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Retail Marketing > Lect 2 > Flashcards

Lect 2 Flashcards

1
Q

How do retailers add value?

A

Breaking Bulk - Buy in quantities the customers want to maintain their happiness and fulfil demand
Holding inventory - Hold inventory in convenient places so customers can have easy access
Offering extra services - e.g getting extra credit upon purchase

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2
Q

What does Porter (1985) call Market Driven and Market driving firms?

A
  • Value chains
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3
Q

What does being a driving market imply?

A

Influencing the structure of the market and/ore the behaviours of the market players in a direction that enhances the competitive position of a business (Jaworski et al 2000)

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4
Q

What are the characteristics of a market driving firm ?

A

Global - increasingly international in orientation
Innovative formats - Have the emergence and growth of a range of new store formats e.g factory outlets
Powerful - Often bigger than their supplier
Technology intensive - Make use of new efficient technology
- Brand managers who create powerful and unique brand images

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5
Q

What are the examples of market driving firms?

A

Amazon, Apple, IKEA and Starbucks

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6
Q

What are the three generic approaches to driving the structure of the market (Jaworkski et al,2000)?

A

1) Eliminating players in the market
2) Functional Modification
3) Construction

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7
Q

What is meant by Eliminating players in the market and what is an example?

A

Players may be wholesalers, retailers, influencers etc

  • Success often depends on the whether the business can better deliver value than its rivals
  • Dell example where they got customers to buy directly from them which led to reduced business for retailers and eventually eliminated them
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8
Q

What is a market driven firm?

A
  • A business is based on understanding and reacting to the preferences and behaviours of players within the given market structure (Jaworski et al 2000)
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9
Q

What are the characteristics of a market driven firm?

A
  • Fragmented, mainly small independent retailers
  • Vulnerable as less powerful than multinational manufactures
  • Unsophisticated
  • Examples include Nestle and Unilever
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10
Q

In Kumars paper, what are market orientations made up of?

A

Sales driven, market driven, market driving and customer driven

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11
Q

What are the characteristics of sale orientation?

A

Often adopted by monopolies and large manufacturing firms

- Mass marketing, undifferentiated segmentation and they listen to their research and development

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12
Q

What is a customer driven market?

A
  • They target segments of one and deliver customised value configurations to each consumer
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13
Q

Within the distribution process, what to intermediaries do?

A

They facilitate the distribution process by providing points at which the merchandise is altered e.g being repackaged

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14
Q

What are the three main categories of retail theory?

A
  • Cyclical Theories
  • Environmental theories
  • Conflict theory
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15
Q

What makes up the cyclical theories?

A
  • Wheel of retailing
  • Real life cycle
  • Retail accordian
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16
Q

What makes up the environmental theory?

A
  • Evolution theory

- Institutional theory

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17
Q

What is the wheel of retailing theory?

A
  • McNair tried to explain the evolution of retail as a wheel
  • Assumes retail firms enter a market with a low cost, low price, low service format and use opportunistic buying
  • Stage 2 is when retailers trade up with moderate prices, higher quality products, refurbished stores which therefore results in higher prices
    stage 3- is the vulnerability stage with higher end of the market, higher prices means there is now space for entrepreneurs to enter as a low cost innovator
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18
Q

What is the real accordion theory?

A
  • When retailers enter as a general retailer and focus on a particular product/consumer group but then fluctuate between this and periods of generalist retailing
  • Seen in the UK when variety stores gave way to apparel specialists such as NEXT and category killers such as IKEA
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19
Q

What is the environmental approach?

A
  • Based on darwins theory of survival of the fittest

- Those who test out new tech etc are those more likely to survive

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20
Q

What is the conflict theory and the stages they go through?

A

Says that retailing evolves through blending of two opposites to create a new format

  • Stages include problem recognition, implementation of solutions and emergence of new retail business
  • For example merging petrol stations with convenience stores
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21
Q

What are the characteristics of an independent store?

A
  • Owns one unit, ease of entry into marketplace due to simple licensing provisions , WOM is important
22
Q

ADV & DIS of independents?

