MAR3231 EXAM 3 - Lecture notes Exam 3 PDF

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Comprehensive lecture notes of Exam 3 for Retailing Management with Luke Hopkins (online section)....

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Module 3: Retail News and Information Flow in Distribution Channels ● In the news ○ In 2013, under armour purchased multiple tracking devices (maps, fitness, diet, etc..) to gain control of consumer data ○ Wearables in 2019, apple watch, ring, apps, etc to track sleep, heart rate, etc.. ○ DNA testing, 23 & me ● Information flow in retail distribution channel ○ info/supplier → info/retailer → info/consumer ○ Continuous cycle ○ What information should be shared between the following groups? (price changes or product modifications) ■ Retailer ←> customer ● Ex. consumption habits, sales, ● Suppliers need to know ○ From the retailer: ■ Estimates of category sales ■ Inventory turnover rates ■ Feedback on competitors ■ Level of customer returns ○ From the customer: ■ Attitudes towards styles and models ■ Extent of brand loyalty ■ Willingness to pay a premium for superior quality ● Retailers need to know ○ From the supplier: ■ Advance notice of new models and model changes ■ Training materials ■ Sales forecast ■ Justifications for price changes ○ From the customer: ■ Why people shop there ■ Customer likes and dislikes ■ Where else people shop ● Consumers need to know ○ From the supplier: ■ Assembly and operating instructions ■ Extent of warranty coverage ■ Where to send a complaint ○ From the retailer: ■ Where specific merchandise is stocked in the store ■ Methods of payment acceptable ■ Returns and other policies

Retail Information Systems and Big Data in Retail ● Retail Information System (RIS) ○ Anticipates the information needs of retail managers ○ Collects, organizes, and stores relevant data on a continuous basis ○ Directs the flow of information to the proper decision makers ○ Makes data manageable and applicable to decision making ○ What target knows about you: ■ Ethnicity ■ Job history ■ Magazines you have read ■ If you ever declared bankruptcy ■ Married, single, or divorced ■ Year you bought or lose your house ■ Where you went to college ■ What kinds of topics you talk about online ■ Whether you prefer certain brands of coffee, paper towels, cereal, or applesauce ■ Political learnings ■ Reading habits ■ Charitable givings ■ # of cars you own ● Had to pull back on showing how much they know to not freak out customers ○ Bringing it all together = guest id ○ Starbucks, chickfila, etc.. ● Data base management ○ Major element of an RIS ○ System gathers, integrates, applies, and stores information in related subject areas for easy access for decision makers ○ Used for: ■ Loyalty program management ■ Customer analysis ■ Promotion evaluation ■ Trade area analysis (how far are you willing to travel for a product?) ● Staples got in trouble for charging more for how far customer is from store ● Primary data ○ Information collected by the firm for a specific purpose ○ Advantages: collected for specific purpose, current, relevant, known and controlled source ○ Disadvantages: may be more expensive, tends to be more time consuming, information may not be acquired, limited perspectives ● Secondary data ○ Information collected by someone else for another purpose

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Ex. underarmour buying map my ride, bought personas around the users Advantages: inexpensive, fast, several sources and perspectives, generally credible, provides background information ○ Disadvantages: may not suit current study, may be incomplete, may be dated, may not be accurate or credible, may suffer from poor collection techniques Data mining and micromarketing ○ The in depth analysis of information to gain specific insights about customers, product categories, vendors, etc.. ○ Harrah’s data mining ■ In 1998 wanted to be the top loyalty program ■ Trying to differentiate themselves ■ Found customers preferred 60 casino chips over 30 casino chips, a free night, and free dinner for two ■ Found that 82% of revenue came from 26% of customers ● Typical customer: ○ Middle aged to senior adults ○ Middle class income ○ Did not stay in hotel, locals!! ○ Overall preferred “aspiring to high levels of achievement and reward” Micromarketing ○ An application of data mining whereby retailers use different marketing techniques specific customer segments ○ Micromarketing includes segmentation based on: ■ Location ■ Customer need ■ Brand loyalty ■ Industry

Site Selection and Trade Area Analysis ● Location ○ How does location influence where you do and don’t shop? ■ Parking, convenience, etc.. ○ When choosing a location, retailers consider: ■ Population size and traits ■ Competition ● Good or bad ● Can be good for car dealerships, restaurants, and bars ■ Transportation access ● Which side of the road are you on? ■ Parking availability ■ Nature of nearby stores ● Is it near strip club?

