Berman Ch 02 12e

8/12/2019 Berman Ch 02 12e

1/31

CHAPTER 2:

STRATEGIC

PLANNING IN

RETAILING

8/12/2019 Berman Ch 02 12e

2/31

Retail Mgt. 12e (c) 2013 Pearson Education, Inc. publishing as Prentice Hall 2-2

Chapter Objectives

To explain what value really means

and to highlight its pivotal role in

retailers building and sustaining

relationships

To describe how both customer

relationships and channel

relationships may be nurtured intodays highly competitive

marketplace

8/12/2019 Berman Ch 02 12e

3/31


Chapter Objectives (cont.)

To examine the differences in

relationship building between goods and

services retailers

To discuss the impact of technology on

relationships in retailing

To consider the interplay between

retailers ethical performance andrelationships in retailing

8/12/2019 Berman Ch 02 12e

4/31


Definition of Value Value= Results + Process Quality

Price + Customer Access Costs

Results= Overall quality, instructions, ease of

assembly, taste/quality/health, warranty, producttesting by retailer

Process Quality= Wide aisles, ease of finding,high in-stock position, fun experience, shortwaiting times

Price= Costs + delivery + assembly + credit

Customer access costs= warehouse clubmembership fees, inconvenient location, poorstore hours, inadequate parking

8/12/2019 Berman Ch 02 12e

5/31


What is Value? (cont.)

Channel

Perspective

Value is a seriesof activities and

processes (the

value chain)

that provide acertain value for

the consumer.

Customer

Perspective

Value is a perception

that the shopper has of

the value chain.

It is the view of all the

benefits from a

purchase versus the

price paid.

8/12/2019 Berman Ch 02 12e

6/31

8/12/2019 Berman Ch 02 12e

7/31Retail Mgt. 12e (c) 2013 Pearson Education, Inc. publishing as Prentice Hall 2-7

Potential Pitfalls to Avoid in Planning

a Value-Oriented Retail Strategy

Planning value solely from a priceperspective

Providing value-enhanced services that

customers do not want or will not pay extrafor

Competing in the wrong value/price segment

Believing augmented elements alone create

value

Paying lip service to customer service

8/12/2019 Berman Ch 02 12e


Figure 2-2: A Value-Oriented

Retailing Checklist

Is value defined from a consumer perspective?

Does the retailer have a clear value/price point?

Is the retailers value position competitivelydefensible?

Are channel partners capable of value-enhancingservices?

Does the retailer distinguish between expected andaugmented value chain elements?

Has the retailer identified potential value chainelements?

Is the retailers value-oriented approach aimed at adistinct market?

Is the retailers value-oriented approach consistent?

8/12/2019 Berman Ch 02 12e


Figure 2-2: A Value-Oriented

Retailing Checklist (cont.)

Is the retailers value-oriented approach effectivelycommunicated?

Can the target market clearly identify the retailerspositioning?

Does the retailers positioning consider sales versusprofits?

Does the retailer set customer satisfaction goals?

Does the retailer measure customer satisfaction

levels? Is the retailer careful to avoid the pitfalls in value-

oriented retailing?

Is the retailer always looking out for new opportunitiesthat will create customer value?

8/12/2019 Berman Ch 02 12e


Figure 2-3: Sony

8/12/2019 Berman Ch 02 12e


Customer Service

Expectedcustomerservice

is the service

level that

customers wantto receive from

any retailer such

as basic

employee

courtesy.

Augmentedcustomerservice

includes the

activities that

enhance theshopping

experience and

give retailers a

competitive

advantage.

8/12/2019 Berman Ch 02 12e


Expected Versus Augmented

Levels of Customer Service

ExpectedMust have elements; donot differentiate retailer. Whileabsence of these expected valuesprovides anguish, presence doesnot provide satisfaction

AugmentedServices that can

provide a competitive advantage.Double warranty, special delivery,product demonstrations

8/12/2019 Berman Ch 02 12e

13/31

Retail Mgt. 12e (c) 2013 Pearson Education, Inc. publishing as Prentice Hall

2-13

Figure 2-4: Classifying

Customer Services

8/12/2019 Berman Ch 02 12e


Fundamental Decisions

What customer services are expected and whatcustomer services are augmented for a

particular retailer?

