Chapter 12- Deliver the Customer

Experience
Saturday, September 29, 2018 12:31 PM

LO1 Retail

Retail…

Retail Defined

• How firms sell products to consumers for

consumers' [end] use.
○ Provide time, place, an ownership
utility.
• 2015 U.S. sales totaled $4.87 trillion.
○ 25% the the economy and 10% of
employment.
○ E-commerce is 6% of this and m-commerce
=1%
• Retailing practices very around the world
○ Good carried/ specialty shops
○ Displays (especially of foods such as
meat)

Wheel of retail evolution

Other evolution factors

• These four factors most often accounts and

innovations in retailing:
○ Economic conditions. Lower economy
(e.g., 2008) leads to price shopping.
Amazon said well, and store-brands grew.
○ Demographic and cultural change. Retail
mix, Open hours and days, Store style
are affected.
○ Technology. Even in physical stores,
Self-checkout, RFID tags, store mapping
with ads, eMenus.
○ Globalization. Looking for new markets,
some retailers move to different market.
Aldi (from Germany) IKEA (Sweden).

"Retailtainment"
 some retailers move to different market.
Aldi (from Germany) IKEA (Sweden).

"Retailtainment"

• These marketing strategies and enhance the

shopping experience for consumers seeking
fun.
• Retail experiences that incorporate elements
of surprise, excitement, and novelties lead
to increased purchase likelihood.

Ethics in retail

• Retailers face problems that involve both

customers and employees.
○ Shoplifting- customer stealing
○ Employee theft- employee stealing
○ Retail borrowing- illegitimate returns
○ Ethical treatment of customers- bear and
just treatment
○ Customer profiling- singling out based
on physical characteristics
○ Sale of harmful products- is this the
retailer's job?

Larry goes missing

• In 2013, Air Canada lost Larry, an Italian
Greyhound, who is being shipped to a new
home after his owner died.
• He was in a secured cage with a sign saying
"do not take dog out." Later, it was
discovered, a worker took Larry out, who
been got loose and went missing.
• Air Canada PR I Accidentally sent an
 "do not take dog out." Later, it was
discovered, a worker took Larry out, who
been got loose and went missing.
• Air Canada PR I Accidentally sent an
internal email to the press. "I think I
would just ignore, it is local news doing a
story on a lost dog. Their entire government
shutdown and about to default and this is
how the U.S. media spends its time."
• Larry was found, hit by a car, and take into
a vet where he was euthanized.
• Empathy matters!

LO2 Classifying Retail

Merchandise mix
• An important strategic decision a
retailer makes is what to sell: its
merchandise mix
○ Merchandise breadth: Narrow vs. the
broad assortment
○ Merchandise depth: shallow vs. deep
assortment
Levels of service

• There is a trade-off between service and

low-prices.
• Retailers differ along continuum based on
amount of service provided to customers:
○ Self-service retailers (e.g., Sam's
Club)
○ Limited-service retailers(e.g., Walmart,
Target, Kohl's)
○ Full-service retailers (e.g.,
Bloomingdales, Nordstrom's)

Levels of service table

Category killer

• A category killer is a specialty store that

carries a large selection of products within
a given category
○ Best Buy
○ Home Depot
○ Barnes & Noble is considered a category
killer, but as we saw the last chapter,
they are being disinterminated.
 ○ Home Depot
○ Barnes & Noble is considered a category
killer, but as we saw the last chapter,
they are being disinterminated.

Department stores

• Sell a broad range of items and offer a deep

selection organized into different
"department."
• Full service US department stores have
struggles in recent years (e.g. Sears).
• However, this is not the case globally.
○ Don Quijote ("don-qi") in Japan.
○ El Corte Inglés in Spain.

Pop-up stores
• Stores can be classified by their size.
• Pop-up stores are temporary retail spaces a
company direct to help build buzz for its
product.

