____________ ___________________
at-the-market orientation
average prices
usually only have one other competitor
ex: Lowe's & Home Depot, Dicks & Academy, Petco & Petsmart
upscale orientation
-Higher(est) prices
EX: Gucci; Rolex; Louis Vuitton; Givenchy; Burberry; Fendi; ..........
What are you "actually" buying?
transparency pricing
a pricing strategy that involves making consumers aware of the cost breakdown of products
ex: Oliver Lane (shows breakdown of everything), Everlane
-consumers -Government -Manufacturers -Wholesalers -Suppliers -current and potential competitors
Factors affecting retail price strategy
consumers
(Factors affecting retail price strategy)
Misfits section showed that consumers were interested in buying imperfect veggies at lower prices
Governments
(Factors affecting retail price strategy)
Min wage would impact retailer pricing strategy
Manufacturers, wholesales, retailers
Ingredient prices increased and Toblerone decided to change their design to smaller to keep their same price
Current and potential consumers
Fitbit took a stock hit when Apple watches included fitbit options and more
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
elastic
small percentage changes in price lead to substantial percentage changes in the number of units bought
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
-number of substitutes -cost of switching -degree of necessity -proportion of income -peak and off-peak demand
Factors affecting elasticity
Economic consumers
Status oriented consumers
Assortment-oriented consumers
Personalizing consumers
Convenience-oriented consumers
Market segments by price sensitivity
economic consumers
wants affordable option
status-oriented consumers
status oriented
assortment-oriented consumers
want a wide variety when choosing, will pay more when they can see more options
personalizing consumers
like personalized experiences and products
convenience-oriented consumers
look for the easiest option
price skimming
strategy focuses on maximizing profits by charging a high price for early adopters
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
penetration pricing
occurs when a company launches a low-priced product with the goal of securing market share
aspects of penetration pricing
faster growth broad market potential combat competitors
dynamic pricing
the practice of pricing items at a level determined by a particular customer's perceived ability/willingness to pay
aka "surge" pricing
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
goal of merchandising
maximize sales & minimizing markdowns
merchandising philosophy
sets the guiding principles for all merchandise decisions made by the retailer
merchandising examples for target markets
Urban Outfitters- 18-28 lifestyle brand
Free people- 25-30 contemporary women, boho
Anthropologie- 28-45 for women with a little more money in her pocket
Petco & Petsmart example merchandising
Petco- leaning towards healthy products so they are known as the health brand
Petsmart- bought Chewy online, has strong grooming
scope of merchandising- buying
involves selecting and purchasing goods sold by the retailer
-assortment -advertising -point-of-sale displays -employee utilization -personal selling approaches
All merchandising functions
micromerchandising
retailers adjust shelf-space allocations to respond to customer differences and other differences among local markets
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.)
cross -merchandising
Retailers carry complementary goods and services to encourage shoppers to buy more
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
merchandising planning
the process retailers use to offer the right kind of product at the right place, and at the right price
-innovativeness -assortment -forecasts -brands -allocation timing
Devising merchandise plans
forecasts
projection of expected retail sales for given periods
Forecasts components
-Overall company projections
-Product category projections
-Item-by-item projection
-Store-by-store projections (if a chain)
Examples of forecasting companies
-WGSN -Arth-bomber
-Pantone- color of the year, every year
timing can relate to:
-seasonality -special events -new product releases
Advantages of private labels vs. national brands
-store loyalty
-differentiation strategy
-increased channel power over suppliers
-higher profit margins on private labels
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
differentiation strategy
(Advantages of private labels vs. national brands)
opportunity to differentiate store on the basis of recipe, styling, value, features
Increased channel power over suppliers
(Advantages of private labels vs. national brands)
depends on strength of private label vs. national brand
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)
Gathering information
Selecting interacting with merchandise sources
Evaluation
Negotiation
Concluding purchases
Receiving and stocking merchandise
Reordering
Re-evaluation
Implementing merchandise plans
Gathering Information
(Step 1- Implementing merchandise plans)
A retailer gathers information about merchandise decisions from a variety of sources
Consumer Suppliers Manufacturers Wholesalers
Use a simple point system
Use a tier system to reward loyalty
Charge an upfront fee for VIP benefits
Use a non-monetary programs around customer values
Partner to provide all-inclusive offers
Retailers can most effectively track consumer preferences through consumer loyalty programs
-company owned -outside, regularly used supplier -outside, new supplier
Selecting merchandise sources
(Step 2- Implementing merchandise plans)
inspection
occurs on every single unit delivered
sampling
used with regular purchases of large quantities of breakables, perishables, or expensive items
description
items are not sampled or inspected
retail image
the way a firm is perceived by its customers
Aspects affecting retail image
-attributes of physical facilities -shopping experiences -community service -promotion tools
-name -line of trade -claim to fame -price position -personality
In seconds a shopper should be able to determine a stores.....
atmosphere
includes the physical characteristics of a retail store used to help create the retail image
Store Retailer Atmosphere
the physical characteristics that project an image and draw customers
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
retail employees
(store atmospherics)
compared to friendly salespeople, rude salespeople cause customer with low self-esteem to spend more
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
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
Storefront Store entrances Display windows Exterior building height Surrounding stores and area Parking facilities
Exterior planning
Flooring Colors Lighting Scents Crowds
General interior
task shoppers
high need for control. These shoppers view customer density as crowding
social shoppers
higher need for intimacy. These shoppers perceive customer density as positive
straight traffic pattern disadvantages
-Impersonal atmosphere -More limited browsing by customers -Rushed shopping behavior
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
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
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
Advertising Public relations Publicity Personal selling
Elements of the promotional mix
advertising
paid, nonpersonal communication transmitted through out-of-store mass media by an identified sponsor
key aspects of advertising
Paid form Non-personal presentation Out-of-store mass media Identified sponsor
Goals of Advertising
Inform customers about goods and services and/or company attributes
Develop demand for private brands
Develop and/or reinforce a retail image
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
manufacturing advertising
advertising aimed at increasing awareness of a brand More concerned with developing favorable attitudes
Advertising advantages
Attracts a large audience
Low cost per contact
Many alternatives available
Control over message content
Message can be standard
Advertising Disadvantages
Standardized messages lack flexibility
Some media require large investments
Geographic flexibility limited
Some media have high throwaway rate
Some media limit the ability to provide detailed information
Pioneering advertising
Competitive advertising
Types of Advertising Content
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
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
competitive advertising
Focuses on stimulating demand for a specific brand/retailers
Most of advertising
public relations
Communication that fosters a favorable image for the retailers
Key aspects of PR
Non Personal or personal
Paid or unpaid
Sponsor-controlled or not
Essentially reputation management
Lots of ambiguity
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
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
PR disadvantages
Some retailers do not believe in spending on image-related communication
More suitable for short run
publicity
non personal form of communication whereby messages are transmitted by mass media
Key Aspects of Publicity
The time or space provided by the media is not paid for
there is no identified commercial sponsor
Why don't firms dedicate their entire promotional efforts to publicity?
no control over the message, timing, placement, etc.
personal selling
oral communication with one or more prospective customers for the purpose of making a sale
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
Disadvantages of Personal Selling
-Message inconsistency
-Conflict between sales force and management
-High cost
-Poor reach
-Ethical concerns