Retail Management TEST 2 1. Need Recognition 2. Info Search 3. Alternative Evaluation 4. Choice 5. Outcomes Need Recognition A. Functional Needs: needs directly related to performance of product/ retailers. B. Psychological Needs: needs associated with personal gratification and enhancement of self-esteem. Ex. Stimulation, social experience, learning new trends, status and power, self-reward needs can conflict strategies to encourage need recognition Information Search economics of information approach dominates Diminishing marginal returns. Later bits of info contribute less and less to our knowledge. Most knowledge is learned at first. internal VS external search retailers wish to limit search to their stores Factors Affected Amount of Information Search Characteristics of the Product Complexity-more complex the product the more you search because there’s a lot to learn. Cost-more money more search Characteristics of Customer Past Experience-internally VS externally Perceived risk-info search is a risk-reduction strategy. Time pressure Market Characteristics Number of alternative brands Reducing Information Search Extensive merchandise Assortment Assistance in location alternatives Everyday low pricing Credit-diff methods of payment Information from sales associates Alternative Evaluation Different methods can be used to evaluate alternatives. A multi-attribute attitude model may be particularly helpful in planning retail strategy because it helps to predict consumers' evaluation of store alternatives and choice. Ao= the sum of ∑^n Bi Ii i=1 Where Ao= attitude towards anything ( for this case it will be store) N=the number of salient attributes Bn=beliefs that the store possesses a given attribute I Ii=importance of a given attribute I to the consumer Consumer Female 40's income >$60000 working professional status orient Ii 4=most important 1=least important Bi NMacy’s Express TJmaxx 2 Knowledgeable helpful salespeople4(8) 3(16) 1(2) 4 Good quality merchandise 5(20) 3(12) 3(12) 3 Good atmosphere 4(12) 3(9) 1(3) 1 Low prices 1(1) 3(3) 5(5) Ao= 41 30 22 Retailing Strategy and Multi-attribute attitude models To enhance like hood that consumers will visit store, retailers can A. ΔBi For the retailer( increase performance rating on important attributes) For the retailers competition (decrease performance ratings of competitors) B. ΔIi Convince consumers that an attribute is more/less important than previously thought. (ie. High price is a good thing) Difficult to do. C. Add a new attribute N Post-Purchase Evaluation Satisfaction: post-purchase evaluation of how well a store meets or exceeds consumers’ expectations. To enhance satisfaction (and reduce negative word-of-mouth) retailers can - provide accurate information (don’t over-promise) offer quality merchandise have liberal guarantee and return polices follow-up after a sales Customer Relationship Management (crm) Set of strategies, program ...

1. Retail Management
TEST 2
1. Need Recognition
2. Info Search
3. Alternative Evaluation
4. Choice
5. Outcomes
Need Recognition
A. Functional Needs: needs directly related to performance of
product/ retailers.
B. Psychological Needs: needs associated with personal
gratification and enhancement of self-esteem.
Ex. Stimulation, social experience, learning new trends, status
and power, self-reward
needs can conflict
strategies to encourage need recognition
Information Search
economics of information approach dominates
Diminishing marginal returns. Later bits of info contribute less
and less to our knowledge.
Most knowledge is learned at first.
internal VS external search
retailers wish to limit search to their stores
Factors Affected Amount of Information Search
Characteristics of the Product
Complexity-more complex the product the more you search
because there’s a lot to learn.
Cost-more money more search
Characteristics of Customer

