W1, Marketing & retail management

Question 1

What is marketing?

What is a market?

Answer 1

• the activity and set of processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large
• customers- people who purchase good & services for their own or other peoples use
• consumers- people who use the good or service
• clients- ‘customers’ of the products for not-for-profit organisations
• market- a group of customers with heterogeneous needs and wants

Question 2

What is the marketing process?

What is exchange?

Answer 2

• involves understanding the market to create, communicate and deliver an offering for exchange
• exchange- mutually beneficial transfer of offerings of value between the buyer & seller

Question 3

What is value?

Answer 3

• customers overall assessment of the utility of an offering based on perceptions of what is received and what is given

Question 4

Are consumers and customers the same?

Answer 4

• no
• scenario- a mum buys nappied for her baby
• mum- customer
• baby- consumer, the one who actually uses the nappies

Question 5

Describe what a marketing mix is?

Answer 5

• brand- a collection of symbols such as a name, logo, slogan and design intended to create an image in the customers mind that differentiates as product from competitors products
• brand image- set of beliefs that a consumer has regarding a particular brand
• trade mark- a brand name or brand mark that has been legally registered so as to secure exclusive use of the brand
• brand equity- added value that a brand gives a product
• brand loyalty- a customers highly favorable attitude and purchasing behavior towards a certain brand

Question 6

What are some brand strategies as part of the marketing mix?

Answer 6

• individual branding- a branding approach in which each product is branded separately
• family branding- uses the same brand on several of the organisations products
• brand extension- giving existing brand name a new product in a different category e.g. virgin
• manufacturer brands- brands owned by producers and clearly identified with the product at the point of sale e.g. P & G (oral B, SK-II, meta mucil, herbal essences)
• private label brands- brands owned by resellers such as wholesalers or retailers and not identified with the manufacturer e.g. woolworths (macro, gold, W essentials)
• licensing- an agreeent in which a brand owner permits another party to use the brand on its products e.g. cancer council licenses its brand to manufacturers of sunscreen, sun glasses and clothing which helps raise money for charity
• franchising-where franchisor permits the franchisee to use it’s business model, including products, brands, processes and suppliers and benefit from coordinated promotional activities. Franchisee pays a fee to the franchisor and agrees to abide by the systems and rules set out in the agreement. E.g. Gloria Jeans, Sumo Salad
• co-branding- use of two or more brand names on the same product e.g. biggest loser and subway

Question 7

What is a target market?

Answer 7

• a group of customers with similar needs & wants
• need- day to day survival requirement; food, shelter & clothing
• want- desire, but not necessary for day to day survival
• demand- a want that a consumer has the ability to satisfy
• good- wa physical (tangible) offering capable of being delivered to a customer
• service- an intangible offering that does not involve ownership

Question 8

What are the 7 P’s that a marketer can control over creating an offering for exchange?

Answer 8

• distribution (place)- the means of marketing the offering available to the customer at the right time & place
• price- the amount of money a business demands in exchange for its offerring
• promotion- the marketing activities that make potential customers, partners and society aware of and attracted to the business’ offerings
• product- a good, service or idea offered to the market for exchange
• people- refers to any person coming into contact with customers who can affect value for customers
• process- systems used to create, communicate, deliver and exchange an offering
• physical evidence- tangible cues that can be used as a means to evaluate service quality prior to purchase

Question 9

What is the micro environment?

Answer 9

• forces within an organisatons industry that affect its ability to serve its customers and clients- target markets, partners and competitors
• customers and clients
  
  • understand what customer values noe
  • be able to identify any changes in customer preferences
  • be willing & able to respond to changes
  • anticipate how needs and wants might change in th future
  • be able to influence customer preferences
• partners
  
  • logistic firms- – terms used to describe all processes involved in distributing products: it includes storage and transport
  • financiers- Financiers provide financial services such as banking, loans and insurance, and the financial system’s infrastructure facilitates electronic payment transactions with partners and customers
  • advertising agencies
  • retailers-business form which customers purchase goods and services
  • wholesalers-intermediary acting between the producer and the retailers to provide storage and distribution efficiencies to both
  • suppliers- provide resources that the organisation needs to make its products (crucial)

Question 10

What is the macro environment?

