Study Guide

Taylor’s University
Dual Award Programme

“Retail is a customer
business. You’re trying to
take care of the customer—
solve something for the
customer. And there’s no
way to learn that in the
classroom or in the corner “Too many businesses today
office…” are based on driving prices
lower by screwing over
– Erik Nordstrom, somebody: pounding
President, Nordstrom suppliers or squeezing
Direct employees. We’re the
opposite. We put employees
first, radically… If you take
care of them, they will take
care of your customer better
than anybody else.”

– Kip Tindell, CEO, Container

Store

BUS3304 / MKT 60904

Retail Marketing
March Semester 2018

R Mkt SG ver2.1a
TUTORIAL 01 (WEEK 02)
TOPIC: AN INTRODUCTION TO RETAIL MARKETING

LECTURE 01 OVERVIEW/REFRESHER

To define retailing consider it from various perspectives, demonstrate its impact, and
note its special characteristics. Retailing comprises the business activities involved in selling
goods and services to consumers for personal, family, or household use. It is the last stage in
the distribution process. Retailing may be viewed from multiple perspectives. It includes tangible
and intangible items, does not have to involve a store, and can be done by manufacturers and
others—as well as retailers. Retail firms receive up to 40 cents or more of every sales dollar as
compensation for operating costs, the functions performed, and the profits earned. They may
ship, store, mark, advertise, and pre-pay for items. They complete transactions with customers
and often provide customer services. They may offer multiple formats (multi-channel retailing) to
facilitate shopping. Retailers and their suppliers have complex relationships because retailers
serve in two capacities. They are part of a distribution channel aimed at the final consumer, and
they are major customers for suppliers. Channel relations are smoothest with exclusive
distribution; they are most volatile with intensive distribution. Selective distribution is a way to
balance sales goals and channel cooperation.

To introduce the concept of strategic planning and apply it. A retail strategy is the overall
plan guiding the firm. It has six basic steps: defining the business, setting objectives, defining
the customer market, developing an overall plan, enacting an integrated strategy, and
evaluating performance and making modifications

To show why the retailing concept is the foundation of a successful business, with an
emphasis on the total retail experience, customer service, and relationship retailing. The
retailing concept requires a firm to have a customer orientation, use a coordinated effort, and be
value driven and goal oriented. The total retail experience consists of all elements in a retail
offering that encourage or inhibit consumers during their contact with a retailer. Some elements
are controllable by the retailer; others are not. Customer service includes identifiable, but
sometimes intangible, activities undertaken by a retailer in association with the basic goods and
services sold. It has an effect on the total retail experience. In relationship retailing, a firm seeks
long-term bonds with customers rather than acting as if each sales transaction is a totally new
encounter with them.

TUTORIAL CLASS ACTIVITIES

 Understanding the MIB

 Class discussion questions
TUTORIAL LEARNING OUTCOMES:

 To define retailing, consider it from different perspectives, demonstrate its impact, and
note its special characteristics
 To introduce the concept of strategic planning and apply it
 To show why the retailing concept is the foundation of a successful business, with an
emphasis on the total retail experience, customer service, and relationship retailing

Class Discussion Questions

1. Discuss how a health and wellness clinic can successfully conduct its business
activities by applying a retail strategy.

2. What are the pros and cons of a firm such as Apple having its own retail facilities
and E-commerce Web site (www.apple.com) as well as selling through traditional
retailers?

3. Why would one retailer seek to be part of an exclusive distribution channel while
another seeks to be part of an intensive distribution channel?

4. What is your favourite food retailer? Discuss the criteria you have used in making
your selection. What can a competing firm do to lure you away from your favorite
firm?

5. Describe how the four principles of the retailing concept can be applied to a local
coffee shop for efficient retailing.

6. Define the term “total retail experience.” Then describe a recent retail situation in
which your expectations were surpassed and state why.
TUTORIAL 02 (WEEK 03)
TOPIC: THE RETAIL MARKETING ENVIRONMENT

LECTURE 02 OVERVIEW/REFRESHER

1. To explain what "value" really means arid highlight its pivotal role in retailers 'building
and sustaining relationships. Sellers undertake a series of activities and processes to provide
a given level of value for the consumer. Consumers then perceive the value offered by sellers,
based on the perceived benefits received versus the prices paid. Perceived value varies by type
of shopper.

A retail value chain represents the total bundle of benefits offered by a channel of distribution. It
comprises shopping location, ambience, customer service, the products/brands carried, produce
quality, the in'-stock position, shipping, prices, the retailer's image, and so forth. Some elements
of a retail value chain are visible to shoppers. Others are not. An expected retail strategy
represents the minimum value chain elements a given customer segment expects from a given
retailer type. An augmented retail strategy includes the extra elements that differentiate
retailers. A potential retail strategy includes value chain elements not yet perfected in the
retailer's industry category.

2. To describe how both customer relationships and channel relationships may be

nurtured in today's highly competitive marketplace. For relationship retailing to work,
enduring relationships are needed with other channel members, as well as with customers.
More retailers now realize loyal customers are the backbone of their business. To engage in
relationship retailing with consumers, these factors should be considered: the customer base,
customer service, customer satisfaction, and loyalty programs and defection rates. In terms of
the customer base, all customers are not equal. Some shoppers are more worth nurturing than
others; they are a retailer’s core customers.

