welcome to mt- 303 marketing seminar

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Dr. Nardi

Welcome to MT- 303Store Management

Introduction to the World of Retailing

Unit 2- SeminarProfessor: Dr. Nardi

………

Seminar Ground Rules Start with person’s name, or Prof, or Dr.

N., if responding to someone’s comment. No name means response is to whole

class. When you have a question, ASK it. Start your Question with // or ?? –

examples: //What’s for Lunch? Or ?? What do you mean?

You are welcome to respond, after the person asked has a chance to answer.

When I ask to “move on”, end discussion on that topic.

Please do not use “private chat”

AgendaReview from last weekTonight:

RetailingDistribution ChannelsMulti-Channel RetailAdd-ValueCareer Opportunities

Wrap Up

Review from Last WeekThe SyllabusOffice HoursExpectations

GeneralAssignments & Seminars

Q & AMarketing in Every Day Life

Unit 1How did it go?

Time management? Questions : Grades Review? Seminar?

QuestionWhat is Retailing?

Retailing

Retailing encompasses the business activities involved in selling goods and services to consumers for their personal, family, or household use. It includes every sale to the final consumer.

Distribution Channel

A Retailer’s Role in a Supply ChainRetailers are the final business within a

supply chain which links manufacturers to consumers.

A Supply Chain is a set of firms that make and deliver a given set of goods and services to the ultimate consumer.

Manufacturing, Wholesaling and RetailingVertical Integration – firm performs more than one set of

activities in the channel

Ex: retailer invests in wholesaling or manufacturing

Backward Integration – retailer performs some distribution and manufacturing activities

Ex: JCPenney sells Arizona jeans (Private Label)Forward Integration – manufacturers undertake retailing

activitiesEx: Ralph Lauren (New York Jones, Liz Claiborne) operates

its own stores

Large retailers engage in both wholesaling and retailing

Ex: Wal-Mart, Lowe’s, Safeway, Brown Shoe Company

QuestionDo Retailers add value?

Do Retailers Add Value?

a box of crackers at a grocery store costs $1 to manufacturer sells at a price of $2

Retailers add significantly to the prices consumers face

Why not buy directly from the manufacturer?

Does that mean that grocery stores are very profitable?

Example

Manufacturer

Vendor

Distributor

Wholesaler

Retailer

$1.00 $1.20 $2.00

$.85 $.15 $.70

Consumer

Price to Distributor

Price to Retailer

Price to Consumer

Why Not Get Rid of the Middlemen?

Better services to customersMore efficient

Why Not Get Rid of the Middlemen?

Multi-Channel Retailing

A retailer sells to consumers through multiple retail formats: Web sites Physical stores

Brooks Brothers and Multi-Channel Retailing

Relationship Management Among Retailers and Suppliers

Disagreements may occur in the following areas:control over channelprofit allocationnumber of competing retailersproduct displayspromotional supportpayment termsoperating flexibility

1-20Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

Distribution Types

Exclusive: suppliers make agreements with one or few retailers, designating such retailers as the only ones to carry certain brands or products within a specified geographic area

Intensive: suppliers sell through as many retailers as possible

Selective: suppliers sell through a moderate number of retailers

1-21Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

Figure 1-7: Comparing Distribution Types

How Retailers Add Value■ Provide

AssortmentBuy other products

at the same time■ Break Bulk

Buy it in quantities customers want

■ Hold InventoryBuy it at a

convenient place when you want it

■ Offer ServicesSee it before you

buy; get credit; layaway Ryan McVay/Getty Images

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How Retailers Add Value The value of the product and service increases as the retailer performs functions.