Answer 10

• factors outside of the industry that influence the survival of the company; these factors are not directly controllable by the organisation
• Situation analysis- involves identifying the key factors that will be used as a basis for the development of marketing strategy
• SWOT analysis
• S- strengths (internal to the organisation)
• W- weaknesses (internal to the organisation)
• O- opportunities (external to the organisation)
• T- threats (external to the organisation)

Question 11

What is consumer behaviour?

Answer 11

• the analysis of the behaviour of individuals and households who buy goods and services for personal consumption
• situational influences- circumstances a consumer finds themselves in when making purchasing decision
  
  • physical
  • social
  • time
  • motivational
  • mood

Question 12

WHat is services marketing?

Answer 12

• Intangibility – lacking physical form
• Inseparability – being produced and consumed simultaneously
• Heterogeneity - inevitable but minimisable, variations in quality in the delivery of a service product
• Perishability – inability to store services for use at a later date
• issues for marketers?
  
  • Inability for consumers to inspect and evaluate a product prior to consumption,
  • Inevitable variability in service quality
  • Inability to store the product
• solutions to deal with these issues?
  
  • Create tangible cues (like the environment surrounding the service e.g. store layout)
  • Invest heavily in staff training
  • Develop and implement standardised service delivery systems
  • Use customer testimonials
  • Manage customer expectations - Manage supply and demand

Question 13

What is digital marketing?

Answer 13

• Characteristics of Digital Marketing
• Profiling - process of getting to know about potential customers before they make a purchase and to find out more about existing customers
• Interaction and community - ongoing information exchange between marketer and customer
• Control - ability of the customer to control how they interact with the marketing message
  
  • Push advertising –sent from marketer to the customer
  • Pull advertising - advertising that the customer actively seeks out (sms or email subscriptions)
• Accessibility
• Digitalisation - ability to deliver product as information or to present information about a product digitally

Question 14

What are methods of digital marketing?

Answer 14

• Banner an pop-up advertisements
• Brochure sites - like cabinet makers or photographers can display their portfolio on websites for customers to view
• Social media – various websites using technologies and experiences that involve online communities where members contribute to and build community and content where users can substantially control their own online experience
• Viral marketing – use of social networks to spread a marketing message
• Portals- website that acts as a gateway to other websites
• Search engine optimisation (SEO) - tailoring features of a website to try to achieve the best possible ranking in search results returned by a search engine
• Search engine marketing - paid advertising that appears similar to a search result on a search engine page
• Email, SMS and MMS marketing – note spam is unwelcome and illegal
• Apps
• QR codes
• E-commerce

Question 15

What is retail management?

Answer 15

• Retailing encompasses the business activities involved in selling goods and services to consumers for their personal, family, or household use
• Retail is the last stage in the distribution processes and includes every sale to the final customer
• retailing concept
  
  • Customer orientation – determines attributes and needs of its customers and endeavours to satisfy these needs to the fullest
  • Coordinated effort - retailer integrates all plans and activities to maximise efficiency
  • Value driven – offers good value to customers whether it be upscale or discount. This means having processes appropriate for the level of products and customer service
  • Goal orientation - the retailer sets goals and then uses its strategy to attain them

Question 16

What relationship retailing? 4 factors?

Answer 16

• retailers seek to form and maintain long-term bonds with customers, rather than act as if each sales transaction is a new encounter with them
• customer base- core customer relationships are worth more to nurture than with other shoppers
• customer service- Expected customer service is the service level that customers want to receive from any retailer e.g. basic courtesy . Augmented customer service includes the activities that enhance the shopping experience and give retailers a competitive advantage
• customer satisfaction-occurs when retailing experience meet or exceed customer expectations
• loyalty programs-rewards a retailer’s best customers with whom they want long lasting relationships with

Question 17

What is a value chain?

Answer 17

• A retail value chain represents the total bundle of benefits offered to consumers through a channel of distribution. It comprises of store location and parking, retailer ambience, the level of customer service, the products/brands carried, product quality, the retailer’s in- stock position, shipping, prices, the retailer’s image and other elements
• Manufacturer, wholesaler and retailer’s perspective
  • Value Chain is embodied by a series of activities and processes that provides a certain value for the consumer that involve them
• Customer’s perspective
  • Value is the perception the shopper has of a value chain. Value is based on the perceived benefits received versus the price paid.
• Why is value so important?
  • Value is desired by all customers but it means different things to different people. Customers must always believe they get their money’s worth.