Customer service has two components: expected services and augmented services. The
attributes of personnel who interact with customers, as well as the number and variety of
customer services offered, have a big impact on the relationship created. Some firms have
improved customer service by empowering personnel, giving them the authority to bend some
rules. In devising a strategy, a retailer must make broad decisions and then enact specific
tactics as to credit, delivery, and so forth.

Members of a distribution channel jointly represent a value delivery system. Each one depends
on the others; and every activity must be enumerated and responsibility assigned. Small
retailers may have to use suppliers outside the normal channel to get the items they want and
gain supplier support. A delivery system is as good as its weakest link. A relationship-oriented
technique that some manufacturers and retailers are trying, especially supermarket chains, is
category management.
3. To examine the differences between goods and service retailers. Goods retailing focuses
on selling tangible products. Service retailing involves transactions where consumers do not
purchase or acquire ownership of tangible products.

There are three kinds of service retailing: rented goods services, where consumers lease goods
for a given time; owned-goods services, where goods owned by consumers are repaired,
improved, or maintained; and nongoods services, where consumers experience personal
services rather than possess them. Customer service refers to activities that are part of the total
retail experience. With service retailing, services are sold to the consumer.

The unique features of service retailing are the intangible nature of many services, the
inseparability of some service providers and their services, the perishability of many services,
and the variability of many services.

4. To discuss the impact of technology on relationships in retailing. Technology is

advantageous when it leads to an improved information flow between retailers and suppliers,
and between retailers and customers, and to faster, smoother transactions.

Electronic banking involves both the use of ATMs and the instant processing of retail purchases.
It allows centralized records and customers to complete transactions 24 hours a day, 7 days a
week at various sites. Technology is also changing the nature of supplier retailer-customer
interactions via point-of-sale equipment, self-scanning, electronic gift cards, interactive kiosks,
and other innovations.

TUTORIAL CLASS ACTIVITIES

 Class discussion questions

 Internet activity
 Formation of groups for Group Assignment

TUTORIAL LEARNING OUTCOMES

 To explain what “value” really means and its pivotal role in retailers’ building and
sustaining relationships
 To describe how both customer relationships and channel relationships may be nurtured
 To examine the differences between goods and services retailers
 To discuss the impact of technology on relationships in retailing
CLASS DISCUSSION QUESTIONS:

1. Discuss the concept of “value” from the perspective of both the customer and the
retailer. List three value chain elements a retailer must keep in mind when
planning a value-oriented retail strategy.

2. What are the expected and augmented value chain elements for each of these
retailers?
a. Tesco
b. Local fruit-and-vegetable store.
.
3. Who are the retailer’s base customers? What factors influence the retailer’s
customer base strategy?

4. What are the unique aspects of service retailing? Give an example of each.

5. What are the results of customer dissatisfaction? Discuss the practical steps a
retailer can take to improve weak customer service.

6. The time may come when most consumer purchases are made with self-scanners.
What is the impact on retailers in terms of benefits? In terms of disadvantages?

INTERNET ACTIVITY

Visit the website of Sephora (www.sephora.com), the perfume and cosmetics chain with
stores in 25 countries. Click on “Customer Service” at the bottom of the home page.

Comment on the information you find there. Does Sephora have customer-oriented
policies? Explain your answer.
TUTORIAL 03 (WEEK 04)
TOPIC: CONSUMER BEHAVIOUR IN RETAIL

LECTURE 03 OVERVIEW/REFRESHER

1. To discuss why it is important for a retailer to properly identify, understand, and

appeal to its customers. To properly develop a strategy mix, a retailer must identify the
characteristics, needs, and attitudes of consumers; understand how consumers make decisions;
and enact the proper target market plan. It must study environmental influences, too.

2. To enumerate and describe a number of consumer demographics, lifestyle factors, and

needs and desires — and to explain how these concepts can be applied to retailing

3. To examine consumer attitudes toward shopping and consumer shopping behaviour,

including the consumer decision process and its stages. Many people do not enjoy
shopping and no longer feel high prices reflect value. Different segments have different
attitudes. More people now believe private brands are of good quality. Consumer patronage
differs by retailer type. People often cross-shop, whereby they shop for a product category at
more than one retail format during the year or visit multiple retailers on the same shopping trip.

4. To look at retailer actions based on target market planning. Retailers can deploy mass
marketing, concentrated marketing, or differentiated marketing. Several examples are
presented.

5. To note some of the environmental factors that affect consumer shopping. Consumer
attitudes and behaviour are swayed by the economy, the inflation rate, the infrastructure
where people shop, and other factors. Retailers also need to consider how the standard of
living is changing.

TUTORIAL CLASS ACTIVITIES

 Class discussion questions

 Internet activity
 Discussion on Individual Assignment (due in week 6)

TUTORIAL LEARNING OUTCOMES

 To discuss why it is important for a retailer to properly identify, understand, and appeal
to its customers
 To enumerate and describe a number of consumer demographics, lifestyle factors,
needs and desires – and how these concepts can be applied to retailing
 To examine consumer attitudes toward shopping and consumer shopping behaviour,
including the consumer decision process and its stages
 To analyse retailer actions based on target market planning
CLASS DISCUSSION QUESTIONS:

1. Examine the facts on Malaysian Demographics provided in the lecture slides.

What implications are there for retailers in the country?