2. Past Experience-internally VS externally
Perceived risk-info search is a risk-reduction strategy.
Time pressure
Market Characteristics
Number of alternative brands
Reducing Information Search
Extensive merchandise Assortment
Assistance in location alternatives
Everyday low pricing
Credit-diff methods of payment
Information from sales associates
Alternative Evaluation
Different methods can be used to evaluate alternatives.
A multi-attribute attitude model may be particularly helpful in
planning retail strategy because it helps to predict consumers'
evaluation of store alternatives and choice.
Ao= the sum of ∑^n Bi Ii i=1
Where
Ao= attitude towards anything ( for this case it will be store)
N=the number of salient attributes
Bn=beliefs that the store possesses a given attribute I
Ii=importance of a given attribute I to the consumer
Consumer Female 40's income >$60000 working professional
status orient
Ii
4=most important
1=least important
Bi
NMacy’s Express TJmaxx
2 Knowledgeable helpful salespeople4(8) 3(16)
1(2)

3. 4 Good quality merchandise 5(20) 3(12)
3(12)
3 Good atmosphere 4(12) 3(9)
1(3)
1 Low prices 1(1) 3(3)
5(5)
Ao= 41 30 22
Retailing Strategy and Multi-attribute attitude models
To enhance like hood that consumers will visit store, retailers
can
A. ΔBi
For the retailer( increase performance rating on important
attributes)
For the retailers competition (decrease performance ratings of
competitors)
B. ΔIi
Convince consumers that an attribute is more/less important
than previously thought. (ie. High price is a good thing)
Difficult to do.
C. Add a new attribute N
Post-Purchase Evaluation
Satisfaction: post-purchase evaluation of how well a store meets
or exceeds consumers’ expectations.
To enhance satisfaction (and reduce negative word-of-mouth)
retailers can -
provide accurate information (don’t over-promise)
offer quality merchandise
have liberal guarantee and return polices
follow-up after a sales
Customer Relationship Management (crm)
Set of strategies, programs and systems focused on identifying
and building loyalty with the firms most valuable customers
recognizes that nota ll customers are equally profitable of serve

4. Customer Relationship Management (CRM)
A set of strategies, programs, and systems focused on
identifying and building loyalty with the firms most valuable
customers.
Recognized that not all customers are equally profitable to serve
Firms can increase profitability develop a sustainable
competitive advantage by building and maintaining relationship
with their better customers.
Identifying Best Customers
Lifetime customers value (LTV) the expected contribution of
the customer’s patronage to the retailer’s profitability over his/
her entire relationship with the retailer.
LTV estimated using post purchase behavior.
Use post purchases to estimate future lifetime purchases and
then deduct costs of serving he customer.
80/20 rule 20% of customers account for 80% of sales.
4 LTV segments
4 LTV SEGMENTS
Platinum-most loyal customers; not very price sensitive; place
more value on good customers service.
Gold- more price sensitive than A; may shop at competitors
stores from time to time. Iron
Price Sensitive; no very loyal; frequently shop competition.
Lead-cost retailers’ money to serve these customers; “get the
lead out”
Customer Alchemy-turning gold ad iron customers into
platinum customers by increasing retailers share of wallet for
these customers.
Retaining Best Customer
A. Frequent Shopper programs offer customers incentives
and/ or discounts for patronage- 4 limitations.
Programs are expensive to develop and administer.
Difficult to decrease benefits once they are given to consumers.
Do these programs really create loyalty

5. Competitors may offer similar programs than competitive
advantage is lost.
B. Special Customers Services offered only to host customers.
Other customers may not be aware of the programs.
Personalization use past purchase data to make
recommendations to customers.
Community: create sense of community or family among
consumers
community involvement sponsorships etc
E. Company Owned Production
retailer ecoes manufacturer of private label goods
Merchandise costs are decreasing since there are no middlemen
But retailer must bear cost and risks of production
speeds production process
tailoring of goods to clients (customers)
quality is assured (retailer controls level)
Levels of Private Label Involvement
(Low)No Private brands; all manufacturer brands, off-price
retailers
(Middle)Proportional private label inventories; mix of
manufacturer and private brands dept. stores
(High) 100% private labels the store is the brand
Specialty stores
A. “The store is the Brand”
entire inventory consists of private label merchandise
Otherwise store and brand name are synonymous

