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Retail & Distribution Tutorial Week 4 Answer

Retail & Distribution Tutorial Week 4 Answer

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ABDT4104 RETAIL & DISTRIBUTION STRATEGY

Tutorial Week 4 Answer

October 31, 2010

Question 1
Store base retailers are aggressively pursuing sales through an electronic channel, because t e electronic h channel has the potential for offering a greater selection of products and more personalized information about products and services. Compare to the store base and catalog channel, electronic channel has border selection, it has vast number of alternatives available to consumers, offering deep assortment. Information is always important for customers to make better purchase decisions. However, the information that provided by the store and catalog retailers are limited. The space available in store and catalog to provide information is constrained by the size of a printed page, a sign and a package on a shelf. By using an electronic channel, retailers have the capability of providing as much information as each customer wants and also providing solution to customer problems. In addition, the electronic channel can arrange the needed information the customers want side by side to make comparison, so that customers can effectively use it when evaluation the products. The most significant potential benefit of the electronic channel is the ability to economically personalize the information for each customer. Store base retailers are manager to provide personalize services to customers, but it is costly. Catalog cannot tailor to the needs and preferences to all customers. However, electronic channel can provide personal service at a low cost. Electronic channel can use the electronic agent to assist customer by using the online chat, email or VIOP, helping customer to locate merchandise.

Question 2
To effectively operate and realize the benefit of multichannel retailing, firms need to have the skills to: i. ii. iii. iv. v. vi. vii. Develop assortments and managing inventory- the basic merchandise management activities. Manage store operations including managing employees in distant locations. Distribute merchandise efficiently from distribution centers to stores. Undertake nonstore retail activities, including presenting merchandise in both catalogs and websites. Proves orders from individual customers electronically. Efficiently distribute individual orders to homes and accept returns. Integrate information systems to provide a seamless customer experience across channel.

For example, store base and catalog retailers both are ideally suited to offer assortments and efficiently manage merchandise inventories as they have more experience and greater skills in put ing together t merchandise assortments, a skill that most manufacturers and specialty retailers lacks. Most store based retailers and manufacturers lack the appropriate systems for shipping individual orders to household. Their distribution center systems are designed to fill large orders from retail firms and deliver goods to retailer s distribution centers.

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ABDT4104 RETAIL & DISTRIBUTION STRATEGY

Tutorial Week 4 Answer

October 31, 2010

Question 3
I. Store a) Benefit i. Customer can browse and see what is available in the store before they decide what to buy. ii. The greater benefit offered by stores is the opportunity for customers to use all of their sense when examining products- touching,feeling, smelling, testing, seeing and hearing. iii. Store providespersonal services to customers, such as sales associates, providing meaningful and personalized information. iv. Stores are the only channel that accepts cash payments. Many customers prefer to pay cash because it is easy, resolves the transaction immediately and does not result in potential interest payment. v. Stores have the advantage of allowing customers to get the merchandise immediately after they buy it. Example you no need to wait the delivery of your medicine when you need it immediately when you buy it at store. b) Limitation: i. Size of the store is limited. Stores always have limited shelve space, which will cause additional costs to the merchandise on shelve. ii. Inconsistent execution by sales associates may be occur, the information provided by the sales associates may be varies. iii. For some customers, travel long distant to get the goods in store is costly and time consuming. Catalog a) Benefit i. Catalog like all non-store formats; offer the convenience of looking at merchandise and placing an order any day at any time form almost anywhere. ii. Non-store retail formats have an advantage over store-based retail by enabling customers to review merchandise and place orders from a safe environment like in their home. iii. Catalog have a lots of information needed such as the price, photo to show how the products look like, and also provide information on how a products can enhance consumer life style. For example, Ikea show you how to deco your home. b) Limitation i. Outdate information, as some retailer may only provide a catalog per year. The price state on the catalog may be varies time to time. ii. Some catalog retailer may cheat the customer like do not deliver the product after the payment had be made. Web site a) Benefit i. Electronic retail can provide border selection; it s providing a vast number of alternatives available to consumers. ii. Using electronic channel, retailers have the capability of providing as much information as each customer wants, more information than they can get through store and catalog channels. Customer shopping electronically can drill down through Page 2 of 6

II.

