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TXMI 5250: Test 2
Burberry's New Look (article) |
allows customers to experience the brand
show how retailers can be cutting edge and new, while still staying true to its roots
retail is knife fight, Burberry will be copied when other companies see that this store model is successful
primary trade area
|
Primary trade area (article) |
The geographic area where the retailer cans serve customers in terms of convenience and accessibility better than the competitors |
WWD.COM-Retailer vs Vendor (article) |
Sherman Anti Trust Act - Price fixing
Protects manufacturers, but hurts retailers (mom & pops)
Represents Law of Diminishing Returns
Court ruled that price fixing is legal
|
House Parties With A Commercial Twist (article) |
Want to reconnect with consumers after losing to private labels |
"Dowdy" Talbots (article) |
What strategies are talbots using to deter their decline?
Consistent marketing, make products more playful and colorful, targeting a new client, redesigning classic items, change their consumer changes
|
Why China Doesn't Like Barbie, Best Buy, or DIY? (article) |
consumer research says Barbie failed
huge difference between American's middle class and China's middle class
Best Buy & Home Depot failed
|
Hitting the Mark |
counterfeit
legal to buy, not to sell
bigger problem in e-commerce
some people don't even know that they are buying counterfeit |
US view of Capitalism |
Predatorial |
Germany view on Capitalism |
Paternal |
Japan view on Capitalism |
Protected |
Law of Diminishing Returns |
Want people to buy more at a lower price
Consumers who have one unit tend to place a lower value on additional unit |
Non-price decisions definition |
Using price as a weapon to gain loyal customers, doesn't always work - customers pay more if they value their time |
Non-price decisions |
1) Differentiate with merchandising mix
2) Private label merchandise
3) Provide other benefits
4) Master stock-keeping |
Retail competition |
Interplay of supply & demand
Retail competition is typically local
Retail industry is monopolistically competitive
Retailers today try and achieve differential advantage over competition
|
Why do retailers use private retailers? |
Private labels help retailers minimize competition and increase brand loyalty, key business asset for diversifying, expand recognition |
Corruption Perceptions Index |
Transparency International published the CPI which is ranked by their perceived levels of corruption, as determined by expert assessments and opinion surveys |
CPI definition of corruption |
The misuse of public power for private benefit |
Best and worst corruption countries according to CPI |
Best - New Zealand & Denmark
Worst - Somalia and Afghanistan |
Countries from best to worst based on bribery |
1) North America
2) EU
3) South Europe
4) Latin America
5) Asia Pacific
6) Africa |
Middle East laws impacting retailing |
All mannequins must wear appropriate head wear and have enough coverage
Islamic law based on Koran
Religious police enforce laws
Women have more restrictions
|
Marxist Law |
North Korea and Cuba
rules for retailing
depend on the ruler |
Religious laws impacting retailing in Germany |
Closed on Sundays |
Blue laws |
Laws in the US that regular Sunday Closings (alcohol and car dealerships) |
Pure competition |
When a market has similar product; many buyers and sellers, all having perfect knowledge of the market; and ease of entry for both buyers and sellers |
Pure monopoly |
Very rare
Does not exist in US because of Sherman Antitrust Act
One seller will set the selling price |
Outshop |
When there is only one brick and mortar option, and consumers choose to purchase online |
Near Monopoly |
Outshopping
Leaving small towns to go where there is better selection offered |
Monopolistic competition |
Most retailers
Many sellers, selling different products, but consumers believe are interchangeable |
Oligopolistic |
Local retail, homogenous products sold
Top 4 companies have 60-80 percent market share |
"Follow the leader" |
Smaller retailer follow the trends of bigger retailers
ex. Lowes, Home Depot |
Intratype competition |
Same type of retailers selling the same merchandise to the same market
All under the same NAICS code
MAC vs Sephora |
Intertype competition |
Retailer with different NAICS codes and different merchandise but targeting the same market
EX. Macy's vs Target |
Divertive competition |
Stealing customers from another retailer by selling scrambled merchandise and being more convenient |
Non-store retailing NAICS code |
454 |
What is Costco's competitive advantage? |
Only sell 4000 of their most popular items (rationalize) in bulk
Most retailers sell around 40,000
Get deals from companies for buying bulk
No visual merchandising
No signage - no frills
Paid memberships
|
Retail Life Cycle |
1) Intro
2) Growth
3) Maturity
4) Decline |
Retail Life Cycle: Intro |
Aggressive, bold entrepreneur
No profit (e-tailing, recyclers, liquidators) |
Retail Life Cycle: Growth |
Lots of competition
Sales increase
Highest profit area (overhead is small)
EX. Food courts, airport based retailers, super centers |
Retail Life Cycle: Maturity |
No new costumers
Will have sales
Have to keep things exciting
EX. Starbucks, warehouse clubs, supermarket, category killers, convenience stores, fast food
|
Retail Life Cycle: Decline |
Goal is to postpone as long as possible
Changing target market, products, promotion
EX. Variety stores, factory outlet malls, department stores
|
Law of Diminishing Returns |
States that in all productive processes, adding more of one factor of production, while holding all others constant, will at some point yield lower incremental per-unit returns
|
Ceteris Paribus |
Adding more of one factor of production, while holding all others constant
|
Sherman Antitrust Act |
Based on railroad monopoly
Price fixing overturned
Minimum advertising price
No control over prices
Legal for company to pull out
Can't limit and place where they can sell
Call tell your products should be sold in one store
|
Vertical Price Fixing |
An illegal arrangement in which parties at different levels of a system of production and distribution act to fix the market price of goods