6. requires more investment in product development than any other
branding strategy mix
Often these retailers design and produce their own private label
goods.
requires multiple skills and competencies
risky strategy
B. “Proportional private Label inventories”
some % of merchandise offerings consists of private label goods
tries to capitalize on the benefits of both manufacturer and
private brands
may attract multiple target groups of customers
Labeling Techniques
A. Company Name
ex. Gap, Talbots, Ann Taylor, etc.
B. Image Building Brand
Mock designer names
ex. Jennifer Moore, Valerie Stevens
Foreign/ Regional sounding names
ex. Alfani- implies Italian origin
prestige-sounding names
ex. Charter Club, inc
Theme building names
sports oriented
ex. Marshal fields “field sport” and “club follow”
C. Famous-Signature Labels
celebrity name associated with private label goods
attempts to capitalize on celebrity appeal
could become problematic when celebrity becomes involved a
scandal
works best when celebrity and product category are somehow
linked
ex. Martha Stewart home furnishings paint outdoor furniture
Michael Graves – uniquely designed housewares
Kathy Ireland-athletic wear, swimwear.
Manufacture-turned- Private Brand-name

7. Bisou Bisou-JCP
Joe Boxer-Kmart
Mossimo-Target
E. Publications-Affiliated Label
-attempts to capitalize on “brand” equity of publications.
ex. Walmart and better homes: Gardens
Kmart: Country Living
Tactics for Successful Private Brands
A. Extensive advertising to develop/ promote image of private
brand
B. Allocation of separate floor space devoted to private brands
C. displays
D. Employee training (increase knowledge)
E. giveaways emblazoned with private brand
help to keep brands name in consumer minds
F. Special Events/ Promotions
fashion shows, sales, etc
G. Money-back guarantees (grocery, drugstores etc)
Growth Opportunities
has the target market changed?
1. Market Penetration-not existing
2. Market Expansion-ll bean in japan-ex
3. Retail Format Development-Macy’s by mail. Walmart.com
4. Diversification-banana republic
Ansoff's Matrix
A. Market Penetration
Focus on existing market using present retailing format.
encourage existing customers to visit store more often
attract customers in segment who aren’t patrons currently
open more stores convenient to target customers
cross-sell( sell complementary merchandise)

8. least risky strategy to pursue for growth
B. Market Expansion
use existing retail formats to appeal to new segments and
consumers
new geographic territories(i.e. Open stores like Publix in north
east
new target markets
C. Retail format development
use new retail formats to appeal to customers in existing
segments
Store retailer selling through catalogs or internet, or vice versa
(costly)
adding new merchandise categories
adjust service levels
D. Diversification
new retail formats to appeal to new market segments
Most risky strategy for growth.
related diversification; present retail strategy shares something
in common with new opportunity (buying from some vender,
etc)
unrelated diversification; no commonality between present
business and new business
vertical integration; retailer buys up supplier, manufacturer
(backward integration)
3 Objectives for store design
Stores atmosphere should be consistent with the stores image.
Stores design should influence customers buying decisions.
Stores design should make productive use of space.
Store Layout
Layout should encourage customers to move through the store
and purchase more merchandise.
Layouts should make productive use of space and also give
consumers room to shop
Layouts should offer flexibility
Types of store Layouts

9. A. Grid Layouts: displays and aisles are placed in a rectangular
or grid iron pattern
Advantages
Dogs: low product profitability low unit sales; strategies-Raise
price
lower shelf position
cut promotions
consider dropping
Winners: high product profitability, high unit sales; strategies-
promote more
better position
display more (more facings)
Traffic builders: low product profitability, high unit sales;
strategies
review prices
lower shelf position
expand space
mix with sleepers
Types of Retail Location
A. Central Business Districts (CBD'S)
Main Street Locations
B. Shopping Centers
1. Strip Centers
a. Neighborhood Centers
b. Community Centers
c. Power Centers
2. Malls
a. Regional Centers
b. Super-Regional Centers
c. Fashion/ Specialty Centers
d. Outlet Centers
e. Theme/ Festival Centers
f. Lifestyle Centers
Freestanding Sites
Carts, Kiosks RMUS, Wall Units