III.

ABDT4104 RETAIL & DISTRIBUTION STRATEGY

Tutorial Week 4 Answer

October 31, 2010

web page until they have enough information to make a purchase decision or problem solving. The available information in the electronic channel can be update frequently, provided customer with the most latest product information, and the cost of adding information is more cost effective, since retailer no need to reprint their catalog or change the product description board in their store. Everything can be done just in the webpage. Customer can also choose the format of information they want, they can arrange the product they want to evaluate, and perform a side by side comparison on the website, with more clear sign on their purchase decision making process. iii. Electronic channel have the ability to economically personalize the information for each customer. When customer shopping, an electronic agent learn the preference of a customer, and provide better recommendation that help to solve the customer problem and needs. b) Limitation i. Most electronic channel accepts credit transfer services, but this can be risky for the customers. Security issues are the major problem in electronic channel, the transaction process may be hack by the other user instead of the retailer itself. ii. The user privacy are another potential risk on electronica environment, customer personal information may be easily obtain by the other on user online.

Question 4
This is because they will have wider market coverage by expanding their market through all three channels; let the retailer the opportunity to reach new markets, expanding their market beyond the locations of their store. For example, a store at rural area, only have very limit number of customer that from these area. But, if they expand their store by putting it online, then, more customers from different may know about their shop and product. Hence, they can make more profit than before. One of the greatest limitationsfacing by the store-base retailers is the size of their stores, the amount of the merchandise that can be display and sale in the store is limited. Another limitation of the store is their inconsistent execution. The availability and knowledge of the sales associates can vary considerably across stores. However, by using the electronic channel, retailer has the opportunity to overcome the limitation of these retail formats. While offering an electronic channel may lead to some cannibalization, using an electronic channel synergistically with other channels can result in consumers making more purchase from a retailer. The electronic channels drive more purchases from the stores, and the stores drive more purchase from the website, electronic channel build share of wallet and customer loyalty.

Question 5
A multi-channel retailer should offer the same assortment of merchandise for sale on its web site, but with different price. First, the operation costs in this 2 channel are different. The stores have limited space and many other utilities expenses and cause the price on shelve expensive. However, when going to online, retailer no longer need to incur any store rental, utilities fees, or fewer employees wage, hence they can put a lower price to gain more customer and market share.

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ABDT4104 RETAIL & DISTRIBUTION STRATEGY

Tutorial Week 4 Answer

October 31, 2010

Selling online, can be another strategy against the competitor, as going online can expend the market share; mean competitors will lost some of their share if they do not follow. Going online, a retailer can sale their merchandise at lower price and this will attract customer from competitors to buy online.

Question 6
i. ii. Some Jewelry can be sell effectively by non-store retailer, like selling cheap jewelry using catalog retailing are very welcoming by the young teenage. TV sets cannot sale effectively by non-store retailer, customer need high touch and feeling about the electronic devices, and they need to compare the picture quality of each TV set only if they go to the store. Computer software like computer application and music video can be sale by non-store retailer, like directly sale online. For example, Apple online stores selling vast numbers of Apple Apps and Music to 58million apple user worldwide generated $250million revenue per month. High fashion apparel is selling effectively with non-store retailer recently, especially targeting the Gen Y users, which prefer to shop online. This customer can be easily getting updated fashion information online to make their purchase decision. Pharmaceuticals product cannot be sale by non-store retailer, as this action can be illegal. Selling pharmaceuticals product need advice and assist by the doctor on sport, hence it is not suitable selling online or by non-store retailer. Health care products can be sale effectively by non-store, such as direct selling. Direct selling company like Amway and Elken are selling many Health care products by their direct selling strategy, and making profit.

iii.

iv.

v.

vi.

