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MAR 3023-961

MAR 3023-961 Basic Marketing Fall 2003—St. Petersburg Retailing Rich Gonzalez University of South Florida October 22, 2003 URLs www.neimanmarcus.com www.afcsushi.com/ www.wwatching.net/cgi-bin/pgsrvr.cgi/cgi_stubs/enigma/vending Agenda October 22, 2003 Assignment A—Update Quiz # 4

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MAR 3023-961

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  1. MAR 3023-961 Basic Marketing Fall 2003—St. Petersburg Retailing Rich GonzalezUniversity of South Florida October 22, 2003

  2. URLs www.neimanmarcus.com www.afcsushi.com/ www.wwatching.net/cgi-bin/pgsrvr.cgi/cgi_stubs/enigma/vending

  3. Agenda October 22, 2003 • Assignment A—Update • Quiz # 4 • Retailing • Neiman Marcus Video/Discussion • Class Exercise • For October 29

  4. Assignment A • Any problems, questions?

  5. For Today: October 22 Chapter 16 – Direct Marketing, Retailing, Wholesaling(Note Video Case on Neiman Marcus on page VC-19) “Retail Sales Improved in September, Shelly Branch,WSJ, October 10, 2003 Q: “What aspect of retailing do you hate the most?”

  6. For October 29 Chapter 15 – Distribution Channels “Wal-Mart, Driving Workers and Supermarkets Crazy, Steven Greenhouse, N.Y. Times, October 19, 2003 www.nytimes.com/2003/10/19/weekinreview/19GREE.html What are some reasons that Wal-Mart is so powerful? (Based on Chapter 16 and Chapter 15 concepts.

  7. State of Retailing Shelly Branch, WSJ • Good Performers? • Advertising—Madonna, Missy Elliott • Abercrombie & Fitch • Holiday 2003--- + 5.7 % • Retail 2003 --- + 4.1 % • BIG Retailers Getting BIGGER

  8. Mantras #1--The purpose of a business is to create a customer. #2--It is the customer who determines what a product/service is. #3--Know your customer(s). #4—Brand is is the interface between the marketer and the customer.

  9. Quiz 4 Q6 -- Bonus 6. The Neiman Marcus catalog is called:

  10. Quiz 4 Q1 1. 1. In recent years, a new line of limited line retailer has emerged. Borders, Sports Authority, Bed Bath & Beyond, Circuit City, Office Depot are examples of a type of retailer. Name this type of retailer. category killer Chap 16, p478

  11. Quiz 4 Q2 3. A clothing retailer initially prices a suit at $199.99 but the garment does not sell. The wholesale cost of the product is $100, providing a margin of $100 (rounded). ... markdown the garment by 20% to stimulate sales. The new price is: A) $ 79.99. B) $119.99. C) $159.99. D) $139.99. E) $89.99. C Chap 16, p 471, p B-3

  12. Quiz 4 Q3 3. When two different companies with strong brand names join together to sell a product, it’s an example of: A) target marketing leverage. B) strong-base branding. C) co-branding. D) power branding. E) bilateral brand equity (BBE). C. Chap 12, p 358

  13. Quiz 4 Q4 4. A generic brand’s products are offered in plain packages, at low prices and often have no name on them. a. True b. False A. Ch. 12, p 348

  14. Quiz 4 Q5 5. The opening vignette to Chapter 16 details how Prada in New York uses _______ to pamper its customers. A) wine and cheese stations. B) Upscale Customers Attendants (UCA). C) limousine service. D) sophisticated network technology. E) gold plated shopping carts.. D: Chap 16 p 465

  15. Quiz 4 Q6 -- Bonus 6. The Neiman Marcus catalog is called: “the Book” p VC-20

  16. Mantras #1--The purpose of a business is to create a customer. #2--It is the customer who determines what a product/service is. #3--Know your customer(s). #4—Brand is is the interface between the marketer and the customer.

  17. Retailing Traditional, Technology and Transitional

  18. Let’s Lead Off With a Case

  19. Prada • Manhattan NY • Technology: What Kinds? • Wireless Networks • RFID • Video • Information About Accessories

  20. Brand Preference The stage of brand acceptance at which the consumer selects one brand over competing offerings based on previous experience with it.

  21. Brand Insistence The stage of brand acceptance at which the consumer refuses to accept alternatives and searchers extensively for the desired good or service. Store brand loyalty---Anyone loyal to a store?

