Outlet Selection
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Transcript Outlet Selection
OUTLET SELECTION
Consumer shopping
choices
Electronic Commerce
(covered later)
Store marketing
issues
Dealing with
complaints
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 1
The Evolution of Consumer
Outlet Choice
General
Store
Catalog
Sales
Specialty
Stores (where
available)
MKTG 371
Supermarkets
Category
Killers
Discount
Stores
Catalog/
Direct
Marketing
Internet
In-home
Shopping
Note: Evolutionary pressure --->
adaptation or extinction
OUTLET SELECTION
Lars Perner, Instructor 2
Issues in Outlet Marketing
Store positioning
relevant competition
store image
Store location/size
Store brands
In-store marketing
P-O-P displays
Featured promoted brand
Store brand
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OUTLET SELECTION
Lars Perner, Instructor 3
Store Layout/Atmosphere
Location of
merchandise
Music/aroma
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OUTLET SELECTION
Lars Perner, Instructor 4
Retailing
Positioning issues
Margins
Retail pricing
strategies
Strategic
developments in
retailing
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OUTLET SELECTION
Lars Perner, Instructor 5
Positioning Issues
Some ways to profitability:
Low cost, high volumes, low unit
margins, low to moderate service
(profit on volume)
Higher priced, higher per unit
margins, lower sales
“Stuck in the Middle”--midlevel
retailers (e.g., Sears, J. C.
Penney) face competition both
from above and below
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 6
Attributes Influencing Retail
Outlet Selection
Outlet image
Retailer (store) brands
U.S. vs. Europe
Retail advertising
For store
Co-op, brand supported store ads
Location
Size
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OUTLET SELECTION
Lars Perner, Instructor 7
Consumer Shopping
Orientations--Segments
Chameleons—constantly
changing strategies
Collectors/gatherers—
stockpilers
Foragers—focused on
desired items
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Hibernants—indifferent
and opportunistic; will
postpone shopping
Predators—shoppers who
dislike shoppers but plan
ahead to minimize time
spent
Scavengers—
”recreational shopping”
OUTLET SELECTION
Lars Perner, Instructor 8
Influences on Shopping
Behavior
Point-of-purchase
(POP) shoppers
Promotions
In-store coupons
Sales
Other deals
Stockouts
Major problem
Difficult to avoid
Technology can help
predict sales
Sales personnel
Outlet atmosphere
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OUTLET SELECTION
Lars Perner, Instructor 9
Margins
Margins
Gross = sale price price paid to
wholesaler
Per unit
Per dollar
Per unit of space
Very large increases
in sales volumes are
needed to “break
even” on low prices
Net margin = gross
margin vs. allocated
overhead
MKTG 371
OUTLET SELECTION
Lars Perner, Instructor 10
Two Types of Retail
Pricing
“High-low”
High everyday prices
Frequent sales
Profit on price
discrimination--only
some people will
bother to
Every Day Low Price
(EDLP)
Shop while sale is on
Switch brands
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OUTLET SELECTION
Consistent prices-theoretically no sales,
but lower non-sale
prices
Typically lower service
Note that retailers
provide for many
promotions
Lars Perner, Instructor 11
Strategic Issues
Importance of
convenience
Increasing power of
retailers
Private label branding
Lower price but higher
margins
Longer history in
Europe
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OUTLET SELECTION
Lars Perner, Instructor 12
Retail Trends
Power retailers
Early purchases
Investment in
technology
Consistent “fair”
prices
Consistent but modest
gross margins
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Category “killers”:
Specialize--significant
selection at low prices
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Lars Perner, Instructor 13
Retailing Polarity
Trend toward either
Low price--e.g., WalMark, Kmart, Sports
Authority
High quality--e.g.,
Nordstrom’s,
Starbuck’s
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OUTLET SELECTION
Lars Perner, Instructor 14
Electronic Commerce
Penetration vs.
potential
Obstacles
Security
Trial
Delayed delivery
Limited demographics
Glitches
Resentment of
commercial intrusions
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Lars Perner, Instructor 15
SERVICE OUTPUTS AND
SEGMENTATION
Service outputs
Trends
Segmentation
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Lars Perner, Instructor 16
SERVICE OUTPUTS: DISTRIBUTION
FROM THE CUSTOMER’S POINT OF
VIEW
Bulk breaking
Spatial convenience
Waiting and delivery
time
Breadth of
assortment
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Lars Perner, Instructor 17
Trends in Consumer
Preferences
Poverty of time (in U.S.)
Increased knowledge
Travel
Information sources
Polarity of incomes
Some increase in top
incomes in U.S.
