Chp 13: retailing and omnichannel marketing

Question 1

LO1: define retailing

Answer 1

set of business activities that add value to products/services sold to consumers for their personal or family use

Question 2

LO1: when are wholesalers actually retailers

Answer 2

Some retailers claim they sell at wholesale prices, but if they sell to customers for their personal use, they are still retailers

Question 3

LO1: define omnichannel strategy

Answer 3

selling in more than 1 channel (store, catalogue, kiosk, internet)

Question 4

LO1: 4 factors for choosing a relationship with retailers

Answer 4

1) choosing retail partners
2) identifying types of retailers
3) developing retail strategy
4) managing a multichannel strategy

Question 5

LO1: 3 considerations in choosing retail partners

Answer 5

1) channel structure
2) customer expectations
3) channel member characteristics

Question 6

LO1: point to channel structure consideration

Answer 6

Level of difficulty a manufacturer has in getting retailers to purchase its products is determined by the degree to which the channel is vertically integrated; the degree to which the manufacturer has a strong brand or is otherwise desirable in the market; and the relative power of the manufacturer and retailer

Question 7

LO1: 2 points to customer expectations consideration

Answer 7

1) For retailers, it is important to know which manufacturer its customers want to buy
2) Manufacturers need to know where their target market customers expect to find their products and those of their competitors

Question 8

LO1: 2 points to channel member characteristics considerations

Answer 8

1) The larger and more sophistical the channel member, the less likely it is to use supply chain intermediaries
2) By performing channel functions themselves, large firms can gain more control, be more efficient and save money

Question 9

LO2: what do manufacturers need to understand retailers

Answer 9

Manufacturer need to understand the general characteristics of different types of retailers so they can determine the best channels for their products

Question 10

LO2: 2 types of retailers to distribute products

Answer 10

1) food retailers

2) general merchandise retailers

Question 11

LO2: 3 types of food retailers

Answer 11

1) conventional supermarket
2) big box food retailer
3) convenience store

Question 12

LO2: define conventional supermarket

Answer 12

offers groceries, meat and produce with limited sales of nonfood items, such as health and beauty aids and general goods, in a self service format

Question 13

LO2: example of conventional supermarket

Answer 13

sobeys

Question 14

LO2: define big box food retailer

Answer 14

larger than a conventional supermarket; carries both food and nonfood items

Question 15

LO2: 3 types of big box food retailers

Answer 15

supercentre, hypermarket, and warehouse club

Question 16

LO2: example of big box food retailer and type

Answer 16

costco (warehouse club)

Question 17

LO2: 2 points to convenience store

Answer 17

1) Characteristics: provides a limited number of items at convenient locations in small stores with speedy checkout
2) Example: 7-eleven
3) Most convenience stores also sell gas

Question 18

LO2: problem with food retailers

Answer 18

All this competition can be trouble for traditional grocery stores, but they thrive because they offer target customers great value - convenient location, makes shopping easy, have fair prices, find special products/services important to customers

Question 19

LO2: 7 types of general merchandise retailers

Answer 19

1) discount stores
2) speciality stores
3) category specialists
4) department stores
5) drugstores
6) off price retailers
7) services retailers

Question 20

LO2: define discount stores

Answer 20

offers broad variety of goods, limited service, and low prices

Question 21

LO2: example of discount store

Answer 21

walmart

Question 22

LO2: define speciality store

Answer 22

concentrate on limited number of complementary goods categories in relatively small store

Question 23

LO2: 2 points to speciality stores

Answer 23

1) Tailor retail strategy to specific market segments by offering deep but narrow assortments and sales associate expertise
2) Example: sephora

Question 24

LO2: define category specialists

Answer 24

offers narrow variety but deep assortment of goods

Question 25

LO2: define category killer

Answer 25

offers an extensive assortment in a particular category, so overwhelming the category that other retailers have difficulty competing

Question 26

LO2: 3 points to category specialists

Answer 26

1) Some are like large speciality stores (indigo - books), others resemble discount stores in appearance and have similar low prices but offer a more concentrated assortment of goods (best buy - electronics) 2) category killer 3) Using category dominance, they can exploit their buying power to negotiate low prices

