MKT 321: Retail Management Exam #2 Study Guide

Comprehensive vocabulary flashcards covering Retail Market Strategy, Financial Strategy, Retail Site Location, Supply Chain Management, CRM, and Human-AI Collaboration for MKT 321 Exam #2.

Retail Strategy

A statement identifying the retailer's target market, the format it will use to satisfy that market's needs, and the bases on which it plans to build a sustainable competitive advantage.

Target Market

The customer segment or segments toward which a retailer directs its resources and retail mix.

Retail Format

The nature of a retailer's operations, encompassing its specific retail mix of merchandise, services, pricing, promotion, store design, and location.

Sustainable Competitive Advantage

An advantage over competitors that a retailer can maintain over a long period of time because it cannot be easily copied.

Why does sustainable competitive advantage matter?

it can be the key to long-term financial performance, it is what lets a retailer keep earning attractive returns after competitors respond

Operational effectiveness

doing the same things as rivals, only better, gets copied quickly

Strategy

performing different activities, or similar activities in different ways

Customer Loyalty

A customer's commitment to repeatedly buy from a specific retailer, strong enough to resist competitors' lower prices and promotional offers.

Brand image

a strong brand stands for a predictable level of quality, which lowers the customers risk

Unique merchandise

private-label brands (store brands) are developed by the retailer and sold only by that retailer. When competitors all carry the same national brands, private labels are one of the clearest ways to stand apart – customers can't comparison shop for something nobody else sells.

Customer service

knowledgeable, helpful salespeople are hard to copy because service depends on people, training, and culture. Retailers such as Nordstrom built their reputations on it.

CRM/loyalty programs and retail communities

rewards plus data, and customers connected to each other through the brand.

Private-Label Brands

Store brands developed by a retailer and sold exclusively through that retailer's outlets, preventing direct price comparison across competitors.

Positioning

The design and implementation of a retail mix to establish a distinct brand image in the customer's mind relative to competing retailers.

Perceptual Map

A graphic representation—typically structured as a two-by-two grid with four quadrants—displaying customers' perceptions of and preferences for competing retailers.

Patagonia positioning

In 2022, founder Yvon Chouinard amplified that positioning dramatically by giving away ownership of the company to a trust and a nonprofit dedicated to fighting climate change.

Market Penetration

A growth opportunity directed toward existing target markets using the retailer's existing retail format by attracting non-customers or increasing visit frequency and basket size. The greatest chance of success because it builds on the retailers present base of advantage

Market Expansion

A growth opportunity that involves deploying an existing retail format into new market segments or geographical areas.

Retail Format Development

A growth opportunity in which a retailer designs and introduces a new retail format for its existing target market.

Diversification

A growth opportunity where a retailer introduces a new retail format targeted toward a market segment it does not currently serve. Offers the least opportunity to exploit an existing advantage

Strategic Retail Planning Process

1. Define the business mission

2. Conduct a SWOT analysis

3. Identify Strategic opportunities

4. Evaluate strategic alternatives

5. Establish specific objectives and allocate resources

6. Develop a retail mix to implement the strategy

7. Evaluate performance and make adjustments

3. 
   

SWOT Analysis

assesses the retailer's internal environment (strengths and weaknesses, always relative to competitors) and external environment (opportunities and threats). The process is a loop, not a line – what you learn at any step can send you back to an earlier one.

Keys to becoming a great marketing leader

Understand intraorganizational functions to develop credibility, go the extra mile inn internal relationships, have full command of concepts related to marketing finance

EBITDA

An acronym standing for Earnings Before Interest, Taxes, Depreciation, and Amortization, widely used as an indicator of core operating profitability.

Interest

refers to the cost of borrowing money or the return on investment earned on savings or investments, typically expressed as a percentage of the principal amount.

Taxes

Monetary charges imposed by governments on income, property, or transactions, crucial for funding government activities.

Depreciation

The reduction in value of an asset over time, often due to wear and tear. Depreciation is used in accounting to allocate the cost of tangible assets over their useful lives.

Amortization

The process of gradually paying off a debt over time through regular payments, which cover both principal and interest. Amortization is commonly used for loans and mortgages.

Payback Period

The time required for cumulative net cash inflows generated by an investment to fully recover the initial capital outlay.

Net Profit Margin

A profitability ratio calculated as net profit after taxes divided by net sales, representing how much profit is kept from each dollar of revenue.

Asset Turnover

An asset-efficiency metric calculated as net sales divided by total assets, measuring how effectively a retailer generates sales from its asset base.

