The Importance of Retail Ritzky Karina M.R. Brahmana SE.,MA

Business Model Generation

Segmentation Strategy Ask students: What is an example of a mass market product? Answer: There are very few mass market products. Even commodity goods such as flour are now differentiated. Ask students: What are examples of products that use differentiated, concentrated, and micromarketing segmentation strategies?  Differentiated = Coca Cola Concentrated = Helena Rubenstein or Clinique Microtargeting = Financial Services Providers  

Step 2: Describe Segments Group activity: Divide the class into groups. Have them choose either a manufacturer or national retailer. Have them describe their segmentation strategy and then evaluate whether or not it is the best segmentation strategy for that firm.

Product Assortment and Product Line Decisions Breadth Number of product lines Depth Number of categories within a product line Students should understand that each item is called a stock keeping unit (SKU) and the category depth is the number of SKUs within a category.

Innovation and Value Benefits of new products Satisfy the changing needs of consumers Add value to the firm Diversify firm’s risk A new product can be anything from a slight redesign to new-to-the-world offerings. Ask students: What is an example of a slightly redesigned product? What about a new-to-the-world product? Ask students: Think of a new product that interested you as a consumer. Did this new product alter your opinion of the firm that offered it?

Pricing Strategies Note the many factors that go into formulating a pricing strategy and discuss why some strategies choose not to take into consideration the value that consumers place on an offering.

Cost-Based Methods Cost-base pricing methods start with cost All costs calculated on a per unit basis Assumes costs don’t vary for different levels of production These simple methods add a percentage amount to the unit cost to derive the price of the good. Ask students: Simplicity is the major benefit of this method; what are some of the potential problems associated with it? Answer: It does not consider what the value the customer places on the product or service .

Compared to other pricing methods, cost-based pricing: creates greater improvement value. is less likely to result in price fixing. has greater influence on reference prices. results in higher profit margins. is relatively simple. Ans. E Explanation: One of the reasons cost-based pricing is widely used is it is easy to implement. As noted in chapter 13, keystoning is doubling cost to determine price. As the cost of products rise, retailers increase their price and profit margins.

Competitor-Based Methods Set prices to signal information of how product compares with competitors Premium pricing Ask students: Why would someone pay far more for the same item in different stores? For example – the same diamond at Costco and Tiffany’s. Real estate prices are based heavily on the prices of other homes in the area. There are many websites like zillow.com to help gather information when pricing your home. This web link takes you to the zillow homepage. Zillow Website

Mercedes-Benz Commercial Value-Based Methods Setting prices that focus on the overall value of the product Consumer perceptions Sellers need to determine consumer value perceptions. The print ad for Omega points to a watch with higher quality. This YouTube ad (always check link before class) depicts the value the Mercedes-Benz brand offers in both the beauty and brains categories. Mercedes-Benz Commercial

Retail Mix Lokasi  -shopping mall -Ruko -Kompleks Pasar Tradisional -Pusat Kota (CBD) -Kompleks Alternatif Stok Barang  -Fast Moving Product -Slow Moving Product Layanan Jasa -Service Gap (Knowledge, Standard, Delivery Gap)

Retail Mix Desain & Layout -Grid Layout (Carrefour) -Race Track (Sogo, Departement Store) -Free Form (Butik) Harga -EDLP -HLP  Daily Deal? Komunikasi  -Iklan -Sales Promotion -Personal Selling -Publikasi Penciptaan Suasana  Warna, Cahaya, Musik, Komunikasi Visual, Aroma, Pengaturan Suhu

Nostalgia  souvenirs are reminders of the places people have traveled Shopping Motivation Nostalgia  souvenirs are reminders of the places people have traveled Prestige  buying local art allows shopper to show appreciation for local workmanship & add to their personal collection Functionality  convinience and price of items may vary depending on vacation destinations

Gifts  shopper buy gifts for family and friends Shopping Motivation Gifts  shopper buy gifts for family and friends Altruistic reasons  shopper may buy items that benefit people and or places at the destination

Move Faster, spend less time looking Customer Segments Man Move Faster, spend less time looking Look at price tags less often and can be more easily upgraded to a more expensive item

Get a thrill from the experience of paying Customer Segments Man Get a thrill from the experience of paying Hate asking for directions

Spend more money when shopping with other woman Customer Segments Women Spend more money when shopping with other woman Are More demanding of the shopping environment

Customer Segments Older Shopper Need Brightly lit stores -Must have easy to read signs -See a lot more black, white&red, ad a lot less of other colors Need Brightly lit stores

If stores are not child friendly, parents will be deterred to enter: Customer Segments Children If stores are not child friendly, parents will be deterred to enter:

Make merchandise reachable Customer Segments Make merchandise reachable Childproff the store Be able to divert the attention of a restless child Design a good area for children