2. Explain how a retailer selling expensive furniture could reduce the six types of
perceived risk.

3. How effective are product discounts in gaining customer loyalty?

4. How can a retailer hope to increase the level of impulse purchases?

5. Contrast the mass market approach used by a supermarket with the concentrated
marketing approach used by a fruit-and-vegetable store. What is the key to each
firm succeeding?

6. There are three types of decision processes: routine, limited and extended. Give
examples of consumer products for each type, explain why.

INTERNET ACTIVITY
Look at the Web site of Radio Shack (www.radioshack.com) and describe its target
market strategy.

• Discussion on Individual Assignment (due in week 6)

TUTORIAL 04 (WEEK 05)
TOPIC: THE SELLING ENVIRONMENT

LECTURE 04 OVERVIEW/REFRESHER

1.To show the ways in which retail institutions can be classified. There are 2.4 million retail
firms in the United States operating 3.2 million establishments. They can be grouped on the
basis of ownership, store-based strategy mix, and non-store-based and non-traditional retailing.
Many retailers can be placed in more than one category. This lecture deals with retail
ownership.

2. To study retailers on the basis of ownership type, and to examine the characteristics
of each. About 70 percent of U.S. retail establishments are independents, each with one
store. Chains are multiple stores under common ownership, with some centralized buying and
decision making. Franchising embodies arrangements between franchisors and franchisees that
let the latter do business under established names and according to detailed rules. Leased
departments are in-store locations rented to outside parties. Vertical marketing systems consist
of all the levels of independently owned firms along a channel of distribution. Consumer
cooperatives are owned by their customers who invest, elect officers, manage operations, and
share savings or profits.

3. To explore the methods used by manufacturers, wholesalers, and retailers to exert

influence in the distribution channel. Even without an integrated vertical marketing system,
channel control can be exerted by the most powerful firm(s) in a channel. Manufacturers,
wholesalers, and retailers each have ways to increase their impact. Retailers' influence
is greatest when they are a large part of their vendors' sales and private brands are used.

4. To describe the wheel of retailing, scrambled merchandising, and the retail life cycle,
and to show how they can help explain the performance of retail strategy mixes. Now a
store-based strategic retailing perspective will be examined. A retail strategy mix involves a
combination of factors: location, operations, goods/services offered, pricing, atmosphere and
customer services, and promotion. To flourish, a firm should strive to be dominant in some way.

to the wheel of retailing, retail innovators often first appear as low price operators with low costs
and low profit margins. Over time, they upgrade their offerings and customer services and raise
prices. They are then vulnerable to new discounters with lower costs that take their place along
the wheel. With scrambled merchandising, a retailer adds goods and services that are unrelated
to each other and its original business to increase overall sales and profits. Scrambled
merchandising is contagious and often used in self-defence. The retail life cycle states that
institutions pass through identifiable stages of introduction, growth, maturity, and decline..

5. To examine a wide variety of retailers involved with store-based strategy mixes. Retail
institutions may be classified by store-based strategy mix and divided into food-oriented and
general merchandise groups.
TUTORIAL CLASS ACTIVITIES

 Class discussion questions

 Discussion on Individual Assignment (due in week 6)

TUTORIAL LEARNING OUTCOMES

 To understand the ways in which retail institutions can be classified

 To study retailers on the basis of ownership type and to examine the characteristics of
each
 To understand the concept of the wheel of retailing
 To examine a variety of retailers involved with store-based strategy mixes

CLASS DISCUSSION QUESTIONS:

1. Do you believe that independent retailers will soon disappear from the retail landscape?
Explain your answer.

2. Why would a supermarket want to lease space to an outside operator rather than run a
business, such as dry cleaning, itself? What would be its risks in this approach?

3. Describe some advantages of franchising. Are there any disadvantages?

4. Explain the wheel of retailing. Is this theory applicable today?

5. What strategic emphasis should be used by institutions in the growth stage of the retail
life cycle compared with the emphasis by institutions in the maturity stage?

• Discussion on Individual Assignment (due in week 6)

TUTORIAL 05 (WEEK 06)
TOPIC: STORE LAYOUT AND DESIGN

LECTURE 05 OVERVIEW/REFRESHER

1. To describe the operational scope of operations management. Operations management

efficiently and effectively seeks to enact the policies needed to satisfy customers, employees,
and management.

2. To examine an operations blueprint which systematically lists operating functions, their

characteristics, and their timing as well as the responsibility for performing the functions. Store
format and size considerations include the use of prototype stores and store dimensions. Firms
often use prototype stores in conjunction with rationalized retailing. Some retailers emphasize
category killer stores; others open smaller stores. In space allocation, retailers deploy a top-
down or a bottom-up approach. They want to optimize the productivity of store space.

3. In laying out a store interior, six steps are necessary:

(a) Floor space is allocated among selling, merchandise, personnel, and customers based on a
firm s overall strategy.
(b) Product groupings are set, based on function, purchase motivation, market segment, and/or
storability.
(c) Traffic flows are planned, using a straight or curving pattern, (d) Space per product category
is computed by a model stock approach or sales-productivity ratio.
(e) Departments are located,
(f) Individual products are arranged within departments. Interior (point-of-purchase) displays
provide information for consumers, add to the atmosphere, and have a promotional role. Interior
display possibilities include assortment displays, theme displays, ensemble displays, rack and
case displays, cut case and dump bin displays, posters, mobiles, and electronic displays.