Legal after 2008 court case
|
Dual Distribution |
Describes a wide variety of marketing arrangements by which the manufacturer or wholesalers use more than one channel simultaneously to reach the end user
May sell directly to the end users as well as to companies for resale
To be punished - stores need to prove that they are being hurt by parent brand
|
Puffery |
False claim, false usage, false benefits for ad to be illegal
Claim is deceptive, claim in material |
Palming off |
Counterfeit
7% of market share
512 billion a year |
Countries guilty of "palming off" |
Argentina - Pharmaceuticals
Brazil - clothing |
Predatory Pricing |
Can go into a store, document prices, and then lower the prices of your own store |
Bait and switch |
Advertise a product and then not follow through or have enough supply to meet the demand |
Exclusive dealing |
1) One way: retailer gets right to sell product in a store and does nothing for the supplier
2) Two way: Clayton Act - illegal - telling a retailer your product will
only be sold with them and they cannot sell your competitor
supplier offers retailer exclusive distribution if retailer will do something in return for supplier
|
Steps in selecting a target market |
1) Select a specific, unique, distinguishable market
2) Select high traffic geographic or online sites
3) Select markets that are measurable, accessible, and substantial |
Central Business District (CBD) |
Typically built around public transit system, where the city began
Collection of whatever stores and anchor stores
Usually stores tailor to local market |
What hurts Central Business Districts (CBDs)? |
Discount stores, parking, crime |
Neighborhood Business District |
Serve the needs of the community - anchor can be grocery store |
Lifestyle shopping center |
Out door planning, around 70 tenants, people feel safer, quick & easy
EX. The Avenue |
Malls |
55% of retail
Regional/super regional
Rent is based on sales
No new malls since 2006 |
Anchors |
Department stores or entertainment |
Regional Malls |
Mall in a local area - people do not go out of their way to visit
EX. Georgia Square |
Super Regional Mall |
Caters to a mass community
EX. Mall of Georgia |
Competition in relationship to capitalism |
Allows big business to prosper, but hurts mom and pops |
American expansion into Russia |
Very difficult
Russia kicked out most western stores of their country (McDonalds)
Even when companies go into Russia, there are so many fees and regulations which makes it impossible
|
Micro EnvironmentalFactors |
Parts of marketing mix you can control
Knowing your competition and culture of location |
Macro environmental factors |
Cannot control
Must turn technological, social, competitive, and governmental limitations to advantage |
Foreign Direct Investment (FDI) |
Completely know your store, but there are disadvantages |
Joint Ventures (JV) |
Best way to internationalize
Great way to make connections with culture
Go into a business with a local who knows culture etc |
Franchise |
Get permission from mother company to open their store
EX. Fast food chains |
License |
Legal agreement that an entity can use your product |
Global retailers |
Standard retail formats
open up whether city can sustain store, not if it has the right demographic
centralized management, small medium size, vertically integrated (control every part of production)
private labels (Zara, Prada)
|
Multinational retailers |
within a geographic area, change merchandise based on customer and culture, typically large scale
EX. Walmart or Saks
|
Trade area |
A neighboring geographic area that accounts for the majority of a store's sales and customers
Primary trading area: within 3 miles or less
|
Geographic Information Systems (GIS) |
A source of information about trade areas
Identifies market selection, site analysis, trade area definition, estimates new store |
How do retailers compete in an overstored environment? |
Something better, different, cheaper
Being non-tradional and having unique omni channels
|
Civil law |
also referred to as Code law
France, Italy, Canada
copyright and patents are a must
Everything fits into laws
Very little power towards judges to interpret the law
Predetermined domestication
|
Common law |
Britain & US
Rules and laws are up for interpretation (judicial review)
Copyrights and patents are given to who has the product first |
Islamic Law |
N. Sudan, Saudi Arabia, Iran
Follow Quaran
Religious police
no interest or alcohol
Restrictions on women and expression
Predetermined domestication
|
Shriya Law |
Quaran interprets every area of life and law |
Marxist Law |
N. Korea, Laos, Cuba, China
Communist/socialist
Government owns private property
Predetermined domestication |
Predetermined Domestication |
Can force retailer to give up ownership of business without explanation |
Why won't e-tailing gain the majority of retail sales? |
Brick and mortars have customer service, touching products, gratifying, and security |
Showrooming |
When people come and look at in store products and then go and buy online
Doesn't hurt because it brings costumers to store |
How can small businesses compete with discount stores or category killers? |
1) Customer service
2) Customization
3) Loyalty
4) Price for benefits offered
5) Service level
6) Product selection
7) Location
8) Customer experience
|
Brazil |
collectivist
polychronic
high power distance (races)
advertise via mobile
love sports
sexual celeb ads
does not shun sexuality of female form
|
Kazakstan |
Collectivist, polychronic
Big guest culture
Patriarchy
Elders first
Heavy on laws
TV ads
Change how they look |
Turkey |
Polychronic, collectivist
TV and online ads
Celebs capture audience's attention
Composition of ad |
Saudi Arabia |
high context, polychronic
Women have no power
Cover knees, collar bones |
Kuwait |
Polychronic, collectivist, high context
Islamic
Online ads
Confashions of Kuwait |
Azerbaijan |
Polychronic, collectivist, power distance
3.7 million internet users
TV & Newspaper ads
Dress formally |
Panama |
High context
Hierarchical |
China |
Polychronic
Collectivist
Online mobile advertising preferred |
NAICS code for women's apparel |
448 |