1 INTRODUCTION TO RETAILING

INTRODUCTION TO RETAILING
Retailing
- activities involved in selling goods and services to consumers for personal, family,
or household use
o sale of goods to end user (not for resale but for use and consumption)
- last stage in the distribution process
- organized to sell merchandise in small quantities
- selling without transformation and rendering services
Marketing
- activity for creating, communicating, delivering, and exchanging offerings that have
value
- raise product awareness and persuades people
- GOAL: develop a relationship between client and product by creating a brand
identity
Retail management
- includes all steps required to bring the customer to the store and fulfill their needs
- Help customers shop without difficulty
o help customers procure desired merchandise from retail stores
o provide pleasurable experience
IE Perspective
1 INTRODUCTION TO RETAILING
IMPORTANCE OF THE STUDY OF RETAILING Commented [Office1]: Idk if need
Growing retail industry
- ~13% GDP contribution from retail industry
- 33% of the services sector
- Emerging trends:
o Growing entry of foreign brands
o Online shopping
o Franchising
o Awareness of global brands among young BPO crowd and overseas
travelling Filipinos

Customer satisfaction
- 89% of consumers have stopped doing business after poor customer service

Technology
- delivering expectations requires aligning organization and technology
- The store of the future must be:
o Mobile – offer ways of enhancing customer engagement (physical and
digital)
o Relevant – identify customers and knowing their purchase history
o Personal – leverage high touch aspect of instore shopping
o Ubiquitous – gather, analyze, and disseminate customer etc instantly and
across all channels
o Secure – ensures security of payment and personal data
- Top 5 inhibitors of adopting an omni-channel solution
o No singe view of customer across channels
o Inventory and order management are not integrated across all channels
o Store systems are too difficult to change
o Mismatches metrics and incentives slow acceptance
o IT systems not designed to incorporate customer insight

KEY ISSUES IN RETAILING

- How can we best serve our customers while earning?
- How can we stand out in a highly competitive environment where customers have
so many choices?
- How can we grow our business while retaining a core of loyal customers?
- IE Perspective:
o How can we design a retailing system that attains ALL stated goals
3 BUYER BEHAVIOR
RETAILING STRATEGY
Retailers vs Wholesalers
Retailers Wholesalers
Smaller quantities Larger quantities
More frequent
Open to general public Not over-the-counter
Higher per unit prices Use variable pricing (discounted)
One-price policy
Initial contact – customer Transactions are based on agents
More on external and internal Price > atmospherics
atmospherics

Retail strategy
1. Get customers into the store
2. Convert customers to buyers
3. Do at the lowest operating cost

Basic service of retail channels

- Integrators – provide assortment from different producers
- Stockists – stock products if needed
- Transporters – make products accessible to customers
- Experience provider – offer convenience to buyers

Retail formats
Traditional Non-traditional
- Mom and pop (sari-sari - Catalogue
store) - E-tailers
- Mass discounters - Vending machines
- Warehouse stores - Peddlers
- Category killer - Hawkers
- Department stores
- Boutiques
- Convenience
3 BUYER BEHAVIOR
CUSTOMER NEEDS
Right product
- Availability - Information
- Customization - Product testing

Right quantity
- Appropriate unit size
- Units/pack
- Unit measurement
- Right packaging
- Example: Turkish delights; pre-packed vegetables

Right place
- Market area: accessibility (regional, local, trading areas, site)
- Market coverage: availability (intensive coverage, selective, exclusive)
- Store layout and design (floor location, shelf position, in-store and display location)

Right time
- Demand patterns
- Availability
- Waiting and delays
- Inventory management
- Supply chain coordination and
management
- See life cycles:

Right price
- Supply chain management
- Operations cost
- Cross docking systems
- Example: Walmart

Right appeal
- Product mix
- Facility design and environment
- Service satisfaction
3 BUYER BEHAVIOR
BUYER BEHAVIOR
Buyer behavior
- analyzes purchasing habits for marketing purposes
 manner in which consumers act, function, and react (to purchasing a
good/service, or acceptance of an idea)
- includes an examination of:
 perception
 desire
 decision-making
 satisfaction

Buying process
1. Needs recognition
2. Information search
3. Evaluation
4. Choice
5. Visit
6. Loyalty

BUYER BEHAVIOR THEORY

Cultural
- Subculture – smaller, homogenous societies that have their distinct attitudes etc
- Social class – rank-ordered groupings (typical classes: occupation, education, etc)
Social
- Reference groups – provides a standard for individual’s behavior and attitudes
- Family – size of the family
- Roles – initiator, user, decision maker, decision influencer, purchasing agent
Personal
- Product life expectancy – durable goods, non-durable, services
- Product type
- Shopping effort – convenience goods, staples, impulse goods, emergency goods
- Shopping goods – products that consumers are willing to spend considerable time
and effort in evaluating
- Specialty goods – products that customers are willing to spend an extremely large
amount of effort, time, and money
- Lifestyle – pattern of living shaped by psychological influences and social experiences
 Survivors – struggle for survival, poor, price dominant
 Sustainers – compulsive, low income, price is impt, cautious buyers
3 BUYER BEHAVIOR
 Belongers – traditional, low-middle income, fads, middle to lower mass
markets
 Emulators – ambitious, good-excellent income, conspicuous
 Achievers – success, materialism, excellent income, top of the line
 I-am-me – individualistic, dramatic, young, experimental fads
 Experiential – drive to direct experience, process over product
 Societally conscious – societal responsibility, simple living, conservation
 Integrated – psychological maturity, good-excellent income, self
expression

Psychological
- Motivation – process by which consumers are moved or incited to action
 Stimuli – external cues and internal forces acting on basic needs
 Need – lack of something required for well being
 Motive – stimulated need that creates tension with the customer
 Drive – unfulfilled motive
 Behavior – manner in which the person acts, functions, reacts
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