4. To briefly examine non store retailing. For Web retailers, many principles of atmospherics
are similar to those for store retailers. There are also key differences. The home page is the
storefront. The general interior consists of site instructions, company information, product icons,
the shopping cart, the product search engine and other factors. The store layout includes
individual Web pages, as well as the links that connect them. Displays can feature full or more
selective assortments. Sales are lost if the checkout counter does not function well. There are
specialists that help m Web site design. Compared with traditional stores, Web stores have
various pros and cons.

TUTORIAL CLASS ACTIVITIES

 Class discussion questions

  Internet activity
 Individual Assignment DUE THIS WEEK (week 6)

TUTORIAL LEARNING OUTCOMES

 To understand store layout and displays including: allocation of floor space, store
offerings, traffic flow patterns, space needs, in-store locations, product arrangements,
interior POP displays
 To briefly look at the special case of non-store atmospherics

CLASS DISCUSSION QUESTIONS:

1. How is the floor space allotted in a retail store?

2. Explain why a point-of-purchase display is considered the following:

a. Persuasive
b. A silent salesperson
c. Flexible
d. Enhancing overall shopping experience

3. What is a planogram? Present a planogram for a typical bank or cafe you are
familiar with.

4. Develop a purchase motivation product grouping for an online men's apparel

retailer.

5. Which stores should not use a curving (free-flowing) layout? Explain why.

6. You are the store manager for a new outlet specialising in sports apparel.
Describe some ways that product arrangements can help to increase sales
and/or profits.

INTERNET ACTIVITY:
Visit the Web site of PetsMart (www.petsmart.com) and then comment on its
storefront, general interior, store layout, displays, and checkout counter.
TUTORIAL 06 (WEEK 07)
TOPIC: POSITIONING, TARGETING AND RETAIL STRATEGY

LECTURE 06 OVERVIEW/REFRESHER

1. To illustrate the concept of strategic planning for all types of retailers. A retail strategy
is the overall plan that guides a firm. It consists of situation analysis, objectives, identification
of a customer market, broad strategy, specific activities, control, and feedback.

2. To examine how positioning is used by retailers. Positioning is an image which

represents how a given retailer is perceived by consumers and others. A retailer devises its
strategy that projects an image relative to its retail category and its competitors, and elicits a
positive consumer response.

3. To discuss the importance of target marketing to retailers. After consumer

characteristics and needs are determined, and a target market is selected. A firm can sell to
a broad spectrum of consumers (mass marketing); zero in on one customer group
(concentrated marketing); or aim at two or more distinct groups of consumers (differentiated
marketing), with separate retailing approaches for each.

4. To examine the individual controllable and uncontrollable elements of a retail

strategy, and to present strategic planning as a series of integrated steps. There are
four major controllable factors in retail planning: store location, managing the business,
merchandise management and pricing, and communicating with the customer. The principal
uncontrollable factors affecting retail planning are consumers, competition, technology,
economic conditions, seasonality, and legal restrictions. Each stage in the strategic
planning process needs to be performed, undertaken sequentially, and coordinated in order
to have a consistent, integrated, unified strategy.

5. A broad strategy is formed. It involves controllable variables (aspects of business a firm

can directly affect) and uncontrollable variables (factors a firm cannot control and to which it
must adapt). Through a control process, strategy and tactics are evaluated and revised
continuously. A retail audit systematically reviews a strategy and its execution on a regular
basis. Strengths are emphasized and weaknesses minimized or eliminated. An alert firm
seeks out signals or cues, known as feedback, that indicate the level of performance at each
step in the strategy.

TUTORIAL CLASS ACTIVITIES

 Group discussion questions

 Internet activity

TUTORIAL LEARNING OUTCOMES

 To To examine how positioning is used by retailers

 To discuss the importance of target marketing to retailers
  To examine the individual elements of a retail strategy (both controllable and
uncontrollable

GROUP DISCUSSION QUESTIONS:

1. Choose your favourite retailer. Draw and explain a positioning map that includes your
retailer and retailers that sell the same/similar types of merchandise (or service), using
appropriate dimensions.

2. Assume you are interested in opening a restaurant in your town. What specific
controllable variables and uncontrollable variables would be important to consider?

3. The Gap owns several divisions, including Old Navy, Banana Republic, Intermix, and
Athleta. What target market strategy/strategies is/are being used by the chain? Justify
your answer.

4. Compare and contrast the target market strategies of Tesco and Brook Brothers.

INTERNET ACTIVITY:

Do a SWOT analysis for McDonalds. What is its mission? What are its strengths and
weaknesses? What opportunities and environmental threats might it face over the next 10
years?
TUTORIAL 07 (WEEK 08)
TOPIC: RETAIL LOCATION

LECTURE 07 OVERVIEW/REFRESHER

6. To examine the types of locations available to a retailer: isolated store, unplanned

business district, and planned shopping centre. After a retailer rates alternative trading
areas, it decides on the type of location, selects the general location, and chooses
a particular site. There are three basic locational types. An isolated store is freestanding,
not adjacent to other stores. It has no competition, low rent, flexibility, road visibility, easy
parking, and lower property costs. It also has a lack of traffic, no variety for shoppers, no
shared costs, and zoning restrictions. An unplanned business district is a shopping area
with two or more stores located together or nearby. Store composition is not based on
planning. There are four categories: central business district, secondary business district,
neighbourhood business district, and string. An unplanned district generally has these
favourable points: variety of goods, services, and prices; access to public transit; nearness
to commercial and social facilities; and pedestrian traffic. Yet its shortcomings have led to
the growth of preplanned shopping centres.