Question 18

What are the different types of ownership?

Answer 18

• independent retailer
  
  • – owns one retail unit-
  • :) relative ease of entry, no worry about shareholders and ideal for entrepreneurs
  • :/ Low bargaining power against suppliers, high costs in advertising, hard to gain economies of scale
• chain retailer
  
  • operates multiple outlets under common ownership -
  • :) strong bargaining power due to purchase volume, efficiency (e.g. warehousing), ability for succession planning and continuity
  • :/ less flexibility as consistency is required (e.g. pricing), more management layers may result in delays in communication
• franchising
  
  • involves contractual arrangement between franchisor and retail franchisee, allows franchisee to conduct business under an established name and according to a given pattern of business. Franchisees typically pay an initial fee and monthly percentage of gross sales in exchange for the exclusive rights to sell goods and services in an area
  • :) economies of scale are gained, cooperative marketing efforts, taught the business
  • :/ oversaturation if too many in one geographic area, less flexibility due to locked in contracts, franchisors have right to void agreements in provisions are not satisfied
• leased department
  
  • department in a retail store usually a department, discount or specialty store that is rented to an outside party- usually pays percentage of sales as rent
  • :) enlarged market one stop shop
  • :/ leased department may conflict with store procedures

Question 19

What should we consider when choosing a store location?

Answer 19

• Location of the retail business has major impact on consumer visit and further purchase
• Obtain location demographics (population, income and age) for the proposed store location reduces location risk
• Retailers should be near their target market
• Small retails stores may benefit from traffic of nearby larger stores
• Considerations
  
  • Customers walking or driving past the location
  • Availability of public transport
  • Access to parking lot
  • Adequate parking facility
  • Visibility of store

Question 20

What should we consider when choosing store layout?

Answer 20

• store layout is an important factor affecting consumer behaviour and a critical determinant towards the store image
• Layouts are very important as they influence instore traffic flow, shopping atmosphere, shopping behaviour, and operational efficiency store appearance is the total impression a store makes on the minds of its customers.
• Strategies for store layout:
  
  • establish aisles that are narrow enough to force customers to slow down giving them ample time to notice the products displayed.
  • Increase merchandise density to the rear of the store encourages customers to stay and browse
  • product placement at eye-level or slightly below have the most selling success
• General Rules of Customer Traffic
  
  • Transition zone – area of store immediately beyond the entrance - not a good place for high margin products or important information – it is a place to make a good impression
  • Customers walk counter clockwise- customers might process information better if the entrance was to the left of the store
  • Customers avoid very narrow aisles to avoid social distance with other customers
  • Shoppers avoid upper and lower floors

Question 21

What are some examples of store layout?

Answer 21

• counter store- no self service
• forced path layout (IKEA)
• grid layout (Gerald Burns Pharmacy)
• Free form layout
• boutique layout
• area layout- like an amphitheatre
• star layout (department store like DJs, Myer?)

Question 22

What is merchandising?

Answer 22

• Merchandising consists of the activities involved in acquiring particular goods and/or services and making them available at the places, times and prices and in the quantity that enable a retailer to reach its goals
• Devising a Merchandising Plan factors to consider:
  
  • Forecasts (overall company, product category, item-by-item and store-by store)
  • Innovativeness ( first mover in product selection but high risk)
  • Assortment (range and selection)
  • Brands (manufacturer, store or private)
  • Timing (delivery and seasonal)
  • Allocation (on shelf and stock)

Question 23

What are the steps to implementing merchanise plans?

Answer 23

• *1. Gathering information** – about consumer (target market) e.g. product preference, lifestyle etc. , competitors
• *2. Select sources** – company- owned, regularly used supplier, new supplier
• *3. Evaluate merchandise** – inspection before purchase and after delivery, sampling and against description
• *4. Negotiating the purchase** – contract details and terms
• *5. Conclude purchase** - using computers or manually, ensure when payment needs to be made and ownership of goods
• *6. Receiving and stocking** - inventory marketing, delivery etc.
• *7. Reordering**- order and delivery time, inventory turnover, financial outlays, and inventory versus ordering costs
• *8. Re-evaluating on a regular basis** – merchandising plan should be monitored and assessed on a regular basis and conclusions should form part of the information gathering stage for future efforts