  22. Brand Equity The added value that a certain brand name gives to a product. Generated by performance, social image, value, trustworthiness of the brand. Neiman Marcus has high level of brand equity.

  23. Dimensions of Brand Equity: The Young & Rubicam Mode DIFFERENTIATION RELEVANCE ESTEEM KNOWLEDGE

  24. Elements of Brand Equity • Brand Awareness • Brand Loyalty • Quality • Brand Affiliations

  25. Brands Affiliated With N-M Gucci, Armani, Burberry, Stueben, Bose, Moschino, Elie Tahari… Not: Bic, Pioneer, Aiwa, Martha Stewart,

  26. Elements of the Marketing Mix within an Environmental Framework Competitive Distribution Product Political-Legal Target Market Social-Cultural Price Promotion Technological Economic What factors have affected retail? What factors have affected K-Mart?

  27. Revenues (billions) Who’s afraid of a little country store from Arkansas?

  28. Wal-Mart—Last 10 Years ($58.24) WMT

  29. Target—Last 10 Years ($39.11) TGT

  30. 2002 Revenues—Retailers 7T4 $ 247 Wal-Mart $ 36 Sears $ 31 Kmart $ 40 Target $ 32 J.C. Penney $ 15 Federated Dept. Stores $ 58 Home Depot $ 3 Neiman Marcus (revenues in billions)

  31. Kmart • Will they make it? • “Does America need Kmart?”

  32. Evolution of Retailing • Traced to trading posts such as the Hudson Bay Company and peddlers • First Retail Institution in the U.S. was the General Store • Supermarkets appeared in the early 1930s • Discount stores arrived in the 1950s • Convenience food stores emerged in the 1960s • The 1980s saw the first off-price retailers

  33. Wheel of Retailing • Hypothesis that each new type of retailer gains a competitive foothold by offering lower prices than current retailers, while maintaining profits through reduction of services • Once established, more services are introduced and prices rise • It then becomes vulnerable to new, lower price competitors Kind of like a life cycle...

  34. Wheel of Retailing The hypothesis that each new type of retailer gains a competitive foothold by offering lower prices than current suppliers charge, maintaining profits by reducing or eliminating services. Retailers then adds more services, with prices rising gradually. Then another low-cost retailer enters...

  35. The Wheel of Retailing Market Opportunity Low Prices, Low Services Market opportunity Add Services, Prices Rise Add More Services, Prices Rise More This is ALWAYS true. Why do services get added?.

  36. Price Location Key Economic Factors Affecting Consumer Retail Choice Product Selection Special Services Helpful Salespeople Fairness in Dealing Retailing 13-3

  37. Retailing All activities involved in selling goods and services to ultimate consumers, mostly in or around stores. Are vending machines retail? Are virtual Internet stores retail?

  38. First Vending Machine http://www.wwatching.net/cgi-bin/pgsrvr.cgi/cgi_stubs/enigma/vending

  39. Brick and Mortar Retail stores which have a physical location. Is Borders brick and mortar? Think Click and Mortar.

  40. Clicks and Bricks • Barnes & Noble, Circuit City, Best Buy • Virtual, physical, or hybrid? • Shopping....digitized? • Consumer access to “internal” information • i.e., checking store inventory

  41. Lets try Circuit City’s In-Store Express Pick Up • Sony CDP-CX355

  42. Consumers Accessing Information • Is this valuable for consumers? • Some people—say customers don’t need this • What will happen when retailers can tell which products are being looked at?

  43. Where Have all the Small Stores Gone? 7T3 • Bakeries • Drug stores • Record stores • Grocery stores • Hardware stores • Candy stores • Filling stations 5% stores do 54% of business

  44. Retail Image Consumers total perception of a store and the shopping experience it provides. What happens if the image is inconsistent?

  45. Markup An amount that a retailer adds to the cost of a product to determine its selling price. Always know what the base is! Referred to as an amount or as a percentage?

  46. The amount of the markup typically results from marketing decisions: • The services performed by the retailer. • The inventory turnover rate. • 3. Profitability objectives

  47. Markup on Selling Price Markup Percentage on = Amount Added to Cost Selling Price Selling Price

  48. Markup on Cost Markup Percentage on = Amount Added to Cost Cost Cost

  49. Inventory Turnover A major performance metric: Inventory = $ Annual Sales Turnover $ On Hand Inventory Inventory turns for Kmart = 3.8 Inventory turns for retailers = 6.1

  50. Markdown An amount by which a retailer reduces the original selling price of a product.

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