7. To note the decisions necessary in choosing a general retail location. First, the specific
form of isolated store, unplanned business district, or planned shopping center location is
determined, such as whether to be on a highway or side street; in a CBD, an SBD, an NBD,
or a string; or in a regional, community, or neighbourhood shopping centre. Then the
general store location is specified—singling out a particular highway, business district, or
shopping centre.

8. To describe the concept of the one-hundred percent location. Extensive analysis is

required when evaluating each general location and specific sites within it. Most importantly,
the optimum site for a given store must be determined. This is the one-hundred
percent location, and it differs by retailer.

9. To discuss several criteria for evaluating general retail locations and the specific
sites within them. Pedestrian traffic, vehicular traffic, parking facilities, transportation, store
composition, the attributes of each specific site, and terms of occupancy should be studied.
An overall rating is then computed for each location and site, and the best one
selected. Affinity occurs when the stores at the same location complement, blend, and
cooperate with one another; each benefits from the others' presence.

10. To contrast alternative terms of occupancy. A retailer can opt to own or lease. If it
leases, terms are specified in a straight lease, percentage lease, graduated lease,
maintenance-increase-recoupment lease, and/or net lease. Operating and maintenance
costs, taxes, zoning restrictions, and voluntary restrictions also need to be reviewed.

TUTORIAL CLASS ACTIVITIES

 Group discussion questions

  Internet activity

TUTORIAL LEARNING OUTCOMES

 To examine the types of locations available to a retailer: isolated stores, unplanned

business districts, and planned shopping centers
 To discuss several criteria for evaluating general retail locations and the specific sites
within them
 To contrast alternative terms of occupancy

GROUP DISCUSSION QUESTIONS:

1. Where/what is the Golden Triangle in Kuala Lumpur? What sort of retail outlets
would be most suitable to be located in the Golden Triangle? Why?

2. You are a Marketing Consultant specialising in retailing. What would be the most
important factor in choosing a location site for each of these types of stores:
a. Ferrari automobiles
b. American Eagle Outfitters
c. A chain of convenience stores

3. Why would a Payless ShoeSource store locate in a neighbourhood shopping centre

instead of an isolated shopping mall?

INTERNET ACTIVITY:

Go to the home page of your favourite enclosed mall, and describe the mall in terms of
the following characteristics: number of anchor stores, number and categories of specialty
stores, number of sit-down and quick-service restaurants, and types of entertainment
offered. What are the strengths and weaknesses of this assortment of retailers? What are
the unique features of this particular mall?
TUTORIAL 08 (WEEK 09)
TOPIC: MERCHANDISE ASSORTMENT AND SELECTION

LECTURE 08 OVERVIEW/REFRESHER

11. To demonstrate the importance of a sound merchandising philosophy. Developing

and implementing a merchandise plan is a key element in a successful retail strategy.
Merchandising consists of the activities involved in a retailer's buying goods and services
and making them available for sale. A merchandising philosophy sets the guiding
principles for all merchandise decisions and must reflect the desires of the target market,
the retailer's institutional type, its positioning, its defined value chain, supplier
capabilities, costs, competitors, product trends, and other factors.

12. To study various buying organization formats and the processes they use. The
buying organization and its processes must be defined in terms of its formality, degree of
centralization, organizational breadth, personnel resources, functions performed, and
staffing.

3. To outline the considerations in devising merchandise plans: forecasts,

innovativeness, assortment, brands, timing, and allocation. Forecasts are projections of
expected retail sales and form the foundation of merchandise plans. A retailer's
innovativeness is related to the target market(s), product growth potential, fashion
trends, the retailer's image, competition, customer segments, responsiveness to
consumers, investment costs, profitability, risk, constrained decision making, and
declining goods and services

An assortment is the merchandise selection carried. The retailer first chooses the quality
of merchandise. The assortment is then determined. Width of assortment refers to the
number of distinct product categories carried. Depth of assortment refers to the variety in
any category. As part of assortment planning, a retailer chooses its mix of brands.
Manufacturer brands are produced and controlled by manufacturers. Private brands
contain names designated by wholesalers or retailers. Generic brands feature generic
names as brands and are a form of private brand. The competition between
manufacturers and retailers is called the battle of the brands.

4. To discuss category management and merchandising software. Category

management is a techniqae for managing a retail business that focuses on product
category results rather than the performance of individual brands. It arranges product
groups into strategic business units to better address consumer needs and meet
financial goals.
 5. To describe the steps in the implementation of merchandise plans, and o examine
the prominent roles of logistics and inventory management. Logistics includes
planning, implementing, and coordinating the movement of merchandise from supplier to
retailer to customer. Logistics goals are to relate costs to activities, accurately place and
receive orders, minimise ordering/receiving time, coordinate shipments, have proper
merchandise levels, place merchandise on the sales floor, process customer orders,
work well in the supply chain, handle returns effectively and minimize damaged goods,
monitor performance, and have backup plans.

TUTORIAL CLASS ACTIVITIES

 Group discussion questions

 Internet activity
 Group discussion on Assignment due in week 11

TUTORIAL LEARNING OUTCOMES

 To demonstrate the importance of a sound merchandising philosophy

 To study various buying organization formats and the processes they use
 To outline the considerations in devising merchandise plans: forecasts, innovativeness,
assortment, brands, timing, and allocation

GROUP DISCUSSION QUESTIONS:

1. How and why would you expect variety and assortment to differ between
a. J.C. Penney’s stores and its Internet channel?
b. McDonalds outlets and Parkson’s Departmental stores?