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■ Property costs ■ Length of agreement ■ Legal restrictions Trade area analysis ○ A trading area is a geographic area containing the customers of a particular firm or group of firms for specific goods or services ○ Benefits ■ Discovery of consumer demographics ■ Opportunity to determine focus of promotional activities ■ Assessment of effects of trading area overlap, want to make sure they don’t cannibalize any trading areas ■ Ascertain whether chain’s competitors will open nearby ■ Discovery of ideal number of outlets, geographic weakness GIS software ○ Mapping system with key location-specific data used to graphically display trading area characteristics such as ■ Population demographics ■ Data on customer purchases ■ Listings of current and proposed competitor locations ■ Very valuable!!! The size and shape of trading areas ○ Primary trading area ■ 50-80% of store’s customers ○ Secondary trading area ■ 15-25% of store’s customers ○ Fringe trading area ■ All remaining customers Trading areas ○ Large → small ○ Department stores, supermarkets, apparel stores, gift stores, convenient stores Flagship Stores ○ Has one or some of the following characteristics ■ Most prominent location ■ Store that holds/sells the highest volume of merchandise ■ A chain’s largest store ● REI adjusts flagship stores based on region ○ Apple’s chicago flagship store ■ Did not consider environmental factors ● Did not account for gutters for snow/ice season ● Takes away from profitability ● Clear glass walls and bird migratory patterns = bad ○ Had to adjust lightning so birds could see glass ○ Most well known: tiffanys NYC

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■ First merchant building with A/C ■ Tiffany diamond as must see attraction Three types of retail locations ○ Isolated stores ■ Free standing retail outlet with no adjacent retailers ● 7/11 ● Shell ● Dollar general ○ Far from walmart! ■ Advantages ● No direct competition ● Flexibility ● Good for convenience stores ● Adaptable facilities ● Easy parking ● Excellent for store that generates own traffic ■ Disadvantages ● Difficulty attracting customers ● Lack of cumulative attraction for customers ● High advertising expenses ● No cost sharing for promotions ○ Planned shopping centers ■ Centrally owned or managed and well-balanced ■ Architecturally unified, roof/building same color ■ Operated as unit ■ Based on balanced tenancy ■ Accompanied by parking ■ Wholefoods = anchor store, removal could be detrimental ■ Advantages ● Well-rounded assortments ● Strong suburban population ● One stop, family shopping ● Cost sharing of promotions ● Transportation access pedestrian traffic ■ Disadvantages ● Limited flexibility ● Higher rent ● Restricted product offerings in lease ● Competition ● Requirements for association memberships ● Domination by anchor stores ● Impact of store closings on affinities Unplanned business districts ○ Central business districts

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■ Formed around a geographic point where all public systems converge ■ Access to public transportation ■ high(er) pedestrian traffic ■ Near commercial and social facilities ■ Ex. downtown tallahassee Secondary business districts ■ Revolves around a major street intersection, SBDs evolve with the spread of the city ■ Results from crowding in CBD ■ Closer to residential areas ■ Higher level of convenience oriented products ■ Access to main roads ■ Ex. collegetown Neighborhood business districts ■ Formed to satisfy the convenience oriented shopping needs of a neighborhood ■ Convenient location ■ Parking ■ Less hectic than other business districts ■ Large amount of convenience based companies ■ Mostly CVS, nail salons, dry cleaner Which format would work best for….? ■ Fine dining restaurant - CBD ■ Dry cleaners - NBD ■ Trader Joe’s - SBD

