Chp 13: retailing and omnichannel marketing Flashcards
LO1: define retailing
set of business activities that add value to products/services sold to consumers for their personal or family use
LO1: when are wholesalers actually retailers
Some retailers claim they sell at wholesale prices, but if they sell to customers for their personal use, they are still retailers
LO1: define omnichannel strategy
selling in more than 1 channel (store, catalogue, kiosk, internet)
LO1: 4 factors for choosing a relationship with retailers
1) choosing retail partners
2) identifying types of retailers
3) developing retail strategy
4) managing a multichannel strategy
LO1: 3 considerations in choosing retail partners
1) channel structure
2) customer expectations
3) channel member characteristics
LO1: point to channel structure consideration
Level of difficulty a manufacturer has in getting retailers to purchase its products is determined by the degree to which the channel is vertically integrated; the degree to which the manufacturer has a strong brand or is otherwise desirable in the market; and the relative power of the manufacturer and retailer
LO1: 2 points to customer expectations consideration
1) For retailers, it is important to know which manufacturer its customers want to buy
2) Manufacturers need to know where their target market customers expect to find their products and those of their competitors
LO1: 2 points to channel member characteristics considerations
1) The larger and more sophistical the channel member, the less likely it is to use supply chain intermediaries
2) By performing channel functions themselves, large firms can gain more control, be more efficient and save money
LO2: what do manufacturers need to understand retailers
Manufacturer need to understand the general characteristics of different types of retailers so they can determine the best channels for their products
LO2: 2 types of retailers to distribute products
1) food retailers
2) general merchandise retailers
LO2: 3 types of food retailers
1) conventional supermarket
2) big box food retailer
3) convenience store
LO2: define conventional supermarket
offers groceries, meat and produce with limited sales of nonfood items, such as health and beauty aids and general goods, in a self service format
LO2: example of conventional supermarket
sobeys
LO2: define big box food retailer
larger than a conventional supermarket; carries both food and nonfood items
LO2: 3 types of big box food retailers
supercentre, hypermarket, and warehouse club
LO2: example of big box food retailer and type
costco (warehouse club)
LO2: 2 points to convenience store
1) Characteristics: provides a limited number of items at convenient locations in small stores with speedy checkout
2) Example: 7-eleven
3) Most convenience stores also sell gas
LO2: problem with food retailers
All this competition can be trouble for traditional grocery stores, but they thrive because they offer target customers great value - convenient location, makes shopping easy, have fair prices, find special products/services important to customers
LO2: 7 types of general merchandise retailers
1) discount stores
2) speciality stores
3) category specialists
4) department stores
5) drugstores
6) off price retailers
7) services retailers
LO2: define discount stores
offers broad variety of goods, limited service, and low prices
LO2: example of discount store
walmart
LO2: define speciality store
concentrate on limited number of complementary goods categories in relatively small store
LO2: 2 points to speciality stores
1) Tailor retail strategy to specific market segments by offering deep but narrow assortments and sales associate expertise
2) Example: sephora
LO2: define category specialists
offers narrow variety but deep assortment of goods
LO2: define category killer
offers an extensive assortment in a particular category, so overwhelming the category that other retailers have difficulty competing
LO2: 3 points to category specialists
1) Some are like large speciality stores (indigo - books), others resemble discount stores in appearance and have similar low prices but offer a more concentrated assortment of goods (best buy - electronics)
2) category killer
3) Using category dominance, they can exploit their buying power to negotiate low prices
LO2: explain department stores
Retailers that carry many different types of goods (broad variety) and lots of items within each type (deep assortment), offer some customer service, and are organized into separate departments to display goods
LO2: 3 points to department stores
1) Often resemble collection of speciality shops (womens clothing, home furniture, small appliances)
2) Example: hudson bay
3) Have lost market share to specialty stores, discount stores and category specialists in recent years. They are stuck in middle between retailers that provide better value at lower prices and those that offer more complete assortments with better customer service
LO2: define drugstores
speciality store that concentrates on health and personal grooming goods, though pharmaceuticals may represent more than 60% of its sales
LO2: 1 point to drugstore
Low margins on prescription drugs because gov/insurance pays most of the cost and health insurance companies negotiate lower prices with drug stores - regain lost profits by concentrating on non pharmaceutical products (like general goods and food)
LO2: define off price retailers
type of retailer that offers an inconsistent assortment of goods at relatively low prices
LO2: define extreme value retailer
general merchandise discount store found in lower income urban or rural areas