Incomes slowly equalizing
Worldwide
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Lars Perner, Instructor 18
Example: Food Customers
Resellers--restaurants
buy from suppliers
Institutional-hospitals buy to feed
patients
Families
“Nuclear”--may buy
from regular food
stores; will favor large
sizes
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Small families, singles,
and yuppies--will shop
more in convenience
store; single serving
sizes more popular
Value conscious--buy
at warehouses
Time conscious--will
pay extra for delivery
Service conscious-other services
demanded
Lars Perner, Instructor 19
FOOD CONSUMPTION,
MANUFACTURING, AND MARKETING
Food consumption
patterns
Demographics and
trends
International
comparisons
Issues in food
markets
Food marketing
choices
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Lars Perner, Instructor 20
Food Consumption
Patterns
Increasing
consumption—so far…
Pork
Chicken
Turkey
Fish
Cheese
Fresh fruit
Frozen vegetables
Flour and cereal products
Soft drinks
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Declining—so far…
Beef
Eggs
Whole milk
Sugar
Coffee
No evident trend
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Ice cream
Butter, margarine
Fruit juices
Lamb
Fresh potatoes
Lars Perner, Instructor 21
Possible Effects of
Adkins Diet
Low fat diets
Increases:
Increases
Beef
Butter
Cream
Nuts
Chicken
Fish
Low fat dairy
Fruit
Vegetables
Declining
Sweetener
Frozen potato product
Fresh fruit, vegetables
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Decreases
Beef, lamb
Eggs
Sweetened products
Lars Perner, Instructor 22
U.S. Food Consumption and
Demand
Typical family spends 9-11% of income on
food
Decreasing percentage spent with
increasing income, but more absolute
dollars spent (income elasticity <1)
Immigration has influenced both food
preferences and retail formats
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Lars Perner, Instructor 23
Comparative Food Spending
Percentages, 1994
Philippines: 56%
India: 51%
Mexico: 25% (modest
incomes, relatively
high prices)
South Africa: 28%
Japan: 18% (very
expensive food but
high incomes)
West Germany: 17%
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Denmark: 15%
(25% sales tax!)
France: 15%
Netherlands: 11%
U.K.: 11%
Canada:
Percentages10%
of total
OUTLET SELECTION
expenditures—includes
non-consumer spending
such as government and
industry. U.S. figure: 7%
Lars Perner, Instructor 24
Some Common U.S. Food
Outlets
Supermarkets
Neighborhood food
stores
Convenience stores
Drug and discount
stores
Gas stations
Vending machines
Food stands, street
vendors
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Restaurants
Cafeterias
Specialty food stores
Door-to-door sales
Online and catalog
orders
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Lars Perner, Instructor 25
Some International
Characteristics
Japan: Strong emphasis on neighborhood
stores, vending machines
Europe: Large food stores are available,
some may deliver; government protection
of smaller retailers
Developing countries: Food often bought
at open markets
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Lars Perner, Instructor 26
Some Food Demand Issues
Income elasticity
Price elasticity
Normal vs. “inferior”
goods
Cross-price elasticity
“Trading Up” within select
categories
Increased interest in
convenience foods
MKTG 371
Conflict between demand
for healthier and “junk”
foods
Unplanned purchases and
consumption
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Lars Perner, Instructor 27
“Functional” foods
Away-From-Home and
Prepared Foods
48% of food expenditures on items eaten
away from home (1999)
Large part of restaurant meals is for nonfood costs
Labor
Ambiance
Facilities
Increase in take-out foods from
restaurants and stores
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Lars Perner, Instructor 28
Public Food Programs
Food stamps were created
mostly to promote demand
for farm products (thus only
American products)
Only a limited amount of
food stamp value goes
toward increased
consumption (cash is
diverted elsewhere)
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Lars Perner, Instructor 29
Some Food Marketing
Issues
Branding
Innovation
Brand extensions and improvements to
existing product categories
New product categories
Consumer brand loyalty: The ability to
resist promotional efforts of competitors—
not consistent choice of brand
Multi-brand loyalty
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Lars Perner, Instructor 30
POST PURCHASE PROCESSES
Satisfaction
Customer commitment
Word-of-mouth
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Lars Perner, Instructor 31
Post Purchase Dissonance
Regret of purchase or Influences on
question of wisdom of
magnitude
purchase
Degree of
irrevocability /reversal
“dissonance reduction
of decision (trialability)
strategies”
Return product
Rationalization
Consumption guilt
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Importance of
decision
Difficulty of choice
Anxiety proneness of
consumer
Lars Perner, Instructor 32
Product Use and Non-Use
Products bought and
Used as intended
Stored
Not-used
Used for purposes other than intended (use
innovativeness)
E.g., baking soda for odor reduction, upset stomach
E.g., WD40: fish bait additive, removal of gum, enhanced
conduction of electricity, shining of boots
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Lars Perner, Instructor 33
Disposition
Disposal
Garbage
Recycling
Sale
eBay: Very old products for sale—e.g.,
1980s typewriters, CB radios
Donation/gifting
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Lars Perner, Instructor 34