Retail/E-Commerce Test 1

Retailing

a set of business activities that adds value to products and services sold to consumers for their personal or family use

Retailer

a business that sells products and services to consumers (grocery stores, general merchandise stores, specialty stores, non-store retailers, restaurants)

What is the retailer’s role in the supply chain?

Raw material suppliers—>Manufacturer—>Wholesaler—>Retailer—>Consumer

Retailers are the connection between:

wholesaler and consumers

How do retailers create value?

providing assortments of products and services, breaking bulk, holding inventory, providing services

Vertical Integration

occurs when a firm performs more than one set of channel activities

Backward Integration

a retailer also performs wholesaling and/or manufacturing activities (further from the customer) Examples: Ikea, Amazon, Lululemon, J. Crew, Walmart, Costco Wholesale, Target

Forward Integration

a manufacturer performs wholesaling and/or retailing activities (toward the customer) Examples: Polo Ralph Lauren, Apple, Disney +, Amazon Whole Foods

E-commerce

the use of the internet, World Wide Web (web), and mobile apps and browsers running on mobile devices transact business; digitally enables commercial transactions

NAICS

United States, Mexico, and Canada. North American companies use this code. Start with 44 or 45, North American Industry Classification System (NAICS), US Census Bureau, Up to six digits—444110 (Home Improvement Centers), Hierarchy

Retail Mix Elements to Classify Retailers

Type of merchandise, variety and assortment, services offered, price (MVASP)

Variety (breadth of merchandise)

the number of merchandise categories a retailer offers; from wide to narrow

Assortment (depth of merchandise)

the number of items (SKUs) a retailer carries in a category; from deep to shallow

SKU (stock keeping unity)

each different merchandise item, including different sizes, colors, styles, etc.

What is the relationship between variety, assortment, service, and price?

Carrying a wide variety and deep assortments of products costs money, inventory investment, backup stock for each SKU

Food Retailers

Supermarkets, Supercenters, Warehouse Clubs, Convenience

General Merchandise Retailers

Department, Full-Line Discount (Target), Specialty, Drugstores, Category Specialists, Extreme-Value Retailers, Off-Price Retailers

What are the different options for retail ownership?

Independent, single-store establishments, corporate retail chains, franchise

Wholesale Sponsored Voluntary Group

an organization operated by a wholesaler

Franchising

a contractual agreement where the franchisor (the company) sells the rights to use the business brand name (trademark, service mark, etc.) to the franchisee

The franchisor

selling franchises helps franchisors grow the business more quickly, franchisees are motivated and already members of communities, franchisors do lose out on a portion of profits

The franchisee

protected territory, help with market research, advice, ongoing support, LESS RISK AND GREATER CHANCE OF SUCCESS

Digital Retailing

the online business activities and digital assets used for creating, capturing, communicating, and delivering value to their customers (websites, blogs, mobile apps, social media)

7C Digital Retailing Framework

Core goals, contextual elements (design & navigation), content, community, communication, commerce, connection (co, con, con, comm, comm, comm, con)

Retail sites aim to

increase revenue, drive more transactions, improve conversion rate, increase average order value

Context Elements

design (e.g. color, font, and navigation)

Content

information on site is relevant

Community

create a sense of community (comments, reviews, responses, suggestions)

Communication

limit noise and confusion, live chat and instant messaging

Commerce

opportunity to buy: website and apps are “storefront”, buy now button, creating urgency, promotions, coupons

Connection

with the firm: purchase, repurchase, positive word of mouth

Mobile Technology

mobile friendly websites, mobile apps, locational technology

Mobile Friendly Websites

Google prioritizes mobile friendly websites

Bounce rate

the % of visitors that leave immediately after viewing one webpage

Apps

85% of mobile shoppers prefer mobile apps, customer engagement, competitive advantage, use in omnichannel experiences, 157% higher conversion rate than mobile sites, lower shopping cart abandonment

Location Based Technologies

push notifications, push notifications when entering store, geotargeted advertising, geofencing (radio frequency identification; target with ads, store hours, etc.)