Question 7
Yes, I agree with this statement, this is because: i. Website does not provide personal service. Website cannot present a smile and ask May I help you . The customary may I help you is offered to a customer entering or leaving the store without a purchase (to provide them a pleasant buying experience and to ensure that they were able to find what they are looking for). The customer will feel cared for by getting some help finding what they came looking for. For example, Padini s staff greats the customers and help the customer out when they need help or advice. Stores provide touching and feeling product. Customers can touch, smell, taste, see and hear when they visit the store. For example customers can try on the shirt, feel the fabric, look at different styles and see how the color and patterns coordinate in Padini concept store. Store give faster response to the customers when they do not find what they looking for, they are likely to ask the staff for help. On the other hand, if website customer do not find what they want, they are more likely to leave the site rather than email the customer services and waiting for reply. For example, Padini s staffs tell the customer about the location of the item or the price of the item. Store allow customer to get the merchandise immediately after they purchase. For example, customer can get the shirt immediately after they buy it in the Padini concept store.

ii.

iii.

iv.

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ABDT4104 RETAIL & DISTRIBUTION STRATEGY

Tutorial Week 4 Answer

October 31, 2010

Case Study
Question 1(a)
The body shop is specialty store retailer. They concentrate on limited numbers of complementary merchandise categories, which are basic necessities stated in the case. Examples are shower gels, shampoos and others skin care products. In the case, last paragraph stated that, we want to focus on making our existing outlets more... to serve our customers better , prove that The Body Shop is retailer that focus provide high level of service in relatively small outlets.Besides that, focused on very specific market segments by offering deep but narrow assortments. For examples, The Body Shop sell only skin care products, but offers different kind of skin care products for different skin type users.

Question 1(b)
By using the store channel to sell to its customers, customers can browsing in the store to see what products is available in The Body Shop before decided what to buy. As we know, customer enjoys browsing in their buying process. Besides, customer can touch, smell, and see that product in the store. For The Body Shop, stripes are provides to allow customers to test and smell the fragrance, customer also can see verities of products displaced on the shelves too. Another benefit is the promoters in The Body Shop able to provide personal services direct to customer. Service provider in the store will give advices, suggestions and answer customer s questions. In addition, this channel allows cash and credit payment which are fast and easy for customer.

Question 1(c)
Foong is so confident in saying that because even during the 1997 Asia Financial Crisis, they managed to grow by almost 9%, which was their lowest ever. So, this 2008 target is easier to achieve. (Paragraph 3) The second reason is up to December 2008, the company had already achieved a 14% growth its sales compared to 2007. It is a good signal to prove that hitting its 2008 target is nearer. (Paragraph 5) The third reason is that the year-end period sales are higher because of the increasing of customer spending, especially in Christmas and holiday season. (Paragraph 5) The forth reason is The Body Shop experienced and familiar with how to deal with economic calamities. They are having survived the Malaysia recession of the mid-1980s and the economic impact from the Severe Acute Respiratory Syndrome (SARS) outbreak in 2003 as well as the Tsunami of 2004, according to Foong. (Paragraph 6) The fifth reason is Foong believed that, if you have good products, a trusted brand and a harvest business, people will always buy from you . She believed that The Body Shop is managed their business well. (Paragraph 7) The sixth reason is they have no raise their product prices. Thus, old customer will continued to purchase and it may attracts new customer if others stores that sell same products increases their price. (Paragraph 8) Page 5 of 6

ABDT4104 RETAIL & DISTRIBUTION STRATEGY

Tutorial Week 4 Answer

October 31, 2010

The last reason is Foong believed their business would not be affected by economic down-turn because they are not selling luxury goods but basic necessities which are goods that have to use in daily life. (Paragraph 7)

Question 1(d)
I. Provide staff training- RampaiNiagaSdn. Bhd can provide staff training to educate the latest information of the company product in order to increase the knowledge and the market sense of the staff. For example, company provides the company background and products in order to recommend the suitable product to customers. Standardizes the customer service- to make sure the outlets can provide consistent and quality service to the customers. For example, hire the staff that able to speak more than 2 language and provide the uniform to the staff to create an impressive impression to the customers well categorized the products in the different section so that customers can get the product they wants easily. Set up the customer service line- RampaiNiagaSdn. Bdn can set up the customer service line to respond faster to customer complaints. For example, set up customer service line to handling the customer s complaints and collect the feedback of customers about company products. Sale Commission Delivery Service Performance Appraisal Credit Payment Convenient Hours Service Customized Provide Free Samples.

II.

III.

IV. V. VI. VII. VIII. IX. X.

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