Important A1 theory:
Importance of developing and applying a retail
strategy (Chapter 1):
Retail strategy: plan guiding a retail firm à influences firm’s activities and response to
market factors
6 steps of strategic planning:
1. Define the type of business à in terms of goods/services and firm’s specific
orientation
2. Set LT and ST goals
3. Define target market à on basis of characteristics and needs
4. Devise an overall, LT plan à gives firm general direction
5. Implement an integrated strategy à to achieve objectives
6. Regularly evaluate performance and correct weakness
,4 Factors in relationship retailing (Chapter 2):
1. The customer base
2. Customer service
3. Customer satisfaction
4. Loyalty programs and the deflection rate
1. The customer base:
• Regularly analyse customer base à in terms of population and lifestyle trends,
attitudes and reasons for shopping, level of loyalty, and mix of new vs loyal
customers
• Changing à gender roles, shopper demand more diversity, less interested in
shopping, time saving is desired
• Delivering value à customer = king – everything must be done to satisfy and deliver
delight to the customer
• Receiving value à attracting and retaining those customers who provide value in the
form of profits
• Core customers à best customers – loyal, satisfied and generate high profits
• Lost causes (terrorists) à not profitable, often complain and got retailer money
• Free riders à highly satisfied but not profitable
• Mature firm à relies on core customers and supplements revenues from new
customers *Clicks
• New firm à attract shoppers and convince them to become loyal
• If the firm’s goal = growth à expand customer base by adding stores and increasing
advertising
• Core customers are not free à retailers must service them properly
2. Customer service:
• Augmented customer service: includes activities that enhance the shopping
experience and gives retailers a competitive advantage
• Expected customer service: service level that customers want to receive from any
retailer such as basic employee courtesy
• Employee empowerment: workers have the discretion to do what they believe is
necessary – within reason – to satisfy the customer
• Types of services offered:
- Basic à nearby parking, ease of shopping
- Extended à multiple payment options, self-service checkout, digital coupons
- Above and beyond à free delivery, empowered employees
• Decisions for developing a customer strategy:
- What customer services are expected and what customer services are
augmented for a particular retailer?
- What level of customer service is proper to complement a firm’s image?
- Should there be a choice of customer services?
- Should customer services be free? à determine which customer services are
expected, monitor competitors and profit margins, study the target market
, - How can a retailer measure the benefits of providing customer services
against the cost of services?
• Typical customer servicesà credit, delivery, packaging/gift wrapping, gift cards,
special sales, extended store hours
• Miscellaneous customer services à personal shoppers, restrooms, fitting rooms,
restaurants and baby-sitting
• Retailer sponsored credit cards:
✓ Saves fee would pay for outside card sales ✕ Start-up costs = high
✓ Encourage people to shop at the particular ✕ Worry about unpaid bills and cashflow
retailer ✕ Credit checks and follow up tasks must be
✓ Contact with customer is maintained done
3. Customer satisfaction:
• Occurs when value and customer service provided through a retailing experience
meet or exceed customer expectations
• 3 categories of retail satisfaction à shopping systems satisfaction, buying systems
satisfaction, consumer satisfaction
• Turing around weak customer service:
- Long checkout lines à add ques and self-checkout
- Limited payment options à accept cash and credit cards
- Limited returns policy à enhance exchange policy
- Heavy reliance on self-service à add personnel to be more personal
- Inadequate store hours à extend store hours
4. Loyalty programs and deflection rate:
• Customer loyalty programs reward a retailer’s best customers, the retailer wants a
long-lasting relationship
• Enhances customer purchase frequencies and volumes
• Retailers in categories with less differentiation (supermarkets) offer loyalty programs
with the goal of increasing repeat business and profitability
• Collect customer contact and socio-demographic information
• 5 types of reward categories:
- Economic rewards: price reductions and purchase vouchers
- Hedonistic rewards: points that can be exchanged for an award that has
more emotional value and will attract people who shop for pleasure
- Social-relational rewards: such as mailings about special events or right to
use special waiting areas at the airport; attracts consumers who want to be
identified with a privileged group
- Informational rewards: attracts consumers who will stick with one brand or
