Vertical Integration Examples when a retailer engages in wholesaling activities by operating its own distribution center to supply its stores Jcrew and Victoria s secret design the merchandise they sell and then contract with a manufacturer to produce it exclusively for them Intracompetition department store vs department store supermarket vs supermarket a retailers primary competitor Scrambled merchandising used to appeal to a broader group of consumers satisfy the needs of a customer seeking a one stop shop experience example clothing and food available in a grocery store increases intertype competition makes it harder for retailers to identify and monitor their competition Retail strategy identifies 1 The target market s towards which the retailer will direct its efforts 2 The nature of the merchandise and services the retailer will offer to satisfy the needs of the target market 3 How the retailer will build a long term advantage over its competition example best buy defines its market as a consumer living in suburban area of large cities It specializes in consumer electronics and carries most types and brands available and provides more customer service having knowledgeable trained salespeople to assist customers Their strong relationships with their supplier enable them to buy merchandise at low prices Elements of a retail mix types of merchandise and service offered merchandise pricing advertising and promotional programs store design merchandise display convenience of store location assistance to customers 4 p s price promotion place product Benefits Provided by a Store Channel touching feeling merchandise most level of info can see how it looks on you personal service salespeople meaningful personal info risk reduction physical presence of store and can use all 5 senses most likely to not return the product immediate gratification don t have to wait to get it entertainment and social interactions stimulating experience interact with friends browsing see whats available before you buy cash payment only channel you can make a cash payment quicker no fear of paying it back later Benefits of Catalogs safety in a safe environment easier for elderly convince look at it anywhere anytime ease of use Benefits of Internet broader and deeper assortment vast of alternatives more SKUs more timely information for evaluating merchandise unlimited and more current info whenever they want it customer reviews personalization can compare alternatives live chats Benefits of Multichannel Retailing 1 Overcome the limitations of their primary existing channel 2 3 Enables retailers to gain valuable insight into their customer s shopping Increase customer satisfaction and loyalty behavior 4 Retailers can economically enter new behavior 5 Provides the bases for building a strategic advantage Why retailers should be concerned with disintermediation manufacturers can get direct access to their consumers through the internet and therefore sell directly to them instead of going through a retailer Merchandise Assortment different assortments are appropriate for each of the channels offer a broader and deeper merchandise assortment through internet store channel better suited for selling products with important touch and dell attributes internet look and see Example of utilitarian need buying a suit for an interview Example of hedonic need need for entertainment emotional recreational fun multi attribute model designed to predict a customers evaluation of a product retailer or channel based on 1 its performance on relative attributes 2 importance of those attributes to the customer Why to use Extended Problem Solving purchase involves risk an uncertainty making an important buying decision know little about the product service retailer can help by offering a money back guarantee and necessary info Why to use Limited Problem Solving prior experience with the product or service risk is moderate rely on personal knowledge majority of purchases involve this When to use Habitual Decision Making when a need arises and you have bought the same thing same store not very important decision Impulse Buying a type of limited problem solving retailers encourage this by using displays to attract customer s attention the candy Brand loyalty and its relation to habitual decision making when customers are loyal to a brand or a store they engage in habitual decision making Problems with Geographic Segmentation inefficient to develop unique retail offerings Problems with Demographic Segmentation may not be useful for some retailers because motivations for purchasing transcend simple demographics Example of Geographic Segmentation countries states cities neighborhoods Example of Demographic Segmentation age gender income education Example of Geodemographic Segmentation pick a location and tailoring assortment based on the preferences of the local community Example of Lifestyle psychographics Segmentation Harley Davidson motorcycle owners share a slice of the American dream the freedom to conquer the road persons strong need for adventure as part as their lifestyle Example of Buying Situation Segmentation the parent with the four children goes to a supercenter to get all their weekly grocery needs in one shop but if she runs out of a particular item during the week will probably go to a convenient store for the fill in Example of Benefit Segmentation customers who place high importance on fashion and style and low importance on price may form a fashion segment customers who place more importance on price would form a price segment Great Variety warehouse clubs discount stores and toy stores all sell toys BUT warehouse clubs and discount stores sell more than just toys Great Assortment stores specializing in toys stock more types of toys SKUs and thus offer a greater assortment more models sizes and brands