Chapter 2 Flashcards
value from the perspective of the retailer
value is embodied by a series of activities and processes—a value chain—that provides a certain value for the consumer
It is the totality of the tangible and intangible product and customer service attributes offered to shoppers
value from the customer’s perspective
the perception a shopper has of a value chain. It is the customer’s view of all benefits from a purchase (formed by the total retail experience).
Varies by shopper: some value low prices, some value prestigious stores
value chain
total bundle of benefits offered to consumers through a channel of distribution
three aspects of a value-oriented retail strategy
expected, augmented, and potential
expected retail strategy
minimum value chain elements a given customer segment expects from a type of retailer
Ex: store cleanliness, convenient hours, well-informed employees, etc.
augmented retail strategy
extra elements in a value chain that differentiate one retailer from another
Ex: exclusive brands, superior salespeople, loyalty programs, etc.
potential retail strategy
comprises value chain elements not yet perfected by a competing firm in the retailer’s category
Ex: 24/7 store hours (an augmented strategy for supermarkets), unlimited customer return privileges, full-scale product customization, etc.
customers who are attitudinally loyal
have a higher tendency to spread positive word-of-mouth recommendations to friends and family on social media, have a higher commitment to the retailer, and not be reluctant to pay more for products at a particular retailer
customers who are behaviorally loyal
higher tendency to continue purchasing from a particular retailer
Attitudinal loyalty should be emphasized if the objective is to _________, whereas behavioral loyalty should be more important if the objective is to ____________.
charge higher prices, increase market share or profit
In relationship retailing, there are four factors to keep in mind:
the customer base, customer service, customer satisfaction, and loyalty programs and defection rates
the customer base
Retailers must regularly analyze their customer base in terms of population and lifestyle trends, attitudes toward and reasons for shopping, the level of loyalty, and the mix of new versus loyal customers
core customers
most loyal customers
lost causes
frequently complain and return products, spread bad word of mouth, misuse promotions, and lower staff morale through their interactions
Free-riders
customers who are highly satisfied with the company but not highly profitable
–> charging higher prices and reducing services for free-riders can increase profitability
vulnerable customers
profitable but not satisfied with the retailer
retailers must identify unmet needs of vulnerable customers and consider whether it will be profitable to satisfy them; otherwise, competitors will poach them away
employee empowerment
workers have the discretion to do what they believe is necessary—within reason—to satisfy the customer, even if this means bending the rules
Ex: Home Depot’s outstanding customer service helped it grow; Nordstrom strongly believes in empowering its employees to better serve customers
revolving credit account
a customer charges items and is billed monthly on the basis of the outstanding cumulative balance
option credit account
a form of revolving account; no interest is assessed if a person pays a bill in full when it is due
when a person makes a partial payment, he or she is assessed interest monthly on the unpaid balance
open credit account
a consumer must pay the bill in full when it is due
customer satisfaction– three categories:
shopping systems satisfaction
buying systems satisfaction
consumer satisfaction
Dissatisfaction with any of the three aspects could lead to customer disloyalty, decrease in sales, and erosion of the market share
shopping systems satisfaction
includes availability and types of outlets
buying systems satisfaction
includes selection and actual purchasing of products
consumer satisfaction
derived from the use of the product
From the shopper’s perspective, there are five types of reward categories:
Economic rewards
Hedonistic rewards
Social-relational rewards
Informational rewards
Functional rewards
Economic rewards
Include price reductions and purchase vouchers
These rewards attract price-sensitive customers and induce them to buy more
Ex: Dunkin Donuts DDPerks program members receive a free beverage after earning 200 Points + members receive promotional E-mails
Hedonistic rewards
Include things such as points that can be exchanged for spa services or participation in games or sweepstakes
These rewards have more emotional value and will attract people who shop for pleasure
Social-relational rewards
Include things such as mailings about special events or the right to use special waiting areas at airports
Consumers who want to be identified with a privileged group will value these kinds of rewards
Informational rewards
Include things such as personalized beauty advice or information on new goods or services
These rewards will attract consumers who like to stick with one brand or store
Functional rewards
Include things such as access to priority checkout counters or home delivery
Consumers who want to reduce the time they spend shopping will value these most (ex: mobile app to order ahead)
Value delivery system
All the parties that develop, produce, deliver, and sell and service particular goods and services
Goods retailing
focuses on the sale of tangible (physical) products
Service retailing
involves transactions in which consumers do not purchase or acquire ownership of tangible products
rented-goods services
consumers lease and use goods for specified periods of time
ex: car rental
owned-goods services
goods owned by consumers are repaired, improved, or maintained
ex: watch repair
nongoods services
intangible personal services are offered to consumers who then experience the services rather than possess them
ethics
the retailer acts in a trustworthy, fair, honest, and respectful manner
social responsibility
the retailer acts in the best interests of society—as well as itself
ex: having employees participate in community events
consumerism
consumers have basic rights that should be safeguarded
