1. Retail Environment

Question 1

Definition of Retail Environment

Answer 1

It is the sum total of variables and forces inside and outside the organisation that influence the retail decision-making process.It consists of the Micro-, Market- and Macro- environment.

Question 2

Definition Micro Environment

Answer 2

The microenvironment refers to the internal variables that can be controlled by management.

Retail managers do not directly control all the variables in the internal environment but can influence decisions pertaining to the use of resources.

The retail manager, however, has direct control over the activities of the retail organisation.

Question 3

The variables in the microenvironment

Answer 3

The mission of the retailer. 
The objective of the retailer. 
The management structure. 
The corporate culture. 
The resources of the enterprise.
The marketing instrument.

Question 4

The variables in the microenvironment:

The mission of the retailer.

Answer 4

The retailer’s mission statement should clearly indicate the current product market position of the business.

Question 5

The variables in the microenvironment:

The management structure.

Answer 5

Structure entails the division of tasks between groups and individuals and the coordination of the tasks between different departments.

Question 6

The variables in the microenvironment:

The corporate culture.

Answer 6

The retail culture is a collection of separate and collective assumptions, such as beliefs, values and expectations that members of the culture
have of various retail stores.

Question 7

The variables in the microenvironment:

The resources of the enterprise.

Answer 7

The resources of the retailer can be seen in terms of available capital, skills needed, human resources and the physical facilities needed to
make a success of the business.

Question 8

The variables in the microenvironment:

The marketing instrument.

Answer 8

This instrument is directly controlled by the retailer and includes the product (the goods and services the company o ers), the price (the value of the goods and services), place (where the goods and services are sold) and promotion (the marketing communication mix used to inform the target market).

Question 9

Definition of Market Environment

Answer 9

The market environment refers to those elements or variables that may be influenced by the organisation but which it cannot control.

Question 10

Three variables in the market environment.

Answer 10

Suppliers
Consumer
Competitors

Question 11

Variables in the market environment.

Suppliers.

Answer 11

These are the organisations that provide resources to the retailer to enable it to render services. For example, Tiger Brands is a supplier of Shoprite Checkers and supplies the company with bread, our and other products.

Question 12

Variables in the market environment.

Consumers.

Answer 12

Consumers are the individuals or groups of people who purchase goods or services from the retail store. For example, Jason purchases flowers from Interflora. Jason is the consumer in this example.

Question 13

Variables in the market environment.

Competitors.

Answer 13

These are the businesses that o er goods and services similar to our retail store, and those goods and services compete for the retail support of the same customer. For example, MTN and Cell C compete with their services for cellphone customers.

Question 14

Define the macroenvironment

Answer 14

The macro environment refers to those factors or variables in the environment over which the individual business has no control and on which it has little etc. These variables influence the business and need to be constantly monitored because they are continually changing

Question 15

The macro environment consists of the following variables:

Answer 15

• The technological environment.
• The economic environment.
• The social environment.
• Political environment.
• International environment.

Question 16

The macro environment consists of the following variables:

The technological environment.

Answer 16

Technological innovation originates in research and development by business as well as the state and results not only in new machinery or products, but also new processes, methods and new approaches to management that effect change in the environment. An example in South Africa would be the 3D LG television.

Question 17

The macro environment consists of the following variables: • The economic environment.

Answer 17

The economic wellbeing of a community is measured by the range and number of products and services produced.

The structural changes in the incomes of different consumer groups are of paramount importance to marketing management. In action, like growth is an economic variable that influences the decisions made by management.

Money supply and interest rates and the position of country’s monetary unit can create disturbances in the environment.

For example, the South African economy is affected by the global recession and consumers have therefore had to curb their spending on jewellery, cars and expensive holidays.

Question 18

The macro environment consists of the following variables:

• The social environment.

Answer 18

Social and cultural changes are strongly influenced by the economy and technology. Social trends directly affect the marketing strategies of a business because they help to determine consumer needs and purchasing decisions. These trends include demographics, lifestyle, cultural values and subcultural influences.

Question 19

The macro environment consists of the following variables:

• Political environment.

Answer 19

A business has to be aware of the laws and regulations that regulate business because it has to abide by them. In addition, South African businesses need to be aware of the laws of the national and provincial governments. When South Africa entered a new political era in April 1994, there were vast changes in regulatory bodies in an e ort to implement change.
.

Question 20

The macro environment consists of the following variables:

• International environment.

Answer 20

Businesses operating in the international business environment and themselves in a far more complex environment. Businesses wishing to market their products abroad or import goods must understand all the relevant regulations and conditions that apply in those countries

Question 21

SWOT analysis

Answer 21

SWOT analysis is conducted to determine internal strengths and weaknesses and external opportunities and threats. It endeavours to shed light on those environmental variables that in some way have either a positive or negative impact on the success of the business.

Question 22

• Strengths

Answer 22

Strengths are resources, skills, capital or any other advantages arm has relative to its competitors and the needs of the market. Strengths give retailers a competitive edge in the marketplace. Strengths can also be a retailer’s present position and a major retailer’s resources or expertise. One of the strengths of Toys-R-Us, for instance, could be the fact that it has more than 1 500 stores worldwide.

Question 23

• A weakness

Answer 23

• A weakness is a limitation or deficiency in resources, skills and capabilities that seriously hampers the effective performance of the business. Weaknesses may include retail store facilities, financial resources, management capabilities and brand image. For example, a weakness for Apple could be that its customer base is located far from its production facilities.

Question 24

• Opportunities

Answer 24

• Opportunities refer to the internal variables that management can control. Opportunities
are favourable elements in the business environment that management can exploit. An opportunity for Blackberry, for instance, would be the increased demand for this brand of cellphone among the youth, because the youth market is generally technologically inclined.

Question 25

• Threats

Answer 25

• Threats are major unfavourable elements in a business environment that can lead to failure of the product, service or retail shop. For example, McDonalds is often criticised for being unethical in its marketing campaigns aimed at children.