Bicycle is developed at manufacturerBicycle is developed at manufacturer

Bicycle is developed in several styles

Bicycle is developed in several styles

Bicycle is offered in convenient locations in quantities of one

Bicycle is offered in convenient locations in quantities of one

Bicycle is featured on floor display

Bicycle is featured on floor display

Bicycle can be bought on credit or

put on layaway

Bicycle can be bought on credit or

put on layaway

Examples: How Retailers Add Values BagBorrowerSteal.com

jewelry and bag rental; Get (not buy, but borrow) exactly what you want

Home DepotDIYer (Do-it-yourselfer); Learn how to do it yourself with in-

store clinics and online workshops

Social and Economic Significance of Retailing

Retail Sales: Over $4.1 trillion in

annual U.S. sales in 2005Employment:

Employs over 24 million people in 2005

One of the largest sectors for job growth in US

Social responsibilityGlobal player

Social responsibility Corporate social responsibility

The voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations, in addition to the concerns of its stakeholders

Examples: Edun - a fair-trade fashion brand by the U2 lead singer BonoStarbucks: pays its farmers 42%

more than the commodity price of Arabica coffee beans

Target: community giving programs (5% of income, $3 million a week)

Retail companies give away 1.7% of their profits, compared with about 0.9% for companies in other industries

QuestionAre retail operations the same everywhere?

Structure of Retailing and Distribution Channels around the World: The United States

The nature of retailing and distribution channels in the U.S. is unique.

Has the greatest retail densityHas the greatest concentration

of large retail firmsLarge enough to operate their

own warehouses, eliminating the need for wholesaling.

The combination of large stores and large firms result in a very efficient distribution system.

CHINAThe United States

Comparison of Distribution Channels around the World

What have created these differences in distribution systems?

Social & Political Objectives

China, India: To reduce unemployment by protecting small businesses EU: To protect small retailers

To preserve green spaces/town centers

Geography Much lower population density in the US than in India, China, and EU (where less low-cost real estate are available for building large stores)

Market size Large retail markets in US, India, China Countries in EU – distribution channels and retail chains operate in a single country (no economy of scales to be achieved; trade barriers still exist)

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Careers in Retailing

Opportunities in Retailing:Management opportunities

■ People with a wide range of skills and interests needed because retailers’ functions includeFinancePurchaseAccountingManagement information system (MIS)Supply management including warehouse and

distribution managementDesign and new product development

■ Financially rewarding5-year salary of buyers: $50,000 - $60,0005-year salary of store managers: $120,000 -

$160,000

Opportunities in Retailing:Entrepreneurial opportunities

■ Retailing provides opportunities for people who want to start their own business

■ Some of the world’s richest people are retailing entrepreneurs

■ Examples of retailing entrepreneurs Sam Walton (Wal-Mart) Jeff Bezos (Amazon.com) Ingvar Kamprad (IKEA) Anita Roddick (the Body

Shop)

Wal-Mart: Sam Walton

IKEA: Ingvar Kamprad

Career Opportunities in RetailingStart Your Own Business

Walton Family (Wal-Mart) Fisher (The Gap) Wexner (The Limited) Menard (Menard’s) Marcus (The Home Depot) Kellogg (Kohl’s) Schulze (Best Buy) Levine (Family Dollar) Gold (99Cent Only)

List of Retail Entrepreneurs on Forbes 400 Richest Americans

Careers in RetailingCareer Opportunities

Store ManagementMerchandise ManagementCorporate Staff

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Retailers are a Business Like Manufacturers

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

MIS

Real Estate

Operations

Finance

Promotion/Advertising

Human Resources

Loss Prevention

Store Design

Figure 1-8: Special Characteristics Affecting Retailers

Impulse Purchase

Popularityof

Stores

Retailer’sStrategy

Small Average

Sale

Retail Management Decision Process

Strategic Vs Tactical Decisions

■ Doing the Right Thing (direction) vs. Doing Things Right (execution)

■ Strategic Decisions Are: Made Infrequently Long-term Require significant investment Not easily reversed

■ Location, Organization Design, Information and Distribution Systems, Customer Service

Retail Strategy■ Need to identify the

competition intratype competition

(e.g., Dillard’s vs. JCPenney)

intertype competition (e.g., Dillard’s vs. Wal-Mart)

