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38 Cards in this Set

  • Front
  • Back
a set of business activities that adds value to products/services
vertical integration
when a firm takes onto itself the ability of one or more parts of the distribution channel
*do this to become more efficient and lower costs
backward integration
when retailers start to manufacture or distribute outwards
forward integration
when manufacturers start retailing or wholesaling (ralph lauren)
how do retailers add value
providing assortments-having all products in one store
break in bulk- giving customers the amount of the good they want
storage- hand in hand with break in bulk, giving them the ability to easily store stuff
services- services while shopping, on products (warranty, try it before you buy, geek squad)
retailing in the us
most retailers per sq mile
large enough companies to get rid of wholesaler middle man. makes dist. channel very effective
retailers have most of the power and there is a lot of competition (both make distr channel max efficient)
retail strategy
Identify competition (intra vs inter)
identify customers (significant demographic lifestyle and trends)
-should include target mkt, prdct and service mix, and longterm comparative advantage
marketing retailing mix
store design+ display
wide vs narrow
how many categories you have
deep vs shallow
how much of a given category you carry
net profit margin percentage
net profit/net sales

tells us the profit generated by $1 of sales
net sales
net sales/net assets

assesses the productivity or our investments in assets
net profit overall
net sales/total assets
Inventory turnover for cost
COGS/average inventory
inventory turnover for retail
total sales/avg inventory
influences on buying decision
family influences
purchases are for the entire family
whole family participates in making decision
retailers influence to satisfy all members of the family
stages of buying process
recognition of needs ->information search -> evaluate merchandise -> select merchandise -> postpurchase evaluation
cutting out the middle man
keys to global success
Global comparative advantages:
low cost, efficient operations, strong private labels, fashion reputation,category dominance

global culture,
financial resources.
4 oppertunities to pursue global growth
market penetration- attract customers from target market (duh) and get them to visit more.
market expansion- same format, new target mkt
retail format development-new retail format with different retail mix with SAME target market
diversification- new retail format to new segment
1) related diversification- same manufacturer, shipping (something is the same)
2) unrelated diversification- nothing is the same HIGH RISK and is indicative of vertical integration
sustainable comparable advantages
location, customer loyalty, customer service, exclusive merchandise, low cost supply chain, information systems, committed employees
less sustainable comparative advantages
better computers, more employees, more merchandise, greater assortments, lower prices, more ads/promotions, more stores
why did e-stores fail
good skills with tech and order management
lacked knowledge in: building brand image, building consumer trust, manage inventory, fulfill small inventories, building multichannel retailers (lacked resources)
store benefits
better browsing
touching and feeling (min risk)
face to face service
pay in cash (not just cc)
entertainment for some (social interaction)
immediate gratification (get it now)
catalogue benefits
information at hand
types of purchase decision
extended problem solving
limited problem solving
habitual problem solving
customer loyalty
extended problem solving
high risks involved (social, financial, physical)
use sales people instead of ads
need alot of info (reviews too)
reduce risks with offerings (guarentees, warrantees etc)
limited problem solving
majority of all decsion making
happens when customer has prior experience with product (colgate) and rely on personal knowledge of product
how to influence:
comes to you)create positive buying experience, customer satisfaction, good assortments, loyalty rewards
going to competitor) more convenient locations, offer better services, assortment
habitual probelem solving
purchases not too important for consumer, usually to brand name or store.
*must have the assortment though
how to influence:
coming to you)keep product in stock, good service, loyalty rewards
going to competitoin) promotions
issues with service retail
intangible so it is hard to evaluate the service
simulatenous production/delivery
no inventory- must fill capacity (why they overbook cable companies)
inconsistent offering- depends on what person does it. place high importance on HR manager
retail strategy why its more important
more important today
new competitor (netflix, blockbuster)
new formats (redbox, downloading)
new technologies
shifts in consumer needs
elements of retail strategy
target market
retail format- the nature of the retailers
sustainable comparitve advantage
30-40% of retail sales
franchisee pays flat fee+% of sales
access to financial info, start up costs reduced, risks reduced, promo material available, employee training, mkt data, group insurance
cross selling (def)
sales associates in one department refer customer to another dept
shoe department refers to golf dept for new clubs to go with new golf shoe
multiattribute model
consumers view the store/product/services as a bunch of characteristics (quick, good deals, high end etc)
but are these characteristics important to the customers right now and if so, to what extent
predict a customers' evaluation of a retailer/prodct/service based on
how well it performs relative to how important the characterists are.
characterisitics needed to use multiattribute model
competition, performance and attributes wanted, rating of attributes, how important the attributes are
how to enhance products sales on internet
attributes that can be seen, none that need touching and feelilng
if they have usable information to predict satisfaction
better presentation of touch and feel