A

ADV- flexibility devising a strategy, etailed specs can be set because there is only one site.
Costs for leases, fixtures, workers and merchandise can be held down, and there is no duplication of stock or personnel functions.

Disad - Not much bargaining power with suppliers as buying in small quantities Cannot gain economies of scale in buying and maintaining inventory

23
Q

What are the advantages and disadvantages of chains?

A

Adv - have bargaining power due to their large volume purchase
- Chains use computers in ordering merchandise, taking inventory, forecasting, ringing up sales and bookkeeping. This increases efficiency and reduces overall costs.
etc

Disadv
Once chains are established flexibility may be limited, Consistent strategies must be maintained throughout all units, including prices, promotions, and product assortments. It may be difficult to adapt to local diverse markets.

24
Q

What is franchise?

A

Involves a contractual agreement between a franchisor (a manufacturer, a wholesaler or service sponsor) and a retail franchisee, which allows the franchisee to conduct business under an established name and according to a given pattern of business

25
Q

What is product/trademark franchising?

A

A franchisee acquires the identity of a franchisor by agreeing to sell the latters products and/or operate under the latters name.

26
Q

What is business formats franchising?

A

There is more of an interactive relationship between the two parties as the franchisee receives assistance on site, location, quality control etc

27
Q

What are the benefits of franchising to franchisees ?

A

They own a retail enterprise with relatively small capital investment
They acquire well known names and goods/service lines
Standard operating procedures and management skills may be taught to them

28
Q

What are the potential problems for franchisees?

A
  • Oversaturation if too many open in one geographic area
  • Over zealous selling by franchisors could mean potential gain to franchisees is overstated
  • May be disagreements with how the franchisee can run the firm
29
Q

What are the benefits to franchisors?

A

Quick development of a national or global presence with less investment
Agreements mean rules are set for franchisees
Money is obtained when goods are delivered rather than sold

30
Q

What are the disadvantages to franchisors?

A

Franchisees can harm the company reputation if they do not adhere to standards and rules
Loyalty can be affected if there is a lack of uniformity between outlets
Intrafranchise competition is not desirable

31
Q

What is a leased department?

A

This is a department is a retail store- usually a department, discount, or speciality store
e.g House of Fraser, Macs

32
Q

What are the benefits and disadvantages for the stores within the department store?

A

Adv - The market is enlarged by providing one-stop customer shopping
- Leased department operators pay for some expenses, and thus reduce store running costs

Disad- Leased departments operating procedures may conflict with some store procedures
Lessees may adversely affect store images
Customers may blame problems on store rather than lessees

33
Q

What are the benefits and disadvantages for the retail department stores?

A

Adv -
Stores are known, have steady customers, and generate immediate sales for leased departments
Some costs are reduced through shared facilities, such as security equipment and display windows
Their image is enhanced by their relationship with popular stores

Disadv-
There may be inflexibility as to the hours they must be open and the operating style
The goods/service lines are usually restricted
If they are successful, stores may raise rent or not renew leases when they expire
In store locations may not generate the sales expected.

34
Q

What is a cooperative?

A
  • A retail firm owned by its customer members

- A group of consumers invest, elects officers, manages operations, and shares the profits or savings that accrue.

35
Q

Disad of cooperatives?

A
  • Consumer initiative and drive is rare
36
Q

Whats an example of specials stores?

A
  • Holland and Barrett

- Louis Vuitton

37
Q

What is a category Killer and what are examples?

A

A category killer is a retailer that specializes in and carries a deep product assortment within a given category and through selection, pricing and market penetration obtains a massive competitive advantage over other retailers

  • e.g PC World, Ikea, Toys R us
38
Q

What is the retail marketing mix?

A

The set of controllable variables the retailer can use to satisfy customers’ needs, influence their buying behaviour and compete effectively in the market. (Varley and Rafiq, 2004)

39
Q

According to Varley and Rafiq what are the characteristics of the retail marketing mix?

A
  • Location
  • Price
  • Visual merchandising
  • Store Atmosphere
  • Advertising
  • Promotions
40
Q

What are Walters (1988) retail mix elements

A 
Product characteristics
Price considerations
Customer service
Store location
Facilities
Customer communication
Institutional profile/image
Design
In-store ambience
41
Q

What is market orientation?

