Terms for Exam 3 Not all terms may be listed on these pages but you should know all these terms Chapter 11 Customer loyalty Means that customers are committed to purchasing merchandise and services from the retailer and will resist the activities of competitors attempting to attract their patronage Customer loyalty is more than customers simply being satisfied with a retailer and making repeat visits loyal customers have a bond with the retailer Share of Wallet The percentage of the customers purchases made from the retailer Retailers have focused their attention on encouraging more customers to visit their stores look through their catalogs and visit their web sites while there hopefully they will share the contents of their wallet Customer data base It is the first step in the CRM process The database is part of the data warehouse described in Ch 10 It contains all the data the firm has collected about its customers and is the foundation for subsequent CRM activities Privacy Many customers are concerned that retailers are violating their privacy when they collect this detailed personal information Customers are concerned that the data may not be secure and they may be susceptible to identity theft The concerns are particularly acute for customers using an electronic channel because many of them do not realize the extensive amount of info that can be collected without their knowledge Concerns o Their control over their personal information when engaging in marketplace transactions o Their knowledge about the collection and use of personal information Opting in opting out Opting in o Basically the EU perspective is that consumers own their personal information so retailers must get consumers to agree explicitly to share this personal information o This agreement is referred to as an opt in because European s have a chance to opt in to giving out their information Opting out o Personal information is the US is generally viewed as being in the public domain and retailers can use it in any way they desire o American consumers must explicitly tell retailers not to use their personal information they must opt out Retail analytics The application of statistical techniques and models to find patterns in customer purchase data and make recommendations for improving the Ex Flashlights are placed in the hardware aisle and with a seasonal disply effectiveness of retailers of Halloween costumes Market basket analysis Market basket analysis is a specific type of retail analytics that focuses on examining the composition of the basket or bundle of products purchased by a household during a single shopping occasion It is often useful for suggesting where to place merchandise in a store Ex Tissues are in the paper goods aisle and also mixed in with cold meds Customer lifetime value CLV The expected contribution form customers to the retailers profits over their entire relationship with the retailer Using information in the customer database retailers can develop a score or number indicating how valuable customers are to the firm CLV score Retailers use past behaviors to forecast future purchases 80 20 rule For most retailers a relatively small number of customers account for the majority of their profits 80 percent of the sales or profits come from 20 percent of the customers thus retailers could group their customers into two categories on the basis of their CLV scores o one group would be the 20 percent of the customers with the highest CLV and the other group would be the rest 1 to 1 retailing developing retail programs for small groups or individual customers with the availability of customer level data and analysis tools retailers can now economically offer unique benefits and target messages to individual customers they have the ability to develop programs for small groups of customers many specialty stores do this Federal Trade Commission An independent agency of the US government established in 1914 by the Federal Trade Commission Act Its principal mission is the promotion of consumer protection and the elimination and prevention of anti competitive business practices such as o A business concern that prohibits competitors from entering the field with the natural result being the firm is able to make pricing and production decisions independent of competitive forces coercive monopoly Coercive monopoly Chapter 12 The buying organization Every retailer has its own system for grouping categories of merchandise but the basic structure of the buying organization is similar for most retailers The organization chart shown has four merchandise groups o Women s apparel o Men s children s and intimate apparel o Cosmetics shoes jewelry and accessories o Home and kitchen Each of the four groups is managed by a general merchandise manager is is often a senior vice president in the firm Each of the general merchandise manager GMM is responsible for several departments Ex The GMM for men s children s and intimate apparel makes decisions about how the merchandise inventory is managed in five departments men s dress apparel men s sportswear young men s apparel children s apparel and intimate apparel Figure 12 1 on pg 303 for chart Merchandise category The basic unit of analysis for making merchandising management decisions An assortment of items that customers see as substitutes for one another Ex A department store might offer a wide variety of girls dresses sizes 4 to 6 in different colors styles and brand names a girl might consider all the dresses given that they are all the same price if one is cheaper it is more likely to increase sales of that one dress and negatively affect the other SKUs in the same category Stock keeping unit The smallest unit available for inventory control In soft goods merchandise a SKU usually means a particular size color Ex A pair of size 5 stonewashed blue straight legged Levi jeans is an and style SKU Turnover The rate at which an employer gains and loses employees It is a simplified way to describe how long employees tend to stay or the rate of traffic through the revolving door If an employer is said to have a high turnover relative to its competitors it means that employees of that company have a shorter average tenure than those of other companies in the same industry High turnover many be harmful to a company s productivity if skilled workers are often leaving and the worker population contains a high percentage of novice workers Staple merchandise category Also