1. REVIEW
EXAM #2 Chapters 6,7,8,9,11

2. Chapter 6
FINANCIAL STRATEGY

3. Strategic Profit Model - measurements
Input Measures
Output Measures
Productivity

4. Strategic Profit Model

5. Profit Margin Management Path
40.5%
12.5%
$6,333
4.4%
1.8%
How to calculate Profit Margin
How is it used?
What can be done to affect it?
31.6%
9.6%

6. Asset Management Path
1.1%
3.2%

7. Strategic Profit Model – how is it used?
Corporate Performance
Merchandise Management
Store Operations
Performance over time
Compare to competitors

8. Chapter 7
RETAIL LOCATIONS

9. Why is location important?
The prime consideration in consumer choice
Creates sustainable competitive advantage
Creates potential long-term financial risk

10. Location Factors or “trade-offs”
Size of Trade Area
Occupancy Costs
Pedestrian and Vehicle Traffic
Restrictions on operations
Convenience

11. Types of Locations
Unplanned Areas
Planned Areas (Shopping Centers)

12. Freestanding Sites Size of Trade Area Occupancy Costs
Traffic – Vehicle & Pedestrian
Restrictions on operations
Convenience

13. City or Town Size of Trade Area Occupancy Costs
Traffic – Vehicle & Pedestrian
Restrictions on operations
Convenience

14. Neighborhood and Community Shopping Centers
Size of Trade Area
Occupancy Costs
Traffic – Vehicle & Pedestrian
Restrictions on operations
Convenience

15. Shopping Malls Size of Trade Area Occupancy Costs
Traffic – Vehicle & Pedestrian
Restrictions on operations
Convenience

16. Other types of locations
Lifestyle Center
Fashion/Specialty Centers
Outlet Centers

17. Chapter 8
Retail Site Location

18. Evaluating Locations Economic Conditions Competition Strategic Fit
Operating Costs

19. Economic Conditions

20. Competition How many stores currently exist within the same category?
Is there an unmet need?

21. Strategic Fit Where does your target market live?
What is their demographic profile?
What are their lifestyle characteristics?

22. Operating Costs Are the operating costs worth the revenue potential?
Do the reduced costs of operating in close proximity to other retailers outweigh the increased competition?

23. Site Characteristics Traffic Flow Location Characteristics
Restrictions and Costs

24. Chapter 9
Human resources

25. Critical Assets Locations Merchandise Inventory Stores Employees
Customers

26. Objectives Short Term Long-Term Increase Employee Productivity
Productivity = Sales/Number of Employees
Long-Term
Increasing Employee Satisfaction by Reducing Turnover

27. Creating competitive advantage
Effective management
Differentiation
Create culture (value) that is hart to duplicate

28. The Downward Spiral FINANCIAL PERFORMANCE ISSUES Low profits
High Costs
EMPLOYEE RESPONSE
Decreased motivation and effort
Poor customer service
Lower job satisfaction
Greater turnover
RETAILER RESPONSE
Layoffs
Freeze hiring and promotions
Reduced training
Salary freeze
Greater use of part-time employees and more outsourcing

29. Special HR Conditions in retail
Part-time employees
Expense control
Employee demographics
International challenges

30. Organizational Groupings
Strategic Management
Merchandise
Management
Store
Management
Administrative
Management

31. Matching Org Structure to Strategy
More centralized – fewer employees
Category Specialists
Warehouse Clubs
Franchise Restaurant
Distributed management – more employees
Department Stores
Specialty clothing stores

32. Coordinating Merchandise and Store Management
Improving buyers appreciation of store environment
Making store visits
Assigning employees to coordinating roles

33. Motivating Employees Policies and supervision Incentives
Maintaining a culture

34. Building Employee Commitment
Developing skills
Empowering Employees
Creating Partnering Relationships

35. CUSTOMER RELATIONSHIP MANAGEMENT
Chapter 11
CUSTOMER RELATIONSHIP MANAGEMENT

36. Customer Relationship Management
It costs 3 to 6 times more to sell products and services to NEW customers as it does to sell to existing customer
GOAL = increase “share of wallet”

37. Customer Relationship Management
Strategies
Programs
Systems
Focus is on identifying and building loyalty with a retailer’s most valued customers

38. Loyalty Emotional connection Based on personal attention
Exclusive or individually tailored offers or merchandise

39. CRM Process LEARN ACTION Collect customer data Analyze Customer Data
Develop CRM program
Implement CRM program
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40. Collecting Customer Data
Transactions
Customer contacts
Customer preferences
Descriptive information
Responses to marketing
CUSTOMER
DATABASE

41. Example: Harrah’s casino
CUSTOMER
DATABASE
Rewards program
Purchase prediction
Integration

42. Identifying Info Ask during purchase Frequent shopper card
Internet purchasing
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43. Privacy Protection of personal information and transaction history
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44. Analyze Customer Data Identify Segments Identify Best Customers
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45. Customer Pyramid

46. Developing CRM Programs
Customer retention
Converting good customers
Getting rid of unprofitable customers

47. Customer Retention Frequent shopper program Special customer services
Personalization
Community

48. Converting Good Customers
Cross-selling
Add-on selling

49. Dealing with Unprofitable Customers
High level of returns
Not loyal
Offer less costly services
Charge customers fees for abused services
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50. Implementing CRM Programs
Close coordination
MIS
Sales/Marketing
Operations (store)
Human Resources
Currently retailers are organized by product, not customer type
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51. EXAM #2
Thursday, 3/27
Chapters 6,7,8,9,11 (not 10)