■ Identifying customers What are the significant

demographic and life-style trends

Who are your target customers

Retail Strategy

An overall plan for guiding a retail firm

Influences the firm’s business activities

Influences firm’s response to market forces

Retail Strategy■ A retail strategy should identify

the target marketthe product and service mixa long-term comparative advantage

Six Steps in Strategic Planning1. Define the type of business 2. Set long-run and short-run

objectives3. Determine the customer market4. Devise an overall, long-run plan5. Implement an integrated strategy6. Evaluate and correct

JC Penney’s Strategic Evolution(1)

Main Street (small town) private label, soft goods (apparel, home furnishings), decentralized retailer

Changes in environment -- increased disposable income, growth of suburbs, interstate highway program

Emulate Sears in moving to enclosed suburban malls Add hard goods

(appliances, automotive) Diversify – drug stores,

insurance, specialty stores Develop catalog channel

JC Penney’s Strategic Evolution(2) Focus on department store

format and soft goods develop electronic retail channel

Mid-market, mall based department store, between Wal-Mart/Target and Macy’s/Dillards

Competition from Target, Kohl’s Centralization to reduce cost,

increase responsiveness - centralized buying, warehouse delivery

Off the mall stores to increase customer convenience

Improving store atmospherics Upgrading merchandise offering

(e.g., Sephora, American Living by Polo Ralph Lauren)

Wal-Mart’s Strategic Evolution

Small Town - Discount Store selling hard goods and soft goods limited service, efficient distribution

Enter suburban marketsWarehouse Clubs (Sam’s)Supercenters International ExpansionSupermarkets, neighborhood markets

Sears’ Strategic Evolution

Large number of merchandise categories -- appliances, hardware, apparel

Malls evolved into places for buying soft goods, hard goods sold at category killers

The Softer Side of Sears Refocused on value -- Testing carts in stores Acquired Lands’ End Acquired by Kmart

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Macy’s Retail Mix

Retail Strategy

Customer Service Location

Merchandise

Assortment

PricingCommunication Mix

Store Design

and Display

Macy’s Retail Mix

Enclosed Malls

Customer Service

Merchandise

Assortment

PricingCommunication Mix

Store Display

And Design

Location Strategy

Macy’s Retail Mix

Location

Pricing

Communication Mix

Store Design

and Display

Customer Service

Many Items in Apparel

and Soft Home

Assortment Strategy

Macy’s Retail Mix

Location

Communication Mix

Store Design

and Display

Customer Service

Merchandise Assortment

Moderate with

Frequent Sales

Pricing Strategy

Macy’s Retail Mix

Communication Mix

TV, Newspaper Ads and

Special Events

Store Design

And Display Merchandise Assortment

Pricing

Customer ServiceLocation

Macy’s Retail Mix

Store Design and Display

Racetrack with Displays

Customer Service Location

Merchandise Assortments

PricingCommunication Mix

Macy’s Retail Mix

Customer Service

Modest

Location

Merchandise Assortment

Pricing

Communication Mix

Store Design and Display

Figure 1-10: Applying the Retailing Concept

Customer Orientation

Coordinated Effort

Value-driven

Goal Orientation

RetailingConcept

RetailStrategy

Target’s Retail Mix

Retail Strategy

Customer Service Location

Merchandise

Assortment

PricingCommunication Mix

Store Design

and Display

Target’s Retail Mix

Free-standing Stores

Customer Service

Merchandise

Assortment

PricingCommunication Mix

Store Display

And Design

Location Strategy

Target’s Retail Mix

Location

Pricing

Communication Mix

Store Design

and Display

Customer Service

Large Number of Categories

Private Labels

Few Items in Each Category

Assortment Strategy

Target’s Retail Mix

Location

Communication Mix

Store Design

and Display

Customer Service

Merchandise Assortment

Low to Modest

Pricing Strategy

Target’s Retail Mix

Communication Mix

TV and Newspaper

Insert Ads

Store Design

And Display

Customer ServiceLocation

Merchandise Assortment

Pricing

Target’s Retail Mix

Store Design and Display

Colorful, wide aisles displays

for products with a grid layout

Customer Service Location

Merchandise Assortments

PricingCommunication Mix

Target’s Retail Mix

Customer Service

Limited

Location

Merchandise Assortment

Pricing

Communication Mix

Store Design and Display

Aspects of Target’s Strategy

Growth objectives Appeal to a prime

market Distinctive image Focus Customer service Multiple points of

contact

Employee relations

Innovation Commitment to

technology Community

involvement Monitoring

performance

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Ethical Situations for a Retail Manager

Should a retailer sell merchandise that they suspect utilized child labor?