What level of customer service is proper to

complement a firms image?

Should there be a choice of customer services?

Should customer services be free?

How can a retailer measure the benefits ofproviding customer services against their

costs?

How can customer services be terminated?

8/12/2019 Berman Ch 02 12e


Table 2-1: Typical Customer Services

Credit Delivery

Alterations/

Installations

Packaging/gift

wrapping

Complaints/Returnshandling

Gift certificates Trade-ins

Trial purchases

Special sales

Extended store

hours

Mail/phone orders

8/12/2019 Berman Ch 02 12e


Table 2-1b: Miscellaneous

Customer Services

Bridal registry

Interior designers

Personal shoppers

Ticket outlets

Parking

Water fountains

Pay phones

Baby strollers

Restrooms

Restaurants

Babysitting

Fitting rooms

Beauty salons

Fur storage

Shopping bags

Information

8/12/2019 Berman Ch 02 12e


Figure 2-6: Turning Around Weak

Customer Service

Focus on

Customer Concerns

Empower Frontline

Employees

Show That You Are

Listening

Express Sincere

Understanding

Apologize and Rectify

the Situation

P i i l f C

8/12/2019 Berman Ch 02 12e


Principles of Category

Management

Retailers listen more to customers

Profitability is improved because inventory

more closely matches demand

By being better focused, each department ismore desirable for shoppers

Retail buyers are given more responsibilities

and accountability for category results

Retailers and suppliers must share data andbe more computerized

Retailers and suppliers must plan together

8/12/2019 Berman Ch 02 12e


Figure 2-7: Elements Contributing to

Effective Channel Relationships

8/12/2019 Berman Ch 02 12e


Three Kinds of Service Retailing

Rented goods servicesleased cars,

hotel rooms, carpet cleaning

equipment

Owned goods servicesplumbing,

appliance repair,

Non-goods serviceshaircut,

professional services (physician,

lawyer)

F Ch t i ti f

8/12/2019 Berman Ch 02 12e


Four Characteristics of

Services Retailing

Intangibility

Inseparability

Perishability

Variability

8/12/2019 Berman Ch 02 12e


Figure 2-8a: Characteristics of

Service Retailing

Intangibility

No patent protection possible

Difficult to display/communicate

service benefits

Quality judgment is subjective

Some services involve

performances/experiences

8/12/2019 Berman Ch 02 12e


Figure 2-8b: Characteristics of

Service Retailing

Inseparability

Consumer may be involved in

service production

Centralized mass production difficultConsumer loyalty may rest

with employees

8/12/2019 Berman Ch 02 12e

24/31


Figure 2-8c: Characteristics of

Service Retailing

Perishability

Services cannot be inventoried

Lost revenues from unsold services are lost forever

Effects of seasonality can be severe

Planning employee schedules can be complex

Need to balance supply and demand

(yield management pricing)

8/12/2019 Berman Ch 02 12e

25/31


Figure 2-8d: Characteristics of

Service Retailing

Variability

Standardization and quality control hard

to achieve

Customers may perceive variability even

when it does not actually occurNeed to industrialize/mechanize/service

blueprint services to factor out variability

8/12/2019 Berman Ch 02 12e

26/31


Figure A2-1: Lessons in

Service Retailing

8/12/2019 Berman Ch 02 12e

27/31


Figure 2-10: Technology Icons

E l f C i

8/12/2019 Berman Ch 02 12e

28/31


Examples of Consumerism

in Retailing

Proper testing of items for safety issues

Programming cash registers not to

accept payment for recalled goods

Charging fair prices for goods in short

supply--Home Depot plywood example

in hurricane

Age labeling of toys, warning labels on

goods beyond legal requirements

8/12/2019 Berman Ch 02 12e

29/31


Figure 2-11: Store Sale

Fi 2 12 U d t di th

8/12/2019 Berman Ch 02 12e

30/31


Figure 2-12: Understanding the

Americans with Disabilities Act

8/12/2019 Berman Ch 02 12e

31/31

All rights reserved. No part of thispublication may be reproduced,stored in a retrieval system, or

transmitted, in any form or by anymeans, electronic, mechanical,

photocopying, recording, orotherwise, without the priorwritten permission of the

publisher. Printed in the UnitedStates of America.

Documents

Berman Ch 02 12e