2. Simply speaking, increasing inventory turnover is an important goal for a retail

manager. What are the main factors the retail manager should consider when
faced with this goal?

3. When you go shopping, in which product categories do you prefer store brands or
national brands? Explain your preference.
4. The fine jewellery department in a department store has the same high profitability
margins as the small appliances department, even though characteristics of the
merchandise are quite different. Suggest possible merchandising policies for both types
of departments. Justify your answer.
INTERNET ACTIVITY:

Go to the home page of Merchandise Management Company (MMC) at.

http://www.merchmanco.com/. Read the posted information and press releases at this
website. How does this service provider support vendors to manage merchandise sold?

• Group discussion on Assignment due in week 11

TUTORIAL 09 (WEEK 10)
TOPIC: PRICING IN RETAIL MARKETING

LECTURE 09 OVERVIEW/REFRESHER

1.To describe the role of pricing in a retail strategy and to show that pricing decisions
must be made in an integrated and adaptive manner. Pricing is crucial to a retailer because
of its interrelationship with overall objectives and the other components of the retail strategy. A
price plan must be integrated and responsive—and provide a good value to customers.

2. To examine the impact of consumers; government; manufacturers, wholesalers, and

other suppliers; and current and potential competitors on pricing decisions. Before
designing a price plan, a retailer must study the factors affecting its decisions. Sometimes, the
factors have a minor effect on pricing discretion; other times, they severely limit pricing options.
Retailers should be familiar with the price elasticity of demand and the different market
segments that are possible. Government restrictions deal with price fixing, price discrimination,
minimum prices, unit pricing, item price removal, and price advertising. There may be conflicts
about which party controls retail prices; and manufacturers, wholesalers, and other suppliers
may be asked to provide price guarantees (if they are in a weak position). The competitive
environment may foster market pricing, lead to price wars, or allow administered pricing.

3. To present a framework for developing a retail price strategy. This framework consists of
five stages: objectives, broad price policy, price strategy, implementation of price strategy, and
price adjustments.

Retail pricing goals can be chosen from among sales, dollar profits, return on investment, and
early recovery of cash. Next, a broad policy outlines a coordinated series of actions, consistent
with the retailer's image and oriented to the short and long run.

A good price strategy incorporates demand, cost, and competitive concepts. Each of these
orientations must be understood separately and jointly. Psychological pricing; markup pricing;
alternative ways of computing markups; gross margin; direct product profitability; and pricing
below, at, or above the market are among the key aspects of strategy planning.
When enacting a price strategy, specific tools can be used to supplement the broad base of the
strategy. Retailers should know when to use customary and variable pricing, one-price policies
and flexible pricing, odd pricing, leader pricing, multiple-unit pricing, and price lining.

Price adjustments may be required to adapt to internal and external conditions. Adjustments
include markdowns, additional markups, and employee discounts. It is important that
adjustments are controlled by a budget, the causes of markdowns are noted, future
company buying reflects prior performance, adjustments are properly timed, and excessive
discounting is avoided.

TUTORIAL CLASS ACTIVITIES

 Group discussion questions

 Internet Activity
 Discussion on Group Assignment

TUTORIAL LEARNING OUTCOMES

 To describe the role of pricing in a retail strategy and to show that pricing decisions must
be made in an integrated and adaptive manner

 To examine the impact that consumers, government, manufacturers, wholesalers and

other suppliers, current/potential competitors have on pricing decisions

 To present a framework for developing a retail price strategy: objectives, broad policy,
basic strategy, implementation, and adjustments

GROUP DISCUSSION QUESTIONS:

1. A restaurant experiences brisk business volumes. Explain how it should manage its
pricing strategy for optimum profits. Provide relevant examples to support your
answer.

2. Check out the product prices of several retailers using a variety of sources like their
websites, newspaper advertisements, flyers, brochures and others. Identify four
different types of price strategy concepts/tactics from those sources. Give your
reasoning whether those tactics will be effective to increase sales for the respective
retailer.

3. A floor tile retailer wants to receive a 35 percent markup (at retail) for all
merchandise. If one style of tile retails for $11 per tile, what is the maximum that the
retailer would be willing to pay for a tile?

Markup percent = Retail selling price – Merchandise cost

(at retail) Retail selling price

.35 = $11.00 – C
$11.00

$3.85 = $11.00 – C
$7.15 = C

This can also be computed by Merchandise cost = Selling price (1 – Markup)

4. Go to the website of Sandals (www.sandals.com), and see what you can get for an
all-inclusive price for WeddingMoons® Inclusions. Describe how bundling services and
products provide those on honeymoon with value.

5. What pricing option would the following retailers take?

a. Factory Outlet stores
b. Parkson’s Department Store
c. Hermes outlet

Internet Activity

Go to the web page of Overstock.com, and look at its top-selling merchandise. Select a
few key items, and compare the price of each product at other online retail sites, such
as Target.com,, Amazon.com, , Sears.com, and Macys.com. How do the prices at this
Internet outlet compare to those at online retailer, and department store? Are the results
what you expected, or were you surprised? Explain your reaction.
TUTORIAL 10 (WEEK 11)
TOPIC: RETAIL PROMOTION AND ADVERTISING

LECTURE 10 OVERVIEW/REFRESHER

1. To explore the scope of retail promotion. Any communication by a retailer that informs,
persuades, and/ or reminds the target market about any aspect of the retailer through ads,
public relations, personal selling, and sales promotion is retail promotion.