Question 27

LO2: explain department stores

Answer 27

Retailers that carry many different types of goods (broad variety) and lots of items within each type (deep assortment), offer some customer service, and are organized into separate departments to display goods

Question 28

LO2: 3 points to department stores

Answer 28

1) Often resemble collection of speciality shops (womens clothing, home furniture, small appliances) 2) Example: hudson bay 3) Have lost market share to specialty stores, discount stores and category specialists in recent years. They are stuck in middle between retailers that provide better value at lower prices and those that offer more complete assortments with better customer service

Question 29

LO2: define drugstores

Answer 29

speciality store that concentrates on health and personal grooming goods, though pharmaceuticals may represent more than 60% of its sales

Question 30

LO2: 1 point to drugstore

Answer 30

Low margins on prescription drugs because gov/insurance pays most of the cost and health insurance companies negotiate lower prices with drug stores - regain lost profits by concentrating on non pharmaceutical products (like general goods and food)

Question 31

LO2: define off price retailers

Answer 31

type of retailer that offers an inconsistent assortment of goods at relatively low prices

Question 32

LO2: define extreme value retailer

Answer 32

general merchandise discount store found in lower income urban or rural areas

Question 33

LO2: 5 points to off price retailers

Answer 33

1) Example: winners 2) Typically buy from manufacturers/retailers with excess inventory or at end of season for ¼-⅕ the original wholesale price 3) Consumers can never be confident that same type of goods will be stock each time they visit store 4) Different bargains also available on each visit 5) Key to success: low prices and treasure hunt environment

Question 34

LO2: 3 points to extreme value retailer

Answer 34

1) Subset of off price retailers 2) Example: dollarama 3) Smaller than traditional discount stores

Question 35

LO2: define service retailer

Answer 35

firms that primarily sell services rather than goods

Question 36

LO2: 2 points to service retailer

Answer 36

1) Some are not just retailers like airlines, banks, hotels that sell services to businesses as well as consumers 2) Due to increased competition, retailers that have not called themselves retailers (universities, banks, hospitals) are adopting retail principles to attract customers and satisfy their needs

Question 37

LO3: where do customers shop

Answer 37

shop at any retailer that they feel provides best value for their money

Question 38

LO3: what do retailers need

Answer 38

need to adopt effective retailing strategies and market positioning to differentiate in competitive landscape and give customers compelling reason to shop with them

Question 39

LO3: steps for retail strategy to create value

Answer 39

First develop deep understanding of consumers in market (attitudes, behaviours, preferences), develop market segments and select those segments they want to serve; develop retail mix to reach and serve these customers; elements must be closely coordinates to portray clear and consistent positioning so consumers know what type of customers retailer is targeting and how it wants to serve them

Question 40

LO3: define retail mix

Answer 40

product (merchandise assortment), pricing, promotion, plan, personnel, presentation (store design + display) strategies to reach and serve consumers

Question 41

LO3: 4 points to product (merchandise assortment)

Answer 41

1) Provide right mix of goods and services to satisfy needs of target market 2) Offering assortment gives customers choice and helps attract new and existing customers 3) Manufacturers don’t like to store inventory because factories/warehouses not available to consumers. Consumers don’t want to store more than needed because it takes up space and ties up money. Retailer provides value to both manufacturers + customers by performing storage function 4) Difficult for retailers to differentiate from competitors through goods they carry because competitors can purchase + sell many of the same brands, so retailers develop private-label brands

Question 42

LO3: 3 points to price

Answer 42

1) Prices defines value of goods and services and general price range of store helps define its image 2) Manufacturers must consider at what price they will sell product to retailers so both manufacturer + retail make reasonable profit and be concerned with what customer is willing to pay 3) Tech can shape customer expectation of price by enabling them to quickly and easily access info

Question 43

LO3: 3 points to promotion (part 1)

Answer 43

1) Advertising is important to get consumers into stores 2) Retailers use displays + signs, placed at point of purchase or in strategic areas such as end of aisles to inform customers and stimulate purchases of featured product 3) Through tech, retailers can reach customers in more ways with promotional messages