10. E. Mixed-use development (mxd'S)
CBD'S
downtown business area of a city
high traffic area
gentrification may make CBDs more attractive
problems
Parking
Security
Off-peak times (evening/ weekends)
Poor planning
Main street location (shopping area of smaller towns or
secondary business district in suburb or with in city may be
more successful
Shopping Centers
a group of retail and other commercial businesses that is
planned, developed, owned and managed as a single property
provides synergy among members stores
two primary types
1. Strip centers
2. Malls
Strip Centers
parking in front of stores
no enclosed walkways
convenient locations (access points on highways or
neighborhoods)
low rent
3 TYPES
A. neighborhood Centers
Convenient shopping for daily needs.
Usual anchors; super market or drugstores.
trade area: 3 miles
B. Community Centers
widest variety of retail formats
2 or more anchors.

11. usual anchors; supermarkets, drugstores, discount dept. stores,
off price retailers, etc
trade area: 3-7 miles
Power Centers
fast growing types of development
3 or more anchors
Usual anchors; discount dept. stores, off-price retailers category
killers, etc.
trade area: 5-10miles
can be configured as strips
“village”
Few free-standing anchors and a small # of specialty stores.
Malls
typically enclosed
park in outlying area and walk into stores
Tenant mix is planned (good balance in types of stores,
shopping opportunities.)
Stores appealing to similar segments often located together.
mall management controls and maintains environment
high rent
malls becoming entertain centers
6 types.
A. Regional Centers
Provide general merchandise (partis. Soft goods)
at least 2 anchors
Usual anchors: traditional, mass merchant, and/ or discount
dept. store.
Trade area 5-15 miles
B. Super regional Centers
similar to, but larger.
more anchors and a wider variety of merchandise.
often multi-level
trade area: 5-25miles
C.Fashion/specialty Centers
composed of upscale apparel shops, boutiques and gift shops

12. may or may not have an anchor
usually located in tourist areas, high-income areas or CBD's
trade area: 5-15 miles
Outlet Centers
include manufacturers(and retailers') outlet stores and
sometimes, and off-price retailers
often located in tourist areas (and away from dept and specialty
stores)
trade areas: 25-75 miles
E. Theme / festival Centers
member stores carry out unifying “theme”
usually no anchor stores
unstable environment
Popular in tourist areas
F. Lifestyle Centers
street scape layout with restaurants and stores (may include
movie theaters)
no discount stores or self-service stores
High income areas.
Free-standing Sites: retail location that isn’t connected to other
retailers, but site may be adjacent to mall; used by retailers with
large space requirements (eg. Category killers)
low rent
convenient parking
no direct competition
but store must be a destination point for consumers (no synergy
with other stores
Cart: mobile site: typically located in mall common areas.
Kiosk: stationary site larger than cart: mall common areas.
RMU (retail merchandising unit); combination of cart; kiosk
Wall Units: 6-7ft selling spaces located on a wall rather than in
middle of an aisle. Carts, Kiosks, RMU's and wall units are less
expensive than traditional stores but have short-term leases;
stores may not appreciate those businesses, particularly if they
sell similar merchandise.

13. Mixed-use developments (MXD'S)
Combine different uses (e.g. shopping centers, offices, hotels,
residences, etc.) in one complex
bring additional shoppers in
make productive use of space
ex airports resorts, hospitals store with in a store.
Trade Areas
a contiguous geographic area that contains the customers of a
particular firm for specific goods and services
primary zone: geographic area from which the business services
60-65 percent of its customers
Secondary zone: geographic area that contains an additional 15-
25 percent Of firms customers and is located outside of the
primary zone: customers more widely dispersed.
Tertiary (fringe) zone; geographic area located outside of the
secondary zone containing all remaining customers; customers
most widely dispersed here