2. To study the elements of retail promotion: advertising, public relations, personal

selling, and sales promotion. Advertising involves paid, nonpersonal communication. It has a
large audience, low costs per person, many alternative media, and other factors. It also involves
message inflexibility, high absolute costs, and a wasted portion of the audience. Key advertising
media are papers, phone directories, direct mail, radio, TV, the Web, transit, outdoor,
magazines, and flyers/circulars. Especially useful are cooperative ads, in which a retailer shares
costs and messages with manufacturers, wholesalers, or other retailers.
Public Relations includes all communications fostering a favourable image. It may be
nonpersonal or personal, paid or nonpaid, and sponsor controlled or not controlled. Publicity is
the nonpersonal, nonpaid form of public relations. Public relations creates awareness, enhances
the image, involves credible sources, and has no message costs. It also has little control over
messages, is short term, and can entail nonmedia costs. Publicity can be expected or
unexpected and positive or negative.
Personal Selling uses oral communication with one or more potential customers and is critical
for persuasion and in closing sales. It is adaptable, flexible, and provides immediate feedback.
The audience is small, per-customer costs are high, and shoppersare not lured into the store.
Order-taking and/or order-getting salespeople can be employed. Functions include greeting the
customer, determining wants, showing merchandise, making a sales presentation,
demonstrating products, answering objections, and closing the sale.
Sales Promotion comprises the paid communication activities other than advertising, public
relations, and personal selling. It may be eye-catching, unique, and valuable to the customer. It
also may be hard to end, have a negative effect on image, and rely on frivolous selling points.
Tools include POP displays, contests and sweepstakes, coupons, frequent shopper
programs, prizes, samples, demonstrations, referral gifts, matchbooks, pens, calendars,
shopping bags, and special events.

3. To discuss the strategic aspects of retail promotion. There are five steps in a promotion
strategy: (a) Goals are stated in specific and measurable terms. Positive word of mouth (WOM)
is an important long-term goal. (b) An overall promotion budget is set on the basis of one of
these techniques: all you can afford, incremental, competitive parity, percentage of sales, and
objective and task. (c) The promotional mix is outlined, based on the budget, the type of
retailing, the coverage of the media, and the hierarchy of effects. (d) The promotional mix is
enacted. Included are decisions involving specific media, promotional timing, message content,
sales force composition, sales promotion tools, and the responsibility for coordination, (e) The
retailer systematically reviews and adjusts the promotional plan, consistent with pre-set goals.
TUTORIAL CLASS ACTIVITIES

 Internet Activity
 Group Assignment due this week

TUTORIAL LEARNING OUTCOMES

 To study the elements of retail promotion: advertising, public relations, personal selling,
and sales promotion

 To discuss the strategic aspects of retail promotion: objectives, budgeting, the mix of
forms, implementing the mix, and reviewing and revising the plan

GROUP DISCUSSION QUESTIONS:

1. Examine promotional campaigns of retailers in your country. Use sources such

flyers, brochures, advertisements, company websites, etc. Identify any three different
types of sales promotion used. What steps can the retailer take to know whether
these campaigns were successful? Why?

2. What procedures should be considered in dividing up the advertising budget among a

store's different merchandise areas?
3. Outline some promotional elements in a communication program that can be used to
achieve the following objectives:
(a) Build awareness of the store by 10 percent.
(b) Develop an image as a low-price retailer.

4. A retailer plans to open a new store in your university campus. It will specialise in
collegiate merchandise such as apparel, accessories, and school supplies. Consider
the advertising media (other than social media) available for this retailer to capture
the university market. Select the three most effective media and explain why.

Internet Activity

Go to the social media site for a retailer that you have shopped at during the last few
weeks. How was social media used as an element in the retailer's communication
program? What audience is being reached with social media? Is the social media
message consistent or inconsistent with other communication elements? Is this a strong
or weak strategy? Please explain.
TUTORIAL 11 (WEEK 12)
TOPIC: STORE BRANDING (STORE IMAGE)

LECTURE 11 OVERVIEW/REFRESHER

1. To show the importance of communicating with customers and examine the

concept of retail image. Customer communications are crucial for a store or nonstore
retailer to position itself in customers' minds. Various physical and symbolic cues can be
used. Presenting the proper image—the way a firm is perceived by its customers and
others—is an essential aspect of the retail strategy mix. And the growing impact of social
media on a retailer's image must be appreciated. The components of a firm's image are
its target market characteristics, retail positioning and reputation, store location,
merchandise assortment, price levels, physical facilities, shopping experiences,
community service, advertising, public relations, personal selling, and sales promotion. A
retail image requires a multi-step, ongoing approach. For chains, there must be a
consistent image among branches.

2. To describe how a retail store image is related to the atmosphere it creates via
its exterior, general interior, layout, and displays, and to look at the special case
of nonstore atmospherics. For a store retailer, atmosphere (atmospherics) is based on
the physical attributes of the store utilized to develop an image; it is composed of the
exterior, general interior, store layout, and displays. For a nonstore firm, physical
attributes of such factors as catalogs, vending machines, and Web sites affect image.