Question 44

LO3: define cooperative advertising

Answer 44

agreement between manufacturer and retailer in which manufacturer agrees to defray some advertising costs

Question 45

LO3: 4 points to promotion (part 2)

Answer 45

1) Coordinated effort between manufacturer + retailer helps guarantee customer receives cohesive message and manufacturer + retailer can help maintain consistent images 2) Store credit cards and gift cards are also promotion that facilitate shopping 3) Pricing promotions (coupons, rebates, discounts, buy one get one free) attract consumers and stimulate sales by driving traffic to retail locations, increasing avg purchase size, creating opportunity for repeat purchases 4) Retail promotions also valuable to consumers - inform customer about what is new and available and how much it costs

Question 46

LO3: 5 points to presentation (store design and display)

Answer 46

1) Since shopping activities are mundane, retailers can differentiate themselves with unusual + exciting store atmospherics to add value to shopping experience (like interactive displays) 2) Improve shopability by providing convenient store layouts, and shopping experiences to make task faster, easier, more interesting 3) Consumers perception of value and subsequent patronage are heavily influenced by their perceptions of stores look and feel (starbucks vs time hortons for socializing) 4) The extent to which stores offer a more pleasant shipping experience, fosters a good mood resulting in greater spending 5) Music, colour, scent, crowding also affects shopping experience

Question 47

LO3: 4 steps to wheel of retailing

Answer 47

1) outlet starts with low prices, low margins, low status. As time passes, outlet adds services 2) outlet now has higher prices, higher margins, higher status. As more time passes, outlet adds still more services. 3) outlet now has still higher prices, still higher margins, still higher status 4) new form of outlet enters retailing environment with characteristics of outlet box 1

Question 48

LO3: wheel of retailing concept

Answer 48

as stores add services + improvements, expand mix of goods carried, upgrade facilities, costs are added to day to day operations which results in higher prices.

Question 49

LO3: 3 points to personnel

Answer 49

1) Retail associates provide customers with info about product characteristics + availability. They can facilitate sale of goods/services that consumers perceive as complicated, risky or expensive. 2) Successful retailers concentrate on providing more value to their best customers. Using info collected from CRM (store personnel, internet browsing, buying activities) retailers can modify product, price, promotion to increase their share of wallet 3) Can also offer special discounts to good customers to make them even more loyal

Question 50

LO3: define share of wallet

Answer 50

% of the customer’s purchases made from a particular retailer

Question 51

LO3: 2 points to place

Answer 51

1) Great locations provide competitive advantage that few can duplicate 2) Opening store 24/7, and other options to reach target market - convenience

Question 52

LO4: ways to sell to consumer

Answer 52

Manufacturer can sell to consumers through retailer or directly to consumers with its own stores, kiosks, catalogues, or internet

Question 53

LO4: define omnichannel

Answer 53

strategy that creates consistent experience for consumers across all distribution channels

Question 54

LO4: 7 benefits of shopping in stores for consumers

Answer 54

1) browsing 2) touch and feel goods 3) personal service 4) cash + credit pmt 5) entertainment and social interaction 6) instant gratification 7) risk reduction

Question 55

LO4: store benefit - browsing

Answer 55

If consumer only has general sense of what they want but don’t know specific item, they go to store to see what’s available before buying

Question 56

LO4: store benefit - personal service

Answer 56

Sales people can provide meaningful, personalize info and be helpful when purchasing complicated or unknown product

Question 57

LO4: store benefit - cash and credit pmt

Answer 57

Some consumers want to pay with cash or pay in person rather than online

Question 58

LO4: store benefit - entertainment and social interaction

Answer 58

In store shopping can provide break in daily routine and interact with friends

Question 59

LO4: store benefit - risk reduction

Answer 59

When consumers buy in physical stores, perceived risk of buying reduced and confidence increases that any problems with goods will be corrected

Question 60

LO4: store benefit - instant gratification

Answer 60

Get goods immediately after buying

Question 61

LO4: what can happen if using internet to sell goods

Answer 61

Offering electronic channel may draw away sales from other channels but used with other channels can result in consumer making more total purchases from seller

Question 62

LO4: 6 benefits of internet

Answer 62

1) deeper and broader selection 2) more info to evaluate merchandise 3) personalization 4) personalized customer service 5) personalized offering 6) expanded market presence

