ABDT4104retail & Distribution Strategy Tutorial Week 7 Answer December 21, 2010

Question 2
1. Build strong brand name/ image → advertisement, promotion, logo, etc.
Build customer loyalty program → membership card program.
Link with RHB → gain more point
Everyday low price promotion
2. Location → around housing area, high traffic, convenience with parking lots, near main road,
bus top, and train station.
3. Human resources management
a. Well train staff → knowledgeable, skillful to solve customer problem, well educated,
able to speak English.
b. Managing diversity
c. Motivation
d. Culture → Polite; Fast respond
4. Information system
a. POS
b. Bar-code scanner
c. CCTV
d. Inventory tracking system
5. Private label brand → Carrefour’s fruit juice, mineral water, sugar → capture customer
loyalty.
6. Vendor relationship → sell unique merchandise
7. Customer services
a. Info counter
b. Air-coon
c. Express counter, etc.

Question 3
Target Market
Existing New

Existing 1. Market Penetration 2. Market Expansion

Retail
Market 3. Format
New 4. Diversification
Development

1) Market Penetration
a. Involve directing effective toward existing customers using the retailer’s present retailing
format (same customers, same format).
b. Aim to:
i. Attract target market customer who do not patronize currently.
ii. Get current customers visits retailer more often.
iii. Buy more merchandise on each visit.
c. Example: retailer allow customer buy product at their website and collect at retailer store
so that customer visits the store more often and encourage customer to purchase more
items while in the store.
d. Approach:
i. Opening more store in target market.
ii. Keeping existing stores open for longer hours.
iii. Display merchandise to increase impulse purchases.
iv. Training salesperson to cross selling.
ABDT4104retail & Distribution Strategy Tutorial Week 7 Answer December 21, 2010

2) Market Expansion
a. Using existing retail format in new market segments (same format. Different customer).
b. Example: Dunkin’ Donuts open new stores (same format) aside it northeastern U.S.
stronghold and moving to foreign countries including China.
3) Format Development
a. Involves developing a new retail format with a different retail mix for the same target
market (new format. Same customer).
b. Example, multichannel retailing → existing channel + other channel.
Carrefour → Carrefour hypermarket ++ Carrefour express (convenient shop).
4) Diversification
a. Opportunity to operate a new retail format directed toward a market segment that is not
currently served by the retailer (new format. New customer).
b. Related diversification
i. Retailer’s existing target market/ retail format shares something in common with
the new opportunities, such as same supplies and operating in similar location.
ii. Example, an electronic component retailer may try to open a lighting store that
sold bulbs and others lighting component.
c. Unrelated diversification
i. No links between the present business and the new business.
ii. Example, Home Depot vs. Home Depot Supply that sold primary pipes, plumper,
and concrete sold furniture.
d. Vertical integration
i. Diversification by retailers into wholesaling/ manufacturing.
ii. Examples, KFC (food retailer) diversify business in chicken farm (chicken
supplier).

Question 4
What retailers are best positioned to become global retailers?

Specialty store retailers that have universal appeal, strong brand image and/or unique merchandise
are best positioned to become global retailers. For examples Starbuck produce their own signature
coffees that are well-known all around the world and Nike have a strong brand image in sport
apparels industry (shoes, clothes, pants) and both of them are successful globally.

Retailers that offer deep assortments and low prices are also best positioned to become global
retailers. For example IKEA offers deep assortments of furniture product (sofa, dining table, chairs,
bed) at a reasonable price and they are successful globally.

Besides that, discount and food retailers with deep assortments and low prices will be successful in
global retailing. Examples of discount stores that successful globally are Tesco and Carrefour that
offers wide variety of product and deep assortments to the customers such as food (chicken, lamb,
sausages), furniture (chairs, sofa, dining table), electronic component (TV, washing machine, radio,
air-conditioner) and etc. On the other hand, McDonald’s is one of the successful global retailers in
food industry. They sell deep assortments of fast food such as burgers and French fries at lower
price.

In order for retailers to success globally, they need to have the following characteristics. First, they
need to have a globally sustainable competitive advantage. Entry into international markets is
successful when expansion opportunity is consistent with the retailer’s core bases of competitive
ABDT4104retail & Distribution Strategy Tutorial Week 7 Answer December 21, 2010

advantage. For examples, Wal-Mart and Carrefour core bases is low cost and efficient operations and
Starbucks and KFC core bases is Strong private label brands.

Second characteristics are adaptability. Successful retailers recognize cultural differences and adapt
their core strategy to the needs of local markets such as color preferences, selling seasons, store
design and layouts, government regulations and cultural values. Examples, KFC in Malaysia
introduce rice into their menu because local people in Malaysia like to eat rice.

Third characteristics are global culture. Retailers must think globally because it’s not sufficient to
transplant a home-county culture and infrastructure into another country. Example Carrefour has
always encouraged the rapid development of local management and retains few expatriates in its
overseas operations.