store
Importance of developing and applying a retail
strategy (Chapter 1):
Retail strategy: plan guiding a retail firm à influences firm’s activities and response to
market factors
6 steps of strategic planning:
1. Define the type of business à in terms of goods/services and firm’s specific
orientation
2. Set LT and ST goals
3. Define target market à on basis of characteristics and needs
4. Devise an overall, LT plan à gives firm general direction
5. Implement an integrated strategy à to achieve objectives
6. Regularly evaluate performance and correct weakness
,4 Factors in relationship retailing (Chapter 2):
1. The customer base
2. Customer service
3. Customer satisfaction
4. Loyalty programs and the deflection rate
1. The customer base:
• Regularly analyse customer base à in terms of population and lifestyle trends,
attitudes and reasons for shopping, level of loyalty, and mix of new vs loyal
customers
• Changing à gender roles, shopper demand more diversity, less interested in
shopping, time saving is desired
• Delivering value à customer = king – everything must be done to satisfy and deliver
delight to the customer
• Receiving value à attracting and retaining those customers who provide value in the
form of profits
• Core customers à best customers – loyal, satisfied and generate high profits
• Lost causes (terrorists) à not profitable, often complain and got retailer money
• Free riders à highly satisfied but not profitable
• Mature firm à relies on core customers and supplements revenues from new
customers *Clicks
• New firm à attract shoppers and convince them to become loyal
• If the firm’s goal = growth à expand customer base by adding stores and increasing
advertising
• Core customers are not free à retailers must service them properly
2. Customer service:
• Augmented customer service: includes activities that enhance the shopping
experience and gives retailers a competitive advantage
• Expected customer service: service level that customers want to receive from any
retailer such as basic employee courtesy
• Employee empowerment: workers have the discretion to do what they believe is
necessary – within reason – to satisfy the customer
• Types of services offered:
- Basic à nearby parking, ease of shopping
- Extended à multiple payment options, self-service checkout, digital coupons
- Above and beyond à free delivery, empowered employees
• Decisions for developing a customer strategy:
- What customer services are expected and what customer services are
augmented for a particular retailer?
- What level of customer service is proper to complement a firm’s image?
- Should there be a choice of customer services?
- Should customer services be free? à determine which customer services are
expected, monitor competitors and profit margins, study the target market
, - How can a retailer measure the benefits of providing customer services
against the cost of services?
• Typical customer servicesà credit, delivery, packaging/gift wrapping, gift cards,
special sales, extended store hours
• Miscellaneous customer services à personal shoppers, restrooms, fitting rooms,
restaurants and baby-sitting
• Retailer sponsored credit cards:
✓ Saves fee would pay for outside card sales ✕ Start-up costs = high
✓ Encourage people to shop at the particular ✕ Worry about unpaid bills and cashflow
retailer ✕ Credit checks and follow up tasks must be
✓ Contact with customer is maintained done
3. Customer satisfaction:
• Occurs when value and customer service provided through a retailing experience
meet or exceed customer expectations
• 3 categories of retail satisfaction à shopping systems satisfaction, buying systems
satisfaction, consumer satisfaction
• Turing around weak customer service:
- Long checkout lines à add ques and self-checkout
- Limited payment options à accept cash and credit cards
- Limited returns policy à enhance exchange policy
- Heavy reliance on self-service à add personnel to be more personal
- Inadequate store hours à extend store hours
4. Loyalty programs and deflection rate:
• Customer loyalty programs reward a retailer’s best customers, the retailer wants a
long-lasting relationship
• Enhances customer purchase frequencies and volumes
• Retailers in categories with less differentiation (supermarkets) offer loyalty programs
with the goal of increasing repeat business and profitability
• Collect customer contact and socio-demographic information
• 5 types of reward categories:
- Economic rewards: price reductions and purchase vouchers
- Hedonistic rewards: points that can be exchanged for an award that has
more emotional value and will attract people who shop for pleasure
- Social-relational rewards: such as mailings about special events or right to
use special waiting areas at the airport; attracts consumers who want to be
identified with a privileged group
- Informational rewards: attracts consumers who will stick with one brand or
store