Question 63

LO4: internet benefit - deeper and broader selection

Answer 63

Expanded offering enables them to satisfy consumer demand for less popular styles, colours, sizes and still keep overall inventory costs low

Question 64

LO4: internet benefit - more info to evaluate merchandise

Answer 64

Can provide customer info about good and solutions to customer problems (like installing appliances)

Question 65

LO4: internet benefit - personalization

Answer 65

Can personalize promotions + services for each customer economically

Question 66

LO4: internet benefit - personalized customer service

Answer 66

FAQ pages, toll free number or email to ask questions | Live, online chats with customer service

Question 67

LO4: internet benefit - personalized offering

Answer 67

1) Using cookies, can offer personalized homepages based on past purchases. 2) Can notify of products they might like and what customers also bought with item looked at

Question 68

LO4: internet benefit - expanded market presence

Answer 68

1) With internet’s low entry costs and improving search engines, smaller niche sources for hard to find products can expand trade area

Question 69

LO4: explain selling through kiosk

Answer 69

Can just provide store associates with access to company website to help customers find product info or place orders. Or self-service kiosks to allow customers to check product selection + availability at stores.

Question 70

LO4: 4 benefits to kiosk

Answer 70

1) broader selection 2) access to items online that are out of stock in store 3) access to wish lists + gift registries 4) access to loyalty program info

Question 71

LO4: kiosk benefit - broader selection

Answer 71

Can get access to expanded assortment of products than just those in stores

Question 72

LO4: kiosk benefit -access to items online that are out of stock in store

Answer 72

Can save sale on item if item is out of stock or location does not carry broad product assortment

Question 73

LO4: kiosk benefit - access to wish lists + gift registries

Answer 73

Customers buying gifts can check these for gift recipient

Question 74

LO4: kiosk benefit - access to loyalty program info

Answer 74

Can check own status of points available, frees up staff to provide sales assistance to other customers

Question 75

LO4: 3 benefits of catalogue channel

Answer 75

1) convenience 2) info 3) safety

Question 76

LO4: general benefits of kiosk channel

Answer 76

in retail, availability and knowledge of sales associates can vary between stores and time of day, problematic for new, complex goods. Kiosks can be used to obtain product info by sales associates + customers.

Question 77

LO4: downside of catalogue

Answer 77

once catalogue is printed, it cannot be updated with price + new goods. But can use internet sites for catalogues to do this.

Question 78

LO4: catalogue benefit - convenience

Answer 78

1) Info accessible for long period of time. Customers can refer to it at anytime. 2) “Magalogs” - catalogues with magazine content enhances consumers desire to keep it available

Question 79

LO4: catalogue benefit - info

Answer 79

Have info about product and how they can be used, can also include augmented reality app to see how product would look like in home, on person, etc

Question 80

LO4: catalogue benefit - safety

Answer 80

Customers can view goods and place orders from their homes

Question 81

LO4: 2 points to effective omnichannel retailing

Answer 81

1) Adding an electronic channel is attractive to firms with strong brand names but limited locations + distribution 2) Consumers want seamless experience, they want to be recognized by retailer through whatever channel, may want to buy product over internet and return in store, or find product online and buy in store

Question 82

LO4: 4 things to address to determine how much integration is best

Answer 82

1) integrated CRM 2) pricing 3) supply chain 4) brand image

Question 83

LO4: 2 points to integrated CRM for omnichannel

Answer 83

1) Need to store complete history of customer’s interaction with retailer 2) Allows retailers to efficiently handle complaints, expedite returns, target future promotions, and provide seamless experience for customers when they interact with retailer through multiple channels

Question 84

LO4: 2 points to pricing for omnichannel

Answer 84

1) Customers expect pricing consistently for same SKU across channels 2) But: retailers may need to adjust pricing strategy because of competition faced in different channels

Question 85

LO4: point to supply chain for omnichannel

Answer 85

Struggle to provide integrated shopping experience across all channels because unique skills + resources needed to manage each channel

Question 86

LO4: point to brand image for omnichannel

Answer 86

Provide consistent brand image across all channels