2. The store exterior is comprised of the storefront, marquee, entrances, display

windows, building height and size, visibility, uniqueness, surrounding stores and
area, parking, and congestion. It sets a mood before a prospective customer even
enters a store. The general interior of a store encompasses its flooring, colours, lighting,
scents and sounds, fixtures, wall textures, temperature, width of aisles, dressing
facilities, vertical transportation, dead areas, personnel, self-service, merchandise, price
displays, cash register placement, technology/modernization, and cleanliness. An
upscale retailer's interior is far different from a discounter's—reflecting the image desired
and the costs of doing business.

3. To discuss ways of encouraging customers to spend more time shopping. To

persuade consumers to devote more time with the retailer, these tactics are often
employed: experiential merchandising, solutions selling, enhancing the shopping
experience, retailer co-branding, and wish list programs.

4. To consider the impact of community relations on a retailer's image. Consumers

react favourably to retailers involved in such activities as establishing stores that are
barrier-free for persons with disabilities, supporting charities, and running special sales
for senior citizens.
TUTORIAL CLASS ACTIVITIES

 Group discussion questions

 Internet Activity

TUTORIAL LEARNING OUTCOMES

 To describe how a retail store image is related to the atmosphere it creates via its
exterior, general interior, layout, and displays

 To discuss ways of encouraging customers to spend more time shopping

GROUP DISCUSSION QUESTIONS:

1. Why is it sometimes difficult for a retailer to convey its image to consumers? Give an
example of a restaurant with a fuzzy, unclear image.

2. How could a store selling new computers project a value-based retail image? How
could a store selling used computers project such an image?

3. A competing bicycle store has a better location than yours. It is in a modern shopping
center with a lot of customer traffic. Your store is in an older neighbourhood and
requires customers to travel further to reach you. How could you use a merchandising,
pricing, and communications strategy to overcome your disadvantageous image?

4. How does store branding (store image) benefit consumers? Retailers?

Internet Activity

VMSD (www.vmsd.com) provides many examples of excellence in store atmospherics.

Click on Design Galleries for more details. Identify some designs relating to store image
that may be applicable to retailers in your country. Explain why.
TUTORIAL 12 (WEEK 13)
TOPIC: INFORMATION TECHNOLOGY AND E-RETAILING

LECTURE 12 OVERVIEW/REFRESHER

5. To contrast single-channel and multi-channel retailing. A new retailer often relies on

single-channel retailing, whereby it sells to consumers through one retail format. As the
firm grows, it may turn to multi-channel retailing and sell to consumers through multiple
retail formats. This allows the firm to reach different customers, share costs among
various formats, and diversify its supplier base.

6. To look at the characteristics of the three major retail institutions involved with
nonstore-based strategy mixes: direct marketing, direct selling, and vending
machines — with an emphasis on direct marketing. Firms employ nonstore retailing to
reach customers and complete transactions. Nonstore retailing encompasses direct
marketing, direct selling, and vending machines.

In direct marketing, a consumer is exposed to a good or service through a nonpersonal

medium and orders by mail, phone, fax, or computer. Annual U.S. retail sales from direct
marketing (including the Web) exceed $425 billion. Direct marketers fall into two
categories: general and specialty. Among the strengths of direct marketing are its
reduced operating costs, large geographic coverage, customer convenience, and
targeted segments. Among the weaknesses are the shopper s inability to examine items
before purchase, the costs of printing and mailing, the low response rate, and
marketplace clutter.
.

7. To explore the emergence of electronic retailing through the World Wide Web. The
Internet is a global electronic superhighway that acts as a single, cooperative virtual
network. The World Wide Web (Web) Is a way to access information on the Internet,
whereby people turn their computers into interactive multLnedia centers. The Web can
serve one or more retaiier purposes, from projecting an image to presenting information
to investors. The purpose chosen depends on the goals and focus. There is a great
contrast between store retailing and Web retailing. The growth of Web-based retailing
has been enormous. Annual U.S. revenues from retailing on the Web are $250 billion.
Nonetheless, the Web still garners only a small percentage of total U.S. retail sales.

TUTORIAL CLASS ACTIVITIES

 Group discussion questions

 Internet Activity

TUTORIAL LEARNING OUTCOMES

 To examine retailing involved with nonstore-based strategy mixes:vending machines

  To explore the emergence of electronic retailing through the World Wide Web

GROUP DISCUSSION QUESTIONS:

1. Select a product not heavily sold through vending machines. Present a brief plan
to successfully market the product through vending machines.

2. Why are store-based retailers aggressively pursuing sales through Internet

channels?

3. Should a multichannel retailer offer the same assortment of merchandise for sale,
at the same price, on its website and in its stores? Why or why not?

4. Go to the websites of JCPenney (www.jcpenney.com), and American Eagle

Outfitters (www.ae.com), and shop for a pair of khaki pants. Evaluate your
shopping experience at each site, using the discussions in slides 44 and 45 of
Lecture 12.

5. Which of the following categories of merchandise do you think could be sold most
successfully through an Internet channel: a) books; b)flowers; c)high-fashion
apparel; d)children’s toys; e)health care products (such as toothpaste, shampoo)
Why?

Internet Activity

Access the websites of Home Depot and Macy's using your mobile phone and computer. What
are the differences in the ease of navigation when looking at the presentation of merchandise
using the two methods of accessing the websites?