LO2: 5 points to off price retailers
1) Example: winners
2) Typically buy from manufacturers/retailers with excess inventory or at end of season for ¼-⅕ the original wholesale price
3) Consumers can never be confident that same type of goods will be stock each time they visit store
4) Different bargains also available on each visit
5) Key to success: low prices and treasure hunt environment
LO2: 3 points to extreme value retailer
1) Subset of off price retailers
2) Example: dollarama
3) Smaller than traditional discount stores
LO2: define service retailer
firms that primarily sell services rather than goods
LO2: 2 points to service retailer
1) Some are not just retailers like airlines, banks, hotels that sell services to businesses as well as consumers
2) Due to increased competition, retailers that have not called themselves retailers (universities, banks, hospitals) are adopting retail principles to attract customers and satisfy their needs
LO3: where do customers shop
shop at any retailer that they feel provides best value for their money
LO3: what do retailers need
need to adopt effective retailing strategies and market positioning to differentiate in competitive landscape and give customers compelling reason to shop with them
LO3: steps for retail strategy to create value
First develop deep understanding of consumers in market (attitudes, behaviours, preferences), develop market segments and select those segments they want to serve; develop retail mix to reach and serve these customers; elements must be closely coordinates to portray clear and consistent positioning so consumers know what type of customers retailer is targeting and how it wants to serve them
LO3: define retail mix
product (merchandise assortment), pricing, promotion, plan, personnel, presentation (store design + display) strategies to reach and serve consumers
LO3: 4 points to product (merchandise assortment)
1) Provide right mix of goods and services to satisfy needs of target market
2) Offering assortment gives customers choice and helps attract new and existing customers
3) Manufacturers don’t like to store inventory because factories/warehouses not available to consumers. Consumers don’t want to store more than needed because it takes up space and ties up money. Retailer provides value to both manufacturers + customers by performing storage function
4) Difficult for retailers to differentiate from competitors through goods they carry because competitors can purchase + sell many of the same brands, so retailers develop private-label brands
LO3: 3 points to price
1) Prices defines value of goods and services and general price range of store helps define its image
2) Manufacturers must consider at what price they will sell product to retailers so both manufacturer + retail make reasonable profit and be concerned with what customer is willing to pay
3) Tech can shape customer expectation of price by enabling them to quickly and easily access info
LO3: 3 points to promotion (part 1)
1) Advertising is important to get consumers into stores
2) Retailers use displays + signs, placed at point of purchase or in strategic areas such as end of aisles to inform customers and stimulate purchases of featured product
3) Through tech, retailers can reach customers in more ways with promotional messages
LO3: define cooperative advertising
agreement between manufacturer and retailer in which manufacturer agrees to defray some advertising costs
LO3: 4 points to promotion (part 2)
1) Coordinated effort between manufacturer + retailer helps guarantee customer receives cohesive message and manufacturer + retailer can help maintain consistent images
2) Store credit cards and gift cards are also promotion that facilitate shopping
3) Pricing promotions (coupons, rebates, discounts, buy one get one free) attract consumers and stimulate sales by driving traffic to retail locations, increasing avg purchase size, creating opportunity for repeat purchases
4) Retail promotions also valuable to consumers - inform customer about what is new and available and how much it costs
LO3: 5 points to presentation (store design and display)
1) Since shopping activities are mundane, retailers can differentiate themselves with unusual + exciting store atmospherics to add value to shopping experience (like interactive displays)
2) Improve shopability by providing convenient store layouts, and shopping experiences to make task faster, easier, more interesting
3) Consumers perception of value and subsequent patronage are heavily influenced by their perceptions of stores look and feel (starbucks vs time hortons for socializing)
4) The extent to which stores offer a more pleasant shipping experience, fosters a good mood resulting in greater spending
5) Music, colour, scent, crowding also affects shopping experience
LO3: 4 steps to wheel of retailing
1) outlet starts with low prices, low margins, low status. As time passes, outlet adds services
2) outlet now has higher prices, higher margins, higher status. As more time passes, outlet adds still more services.
3) outlet now has still higher prices, still higher margins, still higher status
4) new form of outlet enters retailing environment with characteristics of outlet box 1
LO3: wheel of retailing concept
as stores add services + improvements, expand mix of goods carried, upgrade facilities, costs are added to day to day operations which results in higher prices.
LO3: 3 points to personnel
1) Retail associates provide customers with info about product characteristics + availability. They can facilitate sale of goods/services that consumers perceive as complicated, risky or expensive.