Retail Operations ● Which wich ○ Not user friendly ○ Bombarded by options ■ Paradox of choice ● Fogo de chao ○ Keep serving until you flip CD ● YO! Sushi ○ Conveyor belt sushi based out of UK ○ Unsuccessful in america ○ Managerial concerns ■ Health and safety concerns ■ How to manage costs ■ Allergies ○ Addressed with instructions! ● Customer journey ○ The complete sum of experiences that customers go through when interacting with your company and brand

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Across all mediums ■ Call center ■ Online chat environment ■ E Commerce ■ Instore ■ Social media ■ Digital ads ■ Etc.. before and after purchase ○ Becoming more and more important Operations blueprinting ○ The systematic listing of actions performed by employees and customers ○ Touchpoints: the ways in which a customer experiences a product or service before, during, or after the purchase ○ Advantages: standardizes activities, isolates weak or failure prone operations components, helps evaluate personnel needs ■ Disney! ● Magic bands ● Pick up luggage for you ■ Apple, ritz carlton ○ Position on left, actions on right ○ Physical evidence, customer actions, *** on stage employee contact, *** backstage employee contact, support processes ○ Line of interaction, companies often make the mistake of not managing, first impression ○ Line of visibility, where you no longer see employee ■ Preparing food, ordering supplies, etc. Elements of an operations blueprint ○ Customer actions: customer steps taken as part of service delivery ■ Train your customer, how to order ● Ex. starbucks tall grande venti ■ Co-creation ● Working together! ● Customers have role in creating satisfying experiences ○ Visible contact employee actions ■ face-to-face encounters with the customer ■ Ritz carlton: ■ “Reset internal clocks” ● Bringing appetizer to offset delay of dinner ■ “Own the relationship” ● Whoever receives a complaint is responsible for resolving it ■ Employee empowerment ● Any employee can spend up to $2,000 per guest to resolve an issue ■ Anticipate unexpressed needs

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Not as identifiable because not seen but important elements ○ backstage/employee actions: not f2f w consumers ○ Support processes: necessary functions crucial to put out the services ○ Physical evidence: tangibles that customers are exposed to during contact with the retailer

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Maximizing personnel productivity ○ The role of employees ■ You have to find the right people!!! ■ “Dating and hiring have a lot in common” ○ Hiring the right people ■ Hire for attitude ■ Look for match in personal values ● Googles interview questions ■ Observe people skills ● The other side of customer service ■ Assess emotional strength ● How you handle disappointing situations ○ Job standardization ■ Creating uniform tasks for similar positions in different departments ■ Standardization drives efficiency ■ Ex. chipotle ○ Cross training ■ Involves teaching an employee who was hired to perform one job function the skills required to perform other job functions ■ Increases employee loyalty while reducing labor costs ■ Ex trader joe’s costco Technological decisions ○ Retail self service ■ Should retailers increase self-service options for customers? ■ 73% of shoppers surveyed they prefer retail self service technology, over engaging with store associates ■ 10.6% increase from last year ○ The bad ■ Technology has a very difficult time delighting the customer but it can easily disappoint the customer ■ National bank reported significant decrease in overall satisfaction as transition from f2f atms ■ Increase in overall complaints towards self service technology by large restaurant chain ○ The good ■ Based on a study, significantly more food when using self-service

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Based upon an analysis of selected retail tasks that need to be performed in a given time period, a retailer decided to rely on self-service. This illustrates the effective use of an operations blueprint Supermarkets and full-line discount stores have effectively reduced personnel costs through the use of job standardization and cross training The information needs of retail managers are collected, organized, and stored on a continuous basis in a retail information system As a customer at Publix, it is important that Publix lets you know where merchandise is located As a supplier for publix, it is important publix lets pepsi know inventory turnover rates Products that benefit from product demonstrations are more successful in the direct selling format Least flexible element of a retailer’s strategy is store location Major disadvantage to isolated store location is: costs such as outside lighting and security cannot be shared Destination store has largest trading area Most important trading area for retailer to study is primary...