Gross Margin

The dollar difference between net sales and the cost of goods sold ($\text{COGS}$).

Strategic Profit Model (Return on Assets)

A financial model stating that Return on Assets ($\text{ROA}$) is equal to net profit margin multiplied by asset turnover: $\text{ROA} = \text{Net Profit Margin} \times \text{Asset Turnover}$.

The Power of the Model

it shows there are two very different paths to the same return. A high-margin, low-turnover retailer (think fine jewelry) and a low-margin, high-turnover retailer (think a bakery or grocery store) can earn exactly the same ROA.

Improving Profit Margin

improves when the retailer keeps more of each sales dollar. The levers are increasing sales (and gross margin) and reducing operating expenses.

Same-Store Sales Growth

A performance metric comparing sales growth exclusively across stores open for more than 12 months, excluding newly opened and closed units.

Slotting Fee

A fee paid by a vendor or manufacturer to a retailer to secure shelf space or premium placement for its products.

Top-Down Planning

A planning method where senior corporate executives establish performance goals and allocate targets downward through regions, districts, and stores.

Bottom-Up Planning

A planning approach where operational units at lower levels set performance objectives that are then aggregated upward to form the corporate plan.

VAST+CCP

A retail site selection framework representing Visibility, Access, Signage, Traffic, Co-tenants and saturation, and Parking.

Visibility

can customers see the store and recognize it from the road?

Access

how easily can customers get into and out of the site (ingress and egress)?

Signage

can the retailer display signs that tell customers it's there – or do landlord or local restrictions limit them?

Traffic

how many potential customers pass by, and is that traffic helpful or congesting?

Co-tenants and saturation

who are the neighbors, and how do they affect traffic? Co-tenants are the other businesses located nearby, and their presence can either boost traffic by attracting more customers or create saturation if there are too many similar retailers, potentially dividing the customer base.

Parking

is there enough convenient parking for peak periods?

Ingress and Egress

Physical site access characteristics referring to how easily vehicles and pedestrians can enter (ingress) and exit (egress) a store property.

Why strong demographics aren’t enough

access must be evaluated separately from visibility: a site can be easy to see but difficult or inconvenient to enter, and heavy traffic can actually reduce convenience rather than increase it.

Site Scorecard

A standardized evaluation tool that scores essential site characteristics against established criteria to ensure consistent retail location decisions.

Cumulative Attraction

The principle that a cluster of similar and complementary retail stores generates greater customer drawing power than isolated individual stores.

Cannibalization

A condition where a retailer's new location draws sales, traffic, and revenue directly away from its own existing store locations.

Anchor Tenant

A dominant, well-known retailer positioned within a shopping development to draw heavy customer traffic that benefits surrounding co-tenants.

Localized Merchandising

The practice of tailoring store product assortments to match the specific geographic, climatic, demographic, and behavioral traits of each individual trade area.

Why does Starbucks supply chain complexity make supply chain management a source of competitive advantage

Starbucks' supply chain complexity stems from its need to source high-quality coffee beans globally, maintain consistent product standards, and ensure freshness across its numerous locations. This complexity allows Starbucks to effectively manage its inventory, optimize logistics, and enhance customer experience, ultimately creating a competitive advantage in the market.

Distribution Center (DC)

A logistics warehouse that receives merchandise shipments from vendors and processes them for delivery to a retailer's physical store fleet.

Fulfillment Center

A specialized facility designed to pick, pack, and ship individual customer orders directly to end consumers, typically for e-commerce purchases.

Stockout

A situation occurring when inventory of an item is completely depleted, making it unavailable to purchase when a customer requests it.

Point of Sale (POS)

The checkout terminal and checkout moment where a store associate scans merchandise, collects payment, and records transaction data in real time.

Universal Product Code (UPC)

A standardized scannable barcode identifying the specific item and its manufacturer across all retailers, rather than being unique to a specific retailer.

Pull Supply Chain

A supply chain strategy where store orders and replenishment are triggered by real-time consumer purchase data captured at the point of sale.

Push Supply Chain

A supply chain model where merchandise allocations to stores are pre-determined and pushed based on long-range demand forecasts.

Direct Store Delivery (DSD)

A logistics practice in which vendors deliver merchandise directly to individual retail stores, bypassing the retailer's distribution centers.

Drop Shipping

A retail fulfillment process where the retailer takes the customer's order, but the manufacturer or vendor ships the item directly to the customer's residence.