2) Successful retailers concentrate on providing more value to their best customers. Using info collected from CRM (store personnel, internet browsing, buying activities) retailers can modify product, price, promotion to increase their share of wallet
3) Can also offer special discounts to good customers to make them even more loyal
LO3: define share of wallet
% of the customer’s purchases made from a particular retailer
LO3: 2 points to place
1) Great locations provide competitive advantage that few can duplicate
2) Opening store 24/7, and other options to reach target market - convenience
LO4: ways to sell to consumer
Manufacturer can sell to consumers through retailer or directly to consumers with its own stores, kiosks, catalogues, or internet
LO4: define omnichannel
strategy that creates consistent experience for consumers across all distribution channels
LO4: 7 benefits of shopping in stores for consumers
1) browsing
2) touch and feel goods
3) personal service
4) cash + credit pmt
5) entertainment and social interaction
6) instant gratification
7) risk reduction
LO4: store benefit - browsing
If consumer only has general sense of what they want but don’t know specific item, they go to store to see what’s available before buying
LO4: store benefit - personal service
Sales people can provide meaningful, personalize info and be helpful when purchasing complicated or unknown product
LO4: store benefit - cash and credit pmt
Some consumers want to pay with cash or pay in person rather than online
LO4: store benefit - entertainment and social interaction
In store shopping can provide break in daily routine and interact with friends
LO4: store benefit - risk reduction
When consumers buy in physical stores, perceived risk of buying reduced and confidence increases that any problems with goods will be corrected
LO4: store benefit - instant gratification
Get goods immediately after buying
LO4: what can happen if using internet to sell goods
Offering electronic channel may draw away sales from other channels but used with other channels can result in consumer making more total purchases from seller
LO4: 6 benefits of internet
1) deeper and broader selection
2) more info to evaluate merchandise
3) personalization
4) personalized customer service
5) personalized offering
6) expanded market presence
LO4: internet benefit - deeper and broader selection
Expanded offering enables them to satisfy consumer demand for less popular styles, colours, sizes and still keep overall inventory costs low
LO4: internet benefit - more info to evaluate merchandise
Can provide customer info about good and solutions to customer problems (like installing appliances)
LO4: internet benefit - personalization
Can personalize promotions + services for each customer economically
LO4: internet benefit - personalized customer service
FAQ pages, toll free number or email to ask questions
Live, online chats with customer service
LO4: internet benefit - personalized offering
1) Using cookies, can offer personalized homepages based on past purchases.
2) Can notify of products they might like and what customers also bought with item looked at
LO4: internet benefit - expanded market presence
1) With internet’s low entry costs and improving search engines, smaller niche sources for hard to find products can expand trade area
LO4: explain selling through kiosk
Can just provide store associates with access to company website to help customers find product info or place orders. Or self-service kiosks to allow customers to check product selection + availability at stores.
LO4: 4 benefits to kiosk
1) broader selection
2) access to items online that are out of stock in store
3) access to wish lists + gift registries
4) access to loyalty program info
LO4: kiosk benefit - broader selection
Can get access to expanded assortment of products than just those in stores
LO4: kiosk benefit -access to items online that are out of stock in store
Can save sale on item if item is out of stock or location does not carry broad product assortment
LO4: kiosk benefit - access to wish lists + gift registries
Customers buying gifts can check these for gift recipient
LO4: kiosk benefit - access to loyalty program info
Can check own status of points available, frees up staff to provide sales assistance to other customers
LO4: 3 benefits of catalogue channel
1) convenience
2) info
3) safety
LO4: general benefits of kiosk channel
in retail, availability and knowledge of sales associates can vary between stores and time of day, problematic for new, complex goods. Kiosks can be used to obtain product info by sales associates + customers.
LO4: downside of catalogue
once catalogue is printed, it cannot be updated with price + new goods. But can use internet sites for catalogues to do this.
LO4: catalogue benefit - convenience
1) Info accessible for long period of time. Customers can refer to it at anytime.
2) “Magalogs” - catalogues with magazine content enhances consumers desire to keep it available
LO4: catalogue benefit - info
Have info about product and how they can be used, can also include augmented reality app to see how product would look like in home, on person, etc
LO4: catalogue benefit - safety
Customers can view goods and place orders from their homes
LO4: 2 points to effective omnichannel retailing
1) Adding an electronic channel is attractive to firms with strong brand names but limited locations + distribution
2) Consumers want seamless experience, they want to be recognized by retailer through whatever channel, may want to buy product over internet and return in store, or find product online and buy in store
LO4: 4 things to address to determine how much integration is best
1) integrated CRM
2) pricing
3) supply chain
4) brand image
LO4: 2 points to integrated CRM for omnichannel
1) Need to store complete history of customer’s interaction with retailer
2) Allows retailers to efficiently handle complaints, expedite returns, target future promotions, and provide seamless experience for customers when they interact with retailer through multiple channels
LO4: 2 points to pricing for omnichannel
1) Customers expect pricing consistently for same SKU across channels
2) But: retailers may need to adjust pricing strategy because of competition faced in different channels
LO4: point to supply chain for omnichannel
Struggle to provide integrated shopping experience across all channels because unique skills + resources needed to manage each channel
LO4: point to brand image for omnichannel
Provide consistent brand image across all channels