A

A market orientation is the firm’s organizational culture
- Deshpandé and Webster (1989, p. 3), a market orientation is “a fundamental shared set of beliefs
and values that put the customer in the centre of the firm’s thinking about strategy and
operations”

42
Q

What is a market orientated firm?

A
  • Market driven
43
Q

What are the advantages of a market driving firm?

A
  • There success according to Kotler et al is due to their leap in value proposition as a result of them being technologically intensive which creates a product/service that overwhelms expectations, competitors therefore struggle e.g FedEx example
  • Benefit from free advertising in the BUZZ network
  • Advantage of establishing new industry price points for the quality or service levels they deliver e.g can charge price premium higher than typical e.g starbucks
  • Often bigger than the supplier, buyer power
  • Usually have unique and radical systems that are hard to imitate e.g IKEA
44
Q

Advantages of market driven firm?

A
  • Monitoring customer satisfaction allows firms to get an early indication about changing customer needs and preferences and the identification of future customer needs. Analyzing these needs helps the firms to prevent bad decisions or overlooking important parts of the customer value proposition as well as identifying its current or potential competitive advantage
  • well equipped to achieve high levels of performance (Day, 1994b) and are expected to be more adaptable and perform better than less market-driven competitors because they stay in touch with existing and potential customer needs and competitor moves
  • The focus on long-run return from marketing investments enables market-driven firms to understand which customers are profitable to pursue, and knowing how to encourage loyalty by reducing customer acquisition costs. (Day, 1998)
45
Q

Disadvantages of a Market Driven firm?

A
  • Typically smaller than supplier
  • Investment in market research is expensive and alongside use of unsophisticated tech it may inhibit ability to gain intelligent - not sufficient way of sustaining innovation (Jaworski et al 2000)
  • Tend to be more beaucratic and risk avers than incumbent firms (Kumar et al 2000) so may miss out on big ops
  • Typically use traditional stores rather than meeting the experimental required today
46
Q

What are the advantages and disadvantage of the wheel of retailing?

A

Advan - Serves as a useful reminded that firms operate in a dynamic and highly competitive environment and so they must adapt to and anticipate change to avoid inevitable decline (McGoldrick, 1990)

Disadvantages-
No account can be taken of the strategic firms who may decide to have long term focus on discount operations
- unrealistic to assumer a company can’t ‘turn back’ the wheel as done by Asda with their roll back scheme

47
Q

What is the Taiwan example of retail accordion theory?

A

The traditional grocery store offering limited food assortments was once the main source of food in Taiwan in the 1960s and 70s
- The introduction of the first full supermarket in 1981, which offered a wider selection of products, posed a
potential challenge to the traditional grocery.

-Starting from the early
1990’s, when the number of supermarkets increased rapidly, the traditional grocery started to decline. For example, the traditional grocery
store, which once had been the main sales outlet for many types of drink, fell behind the supermarket in household market share, and even
by 1991 had slipped to the third place behind the convenience store andhe supermarket in the individual consumption market.

48
Q

What are the advantages and disadvantages of the retail accordion theory?

A

Adv - It allows specialist retailers to thrive through their product offering

disadvantages- Not appropriate for multiple formats such as hypermarkets who sell a wide range of product prices

49
Q

What is the retail life cycle?

A

This is a cycle which asserts institutions evolve through the stages if birth, growth, maturity and decline (Davidson 1970)
- Berman and Evans 1995 state that the process is inevitable and decline can be postponed but not prevented

50
Q

What are the advantages and dis of retail life cycle?

A

Allows for a visualised progress so firms can see where they are/what they can do to alter their path

Dis - Dat emphasised that managers have have power and can cope with the changes to avoid decline

51
Q

What is the institutional theory?

A

The institutional theory see’s a firm as a natural part of the environment

  • retailers actions are influenced by cultural and moral norms
  • Decisions of a retail firm reflect PESTLE factors in which it exists
52
Q

‘Agreements of exclusive territories can limit franchisee abilities to intensify the network or develop new channels’ - who said this quote?

A
  • Starssen 1995

Retail Marketing (6 decks)

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