Cross-Docking

A warehouse operation where merchandise is transferred directly from inbound delivery trucks to outbound delivery trucks with minimal or no intermediate storage.

Vendor-Managed Inventory (VMI)

A collaborative inventory strategy where the manufacturer or vendor assumes the responsibility for monitoring and maintaining the retailer's store inventory levels.

Third-Party Logistics (3PL)

An independent logistics provider contracted by a retailer to manage some or all warehousing, transport, and fulfillment operations.

Just-in-Time (JIT) System

An inventory replenishment system that reduces inventory levels and lead times by delivering smaller, more frequent shipments directly as needed.

The Martech Landscape

The latest Martech Map counts more than 15,000 marketing technology platforms. That abundance doesn't make a marketer's life easier – it creates a significant leadership challenge. Marketing leaders must identify, evaluate, integrate, and manage the platforms most relevant to their organization's needs. More tools do not mean more standardization, and they don't eliminate the need for human judgment or expert advice.

Customer Data Platform (CDP)

A technology system dedicated to collecting and unifying customer data across multiple touchpoints into a centralized, complete customer profile.

Customer Relationship Management (CRM)

A business philosophy and set of software applications focused on managing ongoing interactions to build long-term loyalty with valuable customers.

The CRM Process

1. collecting customer shopping data

2. analyzing customer data and identifying target customers

3. developing CRM programs

4. implementing CRM programs

Customer Lifetime Value (CLV)

The estimated net financial contribution a customer makes to a retailer's overall profits over the entire duration of their relationship.

Share of Wallet

The percentage of a customer's total spending within a specific product category that is directed to a single retailer.

Market Basket Analysis

A data analysis technique that evaluates transaction records to identify products frequently purchased together in the same shopping trip.

80-20 Rule

The business observation that approximately 80% of a retailer's sales or profits are generated by roughly 20% of its customer base.

CAN-SPAM Act

Federal legislation setting legal guidelines and requirements for commercial electronic mail messages.

Telephone Consumer Protection Act (TCPA)

Federal legislation governing commercial telemarketing communications, automated phone calls, and marketing text messages, including strict consent rules.

FERPA

protects the privacy of student education records – it is an education law, not a marketing law.

Collaboration Spectrum

A conceptual continuum of human-AI collaboration running from human-directed task execution to agentic autonomy, acting as a variable dial rather than a switch.

AI assistant

you prompt, it generates, you review every output

AI Teammate

co-creation in a shared workspace that remembers context

AI Specialist

AI runs one ongoing job within limits you set

Agentic AI

AI plans and carries out multi-step work within guardrails

Triggers

What starts the work

sequential handoffs

Points where tasks are passed between agents or systems.

exception-based handoffs

Points where tasks are transferred if specific conditions or exceptions are met.

oversight

every output vs sampling, periodic, or exception-only review)

Risk/stakes

high stakes mean more oversight, no matter the autonomy

Trust

built through experience with the AI on this specific task – not trust in AI in general.

Reversibility

easily undone actions need less checking. An email to 200,000 customers can't be unsent.

regulation

some outputs are legally required to be reviewed

The Human Role Evolves

Director (initiates, gives context, reviews everything) to Collaborator (steers iteratively) to Strategist (sets goals and limits, reads dashboards) to Overseer (sets objectives and guardrails, handles exceptions). higher roles bring different value, not less value; the skills are non-transferable – a great prompt writer isn't automatically good at designing guardrails; and the role belongs to the task, not the person, so the same person can be a Director and a Strategist on the same day. Strategy, high-stakes decisions, ethical judgment, relationships, creativity, and accountability stay human at every level.

Polish in not proof

professional formatting and confident prose are not reliable signs of quality. Check the substance – factual accuracy, brand alignment, strategic fit, and bias or sensitivity.

AI can’t fill your knowledge gaps

AI amplifies your clarity – or your confusion. A longer prompt can't supply understanding you don't have.

How AI Fails

hallucination (plausible but false information), brand misalignment (technically correct but emotionally off), generic workslop (adequate but undifferentiated), and context blindness (missing crucial brand or market context)

Automation Bias

The human cognitive error of over-relying on automated or AI outputs, resulting in decreased scrutiny as systems appear more competent.

Workslop

High-volume, low-value AI-generated content that appears superficially polished and technically competent but lacks strategic distinctiveness and substance.

What AI cants replicate

proprietary data, domain expertise, relationship context, strategic judgment, and authentic brand voice