Chapter 2: Classification criteria

Question 1

Buying associations

Answer 1

are organizations of independent retailers that often work on a cooperative basis, and that want to improve the conditions for their members by bundling buying volumes. The buying associations initially worked on a voluntary basis: they were allowed to buy via the association but were not obliged to do so. Independent, affiliated companies often also presented themselves to consumers under their own names. At a later stage, this freedom of association diminished, particularly in the food sector. The buying associations then developed into the

Question 2

Cooperative chains

Answer 2

in which independent entrepreneurs undertook to buy from one particular wholesaler, and the member companies would present themselves under a single formula name. The stores affiliated with them, however, remained independent, and the umbrella organization’s contribution initially consisted only of the assortment. Forced by competition from the retail chains, and centrally managed formulas, at a later stage the umbrella organizations also tried to influence other aspects of the marketing mix than just the assortment (e.g. the development of Schuitema, a cooperative chain now known as Jumbo).

In the non-food sector, the evolution from buying groups to cooperative chains has not started. This was because of the increasing diversity of consumer demand, because of which buying on the basis of the ‘lowest common denominator’ on the part of the affiliated members began to be counterproductive rather than beneficial. In some cases, the non-food buying groups have developed into a form like that of the cooperative chain:
o the buying and sales organization, whose characteristic is that not only is buying done jointly, but people also present themselves under one common name and often promote themselves together.

Today, the phenomenon of buying associations no longer plays an important role, except in a few relatively small submarkets. It can be said that the function of the buying association, certainly in the non-food sector, but also in the food sector, has been taken over by the phenomenon of franchising.

Question 3

Franchising

Answer 3

Franchising is an intermediate form between the branch/retail chain and the cooperative chain. It is a form in which independent entrepreneurs can join a central formula: the franchisor (often an existing chain store).

Franchising is also referred to as a growth strategy: the franchisor is able to expand the chain with a relatively smaller capital requirement. The independent entrepreneur (the franchisee) is responsible for the investments their own location makes.
Another reason is the span of control: the span of control is many times greater than what is possible with a cooperative chain.

The franchisee who joins a franchise organization is obliged to follow the rules that the franchisor considers necessary to maintain the marketing concept.

Question 4

Hard franchising

Answer 4

Hard franchising: The franchisor imposes such stringent requirements on each element of the marketing mix that when they go into the shop, the consumer does not know whether they are in a location run by the business directly, or in a franchise location. This is the most common and fastest-growing form of franchising (e.g. AH)

o Conversion franchising: one of the methods that chains use to apply to franchise is conversion franchising where stores run directly by the business are converted into franchise locations. In this way, the chain often offers a store manager the opportunity to become an independent entrepreneur, this can help to increase market share.

A case study has shown that, when it comes to conversion franchising, the entrepreneur can achieve up to 10% more sales. The lower cost level also enables the entrepreneur to achieve higher returns.

Question 5

soft franchising

Answer 5

Soft franchising: Where the franchisor imposes less-stringent requirements, for example a minimum of 70% product range sales, or imposes on only a few elements of the marketing mix. This form arose quite often among suppliers who saw their sales markets come under pressure and thus started to develop formulas for their customers. Movements in the market seem to lead to an increasing number of soft-franchise organizations switching to hard franchising.

Question 6

The advantages for franchisees:

Answer 6

they can join a reputable formula at a relatively low cost and no longer must divide their attention among the many focus areas associated with the retail business. Moreover, they can also remain independent and concentrate fully on managing their store and staff, and leave other activities, such as buying, promotion, and the store concept, to the franchisor. The franchisee pays a fee for the efforts the franchisor makes to keep the concept up to date, and for the services provided by the central management organization.

Question 7

The advantages for franchisor:

Answer 7

in addition to the direct return on the fee, is that the formula can be expanded more quickly and with less of an investment on their part. This leads to faster coverage of the catchment area. that can make the external promotion process more efficient in terms of cost per contact. On the other hand, it leads to an increase in buying volume and an improvement in buying conditions.

Question 8

10 retail shifts

first five

Answer 8

1. from spending to contributing
2. second hand
3. from ownership to use
4. from timeslot to timefit – amazon delivery in a car
5. from end user to co-producer – Nike DIY in the shop

Question 9

10 retail shifts

last five

Answer 9

6. from mass to micro-moments – maak een shopping bag op site die je linkt op insta en mensen dat dan kopen
7. from check-out to check-in – pay by face
8. from social networks to commerce
9. from keyboard to sensory interface
10. from stores to metaverse