LO3 non-store retail

Non-store retail defined

• Any method of firm uses to complete an
exchange that does not require a customer to
visit a store.
Direct selling
• Direct selling occurs when a sales person
presents a product to one individual or a
small group, takes orders, and delivers the
merchandise.
○ Door to door. Not as popular in the US
(both Adults work), but popular in
China.
○ Party in networks. Host a small group in
a home.
○ Multilevel marketing. Hey Master
distributor recruits other distributors,
buy the product. Amway has 3 million
distributors.

Automatic vending

• Offers many benefits to consumers and

 distributors.

Automatic vending

• Offers many benefits to consumers and

marketers.
○ Open 24-hours
○ Unattended
○ Can be located near need
○ Many take credit cards
• Usually best suited to low-cost convenience
goods

B2C e-commerce

• B2C e-commerce his online exchange between

companies and individual consumers.
○ Shoppers bought $373 billion in good
online in 2016.
○ Estimated that 60% of all US retail
sales involved web and we present $1.8
trillion (≈ 10% of the economy)
• M-commerce is any 4P activity on mobile
devices, expected to be 15% of e-commerce by
2020.

Future of retailing

• Does growth of B2C e-commerce mean the death

of brick-and-mortar stores as we know them?
○ Virtual distribution channels unlikely
to replace traditional ones; most goods
need to be physical rather than digital.
○ Amazon is experimenting with stores and
purchased Whole Foods in August 2017.
Just opened a second "4-star" store.
 to replace traditional ones; most goods
need to be physical rather than digital.
○ Amazon is experimenting with stores and
purchased Whole Foods in August 2017.
Just opened a second "4-star" store.
• Stores must evolve to lure customers away
from the computer.
○ Consumers will visit destination retail
more for the fun they receive from total
experience.

LO4 service and intangible

Services defined

• Acts, efforts, or performances exchanged

from producer to user without ownership
rights.
• Account for four out of every five jobs in
the US and nearly 80% of GDP.
• Targeted towards both consumers and
organizations.
• Services are:
○ Intangible(can't see, touch, smell)
○ Perishable (Seats, or snakes, on a
plane)
○ Variable (not always the same show)
○ Inseparable from consumption (can't be
produced ahead of time)
Service encounter

• When the customer comes into contact with

the organization. Includes:
○ Servicescape, includes the interior and
exterior of the service local (if there
is one) and represents the physical
portion of the encounter.
○ There is a social dimension to the
encounter, where the customer plays a
role (e.g., crowded theater.
• Of course, not all service encounters happen
in a physical location.
 role (e.g., crowded theater.
• Of course, not all service encounters happen
in a physical location.

Quality service

• Quality service means that the customers are

satisfied with what they have purchased.
• Satisfaction is based on customer
expectations.
○ Different customers expect different
levels of service.
○ Not all customers can be satisfied and
it's not your job to. Selecting
customers you can serve well is one goal
of segmentation.

Measuring service quality

• The SERVQUAL scale is a [very] popular

instrument to measure customer service
quality and identifies perceptions of
service quality on five dimensions:
○ Tangibles-appearance of the
servicescape.
○ Reliability- service is consistent and
accurate.
○ Responsiveness- Service is prompt.
○ Empathy-caring, individualized
attention.
○ Assurance-knowledge and courtesy of
employees.

Marketing people
 employees.

Marketing people

• Politicians, athletes, and celebrities are

commonly marketed.
• Agents target and sell into project based on
strengths.
• Clients are "repackaged" and improved.
○ Name changes, still improvements (e.g.,
Voice lessons)
• Fill unmet needs

Q score

• Developed buy Marketing Evaluations, Inc. In

1963.
• Rate familiarity and appeal of celebrities,
brands, companies in the US.

Marketing places

• Place marketing treats the city, State,

country, or other locale as a brand.

Marketing ideas

• Gaining market share for a concept,

philosophy, belief, or issue (e.g.,
religious institution market ideas about
faith)
• Consumers often do not perceive the value
they receive when they conform with an idea
or fail to believe an idea is worth its
ultimate cost.
 faith)
• Consumers often do not perceive the value
they receive when they conform with an idea
or fail to believe an idea is worth its
ultimate cost.