Should it advertise that its prices are the lowest in an area even though some items are not?

Should a buyer accept an expensive gift from a vendor?Should salespeople use high-pressure sales when they

know the product is not the best for the customer’s needs?

Should a retailer give preference to minorities when making a promotion decision?

Should a retailer treat some customers better than others?

Checklist for Making Ethical Decisions

You are Faced with an Ethical Decision: What Can You Do?

Ignore your personal values and do what your company asks you to do – you will probably feel dissatisfied with your job .

Take a stand and tell your employer what you think. Work to change the policies.

Refuse to compromise your principles – you could lose your job!

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1-72Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

The Build-A-Bear Experience: Never Boring

Customer Service

Activities undertaken by a retailer in conjunction with the basic goods and services it sells. This includes:Store hoursParkingShopper-friendlinessCredit acceptanceSalespeople

Figure 1-12: A Customer Respect Checklist

Do we trust our customers?Do we stand behind what we sell?Is keeping commitments to customers important to our company?Do we value customer time?Do we communicate with customers respectfully?Do we treat all customers with respect?Do we thank customers for their business?Do we respect employees?

Relationship Retailing

Retailers seek to establish and maintain long-term bonds with customers, rather than act as if each sales transaction is a completely new encounterConcentrate on the total retail experienceMonitor satisfaction Stay in touch with customers

Effective Relationship Retailing

Use a “win-win” approachIt is easier to keep existing customers happy

than to gain new onesDevelop a customer database

Ongoing customer contact is improved with information on people’s attributes and shopping behaviors

Approaches to the Study of Retailing

Institutional

Functional

Strategic

Parts of Retail Management: A Strategic Approach

Building relationships and strategic planning Retailing institutions Consumer behavior and information gathering Elements of retailing strategy Integrating, analyzing, and improving retail

strategy

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Retail Discussion:Myths about Careers in Retail

Misconceptions About Careers in Retailing■ College not needed■ Low pay■ Long hours■ Boring■ Dead-end job■ No benefits■ Everyone is part-time■ Unstable environment■ No opportunity for women and minorities

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Why You Should Consider Retailing

■ Entry level management positions:

Department manager or assistant buyer/planner

■ Manage and have P&L responsibility on your first job

■ Starting pay average with great benefits

■ Some retailers pay graduate school

■ No two days are alike

■ Buying and planning for financially analytically oriented

■ Management for people-people

Types of Jobs in Retailing Most entry level jobs are in

store management or buying, but there’s…

-accounting and finance

-real estate

-human resource management

-supply chain management

-advertising

-public affairs

-information systems

-loss prevention

-visual merchandising

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Wrap Up

Key Points Key Terms

klj kjl

Wrap Up Discussion:

Remember – Minimum requirements: 1 Answer AND 2 Peer to Peer Comments per Question. Post on 3 separate days

and the primary response post by Saturday. Answer all Sub-questions & cover all Points in the Question

Remember you have assignments due this week.Due on Tuesday by 11:59 PM E.T.

Next Seminar Types of Retailers For the next seminar think about:

What are the characteristics of retailers? Identify some similarities and some differences.

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You can contact me: 1) through my email: nnardi@kaplan.edu , 2) through AOL Instant Messaging my AOL IM name is nknardi, (put me on your buddy list)3) through Second Life (email me to request my user name if you use SL)4) through the Live Chat Post in the Classroom5) or through the “Instructor’s Office” link under the Course Home page My “Office Hours” for this term are as follow: __________________________

T H A N K Y O U

F O R

A T T E N D I N G

SEE YOU IN THE DISCUSSION THREAD QUESTIONS

AND IN NEXT WEEK’S SEMINAR

Any Questions?

Thank you for attending!

See you next week!