What are the three types of media?

owned media, paid media, and earned media

Owned media

website blog site, social media sites, chat platforms, email marketing, and mobile apps

Paid Media

digital advertising: search, display, banner, pay per click, influencer, and social media ads)

Earned media

online sharing and mentions, e.g. online reviews, customer conversations, mentions, shares, likes, and SEO

Influencer Marketing

a form of paid media that uses seeds (influencers, opinion leaders, etc.) to deliver messages to targeted retail audiences

The 4 R’s to predict the value of an influencer

Relevance, Reach, Response, Return

Process for Creating Digital Retailing Strategy

Listen, Analyze, Do

Last Touch Attribution

credit for sale goes to the last touchpoint

Attribution

credit for sale is divided evenly among marketing efforts (equal % across all touchpoints)

Time Decay Attribution

credit for sale increases with each marketing touchpoint; focuses on middle-to-end marketing actions like receiving email offers and customer clicks

AIDA

Awareness, Interest, Desire, Action

Multichannel and omnichannel retailing

the way a retailer sells and delivers merchandise and services to its customers; primary objective is TRANSACTION

Single channel retailing

selling/delivering through only one channel

Multichannel retailing

offering more than one channel to sell/deliver products and services

Cross-channel retailing

cross-channel retailing gives customers the flexibility of completing their purchase across several channels.

Omnichannel retailing

coordination between and among multiple channels

Which non-store channels are available to retailers?

Internet (Electronic and Mobile), Catalog, Television Home Shopping Channel, Direct Selling, Automated Retailing (Vending Machines)

Benefits of the in-store channel

haptic touch and smell, personal service, risk reduction, immediate gratification, entertainment/social experience, cash payment

Benefits of the catalog channel

·         Safety and convenience

·         24/7 shopping

·         Product information readily available

·         No technology needed

·         Vivid, appealing information

Benefits of the Internet channel

·         Wider variety, deeper assortments

·         More information for evaluation

·         Personalization

·         Expanded market presence

·         Collect information on purchases/customers. Improve overall experience

Mobile Channels

·         Portability and convenience

·         Location technology

·         Software applications (apps)

Social Retailing (S-Commerce)

·         Retailing via social media

·         Twitter, Pinterest, Instagram “Buy Buttons”

·         Captures customers where they are

What are the challenges of multichannel/omnichannel retailing?

supply chains/information systems, providing a consistent brand image across channels, merchandise assortment, pricing, reduction of channel migration (showrooming)

Buying Process

the steps or stages that customers go through when buying a product or service

Stages in Buying Process

Need Recognition, Information Search, Alternative Evaluation, Purchase, Post-purchase Evaluation (N,I,A,P,PP)

Need Recognition

triggers the buying process; when individuals perceive a difference between their actual state vs. their desired state, need recognition occurs

Actual state

how they are right now

Desired state

how they would like to be

What do retailers do to facilitate need recognition?

Discounts, marketing strategies towards emotions, ads, benefits of products, popup shops, promotions, awareness of products

Utilitarian Needs

satisfied when purchases accomplish a specific task; shopping as work

Hedonic Needs

satisfied when purchases accomplish a need for entertainment, emotional, and/or recreational experiences; shopping as pleasure

Hedonic needs that can be satisfied by retailers

Stimulation, power/status, adventure

Internal Information Search

always occurs first, customer searches for information stored in memory

External Information Search

customer requires additional information from an external source

Factors that affect the degree of information search

product characteristics, customer characteristics, market characteristics, risk associated with making the wrong decision, buying situation

Retailer’s Goal

to limit the customer’s information search to their store, website, or app

success is measured using conversion rates

Cognitive Dissonance

an internal conflict due to an inconsistency between some belief they have and the purchase they have made

What makes a viable market segment?

Identifiable, substantial, accessible, actionable

Segmentation Bases

Geographic, Demographic, Geodemographic, Psychographic, Buying Situation, Benefit