Fourth characteristics are financial resources. Global retailers need to be in a strong financial
position and have the ability to keep investing in projects long enough to become successful. For
examples, Wal-Mart, Carrefour and Nike are in a strong financial position and have the ability to
keep investing to expand their business all around the world.

Question 5
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants. McDonald's
restaurant is operated by franchisee or the corporation itself.

McDonald's mission is to be our customers' favorites place and way to eat – with inspired people
who delight each customer with unmatched quality, service, cleanliness and value every time.

Strengths

 It is a global brand that owns 31,000 restaurants serving in 120 countries.

 It has a strong global presence and is considered as a market leader in both the domestic as well
as the international markets.
 It adapts to the cultural differences regarding the region where the restaurant is set up.
 It has located itself in major airports, cities, highways, tourist locations, theme parks.
 It has an efficient food preparation style that follows the process in a systematic way.
 It was the first to provide the customers about nutrition facts.

Weaknesses

 High employee turn-over that leads to more money being spent on training.
 It has yet to accomplish going on the trend of organic food.
 Price competition with the competitors resulting in low revenue.
 Lack of innovative products.

Threats

 Unethical promotion
o Some parents criticize the firm’s ‘cradle to grave’ marketing strategy that focuses on kids,
who later on take it as a trend to their adulthood because it will change their mind set,
when they hungry, they will think about McDonalds.
o McDonalds can overcome this by shifting those advertising target from child to others ,
that not concerning children only but also other generation for example teenager.
ABDT4104retail & Distribution Strategy Tutorial Week 7 Answer December 21, 2010

 Competition among fast food industry

o Emergence of major fast food competitors: Burger King, Wendy’s, Pizza hut , KFC.
o They may come out with different promotion or new meal to attract customer.
 Competition among food industry
o More restaurants that are increasing their food offering and declining the price.
o McDonalds not only competence with competitor in fast food industry but also others
food industry for the same customer dollar.
o McDonalds can overcome the competitor by providing promotion, for example
McDonalds now has come out with the lunch set from 12pm-3pm that provide lower
price than other hour to encourage people to consume.
o McDonalds also can overcome it by provide better services than others. For example Wifi
services, good staff knowledge, provide quality product, clean environment and more.
 Health life style
o Now a days, people are getting aware of healthy life style, but fast food is risky to health
so cause them reduce their consumptions.
o McDonalds can overcome it by come out product that is health for example low sugar
drinks, high protein burger, low fat French fries to attract customer to consume.

Question 6
1. Define the business’s mission:
a. seafood restaurant
b. High quality and avoid being too expensive.
c. Target → people who willing to pay for a high quality seafood meal.
2. Conduct a situation audit.
a. Market factors: size of market interested in seafood and the growth of population
market.
b. Competitor factors: include how hard it is to enter the seafood restaurant business.
→startup cost and the number of seafood restaurants in the area.
c. Environment factors→ social and economic
i. Social: how many people dine out?
ii. Economic: exporting of seafood affect services tax, recession, and seasonal
price of the seafood.
d. The analysis of strength and weakness of retailer:
i. Financial resources.
ii. The availability of good location.
iii. Restaurant management skill.
iv. Contracted seafood provider.
v. Need to build Customer loyalty.
vi. Prospect of good operation and good chief.
3. Identify strategic opportunities:
a. Market penetration → can I open another restaurant in another neighborhood?
b. Market expansion → open a restaurant in new geographic area.
c. Retail format development → develop of online order
d. Diversification → sell fresh seafood.
4. Evaluate strategic opportunity: evaluating the alternative- looking into market attractiveness
and the competitive position.
a. Can maximize growth opportunity by investing in area that has high market
attractiveness and a low competitive position.
b. Example, seafood restaurant which also sell fresh seafood.
ABDT4104retail & Distribution Strategy Tutorial Week 7 Answer December 21, 2010

5. Establish specific objective and allocate resources:

a. After finding growth opportunity, resources must be allocated to each opportunity.
This is done by looking at the performance sought, the time frame needed, and the
level of investment needed to accomplish the objective.
6. Develop a retail mix to implement strategy (merchandise and services offered, merchandise
pricing advertising and promoting programed, store design and convenience of the store’s
location).
a. The restaurant will offer large variety of seafood, experience staff and chief.
b. Price: low to medium to attract medium or low income group.
c. Advertisement: will start on publicity on the opening of the business, then focus on
WOM.
d. Promotion program: set dinner, set lunch.
e. Store design: need of large space, normally with big table which allow large member
of customer like family gathering.
f. Location: place with lots of parking, distance is not a problem.
7. Evaluate performance and make adjustment
a. The final step of the planning process is evaluating the results of the strategy and
implementation programed.