Retail Principles Exam #1

Front 1

backward integration

Back 1

when a retailer performs some distribution and manufacturing activities (warehouse and designing private label)

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breaking bulk

Back 2

when retailers offer products in smaller quantities than the bulk in which they received the product

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distribution channel

Back 3

set of firms that facilitate the movement of products from point of production to point of sale to consumer

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ethics

Back 4

principles governing the behavior of individuals and companies to establish appropriate behavior and indicate what is right vs wrong

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forward integration

Back 5

manufacturer undertakes retailing activities (ralph lauren)

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intertype competition

Back 6

competition between the same type of retailers

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intratype competition

Back 7

competition between retailers that sell similar merchandise using different formats (ie discount and department stores)

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retailer

Back 8

business that sells products/services to consumers for personal or family use

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retailing

Back 9

set of business activities that adds value to the products and services sold to consumers for their personal or family use

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retail mix

Back 10

decision variables retailers use to satisfy customer needs and influence their purchase decisions

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retail strategy

Back 11

how the firm plans to focus its resources to accomplish its objectives

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scrambled merchandising

Back 12

offering merchandise not typically associated with the store

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variety

Back 13

number of different merchandise categories within a store or department

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vertical integration

Back 14

a firm performs more than one set of activities in the channel

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assortment

Back 15

number of different items in merchandise catergory

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breadth of merchandise

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variety

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category specialist

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big box discount stores that offer a narrow but deep assortment of merchandise

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closeout retailer

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off-price retailer that sells broad but inconsistent assortment of general merchandise

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depth of merchandise

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assortment

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direct selling

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salespeople contact customers directly at home or work

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efficient customer response

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reduce excess inventory through just-in-time inventory management and better assortment planning

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factory outlets

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outlet stores owned by manufacturers

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full-line discount store

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retailer that offers a broad variety of merchandise, limited service, and low prices (walmart, kmart,target)

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hypermarkets

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large combination food and general merchandise stores

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multi level network

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people serve as master distributors, recruiting other people to become distributors in their network

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North American Industry classification system

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collects data on business activity in each country

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off-price retailer

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inconsistent brand name merch (tj)

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outlet store

Back 28

off-price retailers owned by manufactures or department store chains

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wholesale- sponsored voluntary cooperative group

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organization operated by a wholesaler offering merchandising program to small, independent retailers on a voluntary basis (ace)

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conversion rate

Back 30

percentage of consumers who buy the product after viewing it

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efficient customer response

Back 31

reduce excess inventory through just-in-time inventory management and better assortment planning

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factory outlets

Back 32

outlet stores owned by manufacturers

Front 33

full-line discount store

Back 33

retailer that offers a broad variety of merchandise, limited service, and low prices (walmart, kmart,target)

Front 34

hypermarkets

Back 34

large combination food and general merchandise stores

Front 35

multi level network

Back 35

people serve as master distributors, recruiting other people to become distributors in their network

Front 36

North American Industry classification system

Back 36

collects data on business activity in each country

Front 37

off-price retailer

Back 37

inconsistent brand name merch (tj)

Front 38

outlet store

Back 38

off-price retailers owned by manufactures or department store chains

Front 39

wholesale- sponsored voluntary cooperative group

Back 39

organization operated by a wholesaler offering merchandising program to small, independent retailers on a voluntary basis (ace)

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conversion rate

Back 40

percentage of consumers who buy the product after viewing it

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disintermediation

Back 41

when a manufacturer sells directly to consumers, by passing retailers

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electronic agent

Back 42

computer program that locates and selects alternatives on the basis of some predetermined characteristics (fred)

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share of wallet

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percentage of total purchases made by a customer from that retailer

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accessibility

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ability of the retailer to target its communications to customers in a segment

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actionability

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definition of a segment clearly indicates what the retailer should do to satisfy needs

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benefit of segmentation

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group customers seeking similar benefits

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brand loyalty

Back 47

customers like and consistently but a specific brand in a product category

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compatibility

Back 48

the degree to which the fashion is consistent with existing norms, values and behaviors

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complexity

Back 49

how easy it is to understand and use the new fashion

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composite segmentation

Back 50

using multiple variables to identify consumers in target segment

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cross-shopping

Back 51

pattern of buying both premium and low priced merchandise or patronizing both expensive, status oriented retailers and price oriented retailers

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demographic segmentation

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groups consumers on the basis of age, gender, income, education

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everyday low price strategy

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emphasizes the continuity of retail prices at a level somewhere between nonsale price and discount sale price of competitors

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geodemographic segmentation

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uses both geographic and demographic characteristics to classify consumers

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geographic segmentation

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groups customers according to where they live

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hedonic needs

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shopping for pleasure (entertainment, emotional, recreational)

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identifiability

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permits the retailer to determine 1.segments size and 2. with whom they should communicate when promoting

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information search

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value customers feel they'll gain from searching vs the cost of searching

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lifestyle segmentation

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VALS---1) the consumers’ resources including their income, education, health, and energy level, and (2) personal orientation or what motivates them – principles, status, or actions.

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mass-market theory

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suggests that fashions spread across social classes

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multiattribute attitude model

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based on the notion that customers see a retailer, a product, or a service as a collection of attributes or characteristics

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observability

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the degree to which the new fashion is visible and easily communicated to others in the social group

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reference group

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people whom a person uses as a basis of comparison for beliefs, feelings, and behaviors

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retail market segmentation

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group of customers whose needs are satisfied by same retail mix b/c of similar needs

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subculture theory

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based on the development of recent fashions

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trialability

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costs and commitment required to adopt the fashion initially

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trickledown theory

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suggests that fashion leaders are consumers with the highest social statues and that fashion trickles down to lower social classes

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utilitarian needs

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shopping for a specific task

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VALS

Back 69

classifies consumers into 8 segments

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retail strategy

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a statement identifying 1. retailer's target market 2. the format the retailer plans to use to satisfy the target market;s needs 3. the bases upon which the retailer plans to build a sustainable competitive advantage

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target market

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market segment toward which the retailer plans to focus its resources and retail mix

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retail format

Back 72

suggests the type of retail mix used by the retailer to satisfy the needs of its target market

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sustainable comparative advantage

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an advantage over the competition that is not easily copied and thus can be maintaing over a long period of time

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retailing concept

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a management orientation that focuses a retailer on determining the needs of its target market and satisfying those needs more effectively and efficiently

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retail market

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group of consumers with similar needs that is serviced by a group of retailers using a similar retail format to satisfy them

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positioning

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involves the design and implementation of a retail mix to create an image of the retailer in the customer;s mind relative to its competitors

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data warehouse

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determines what types of merchandise and services certain groups of customers are buying

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market penetration growth opportunity

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realizing growth by directing efforts toward existing customers using the retailer's present retailing format

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cross-selling

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sales associates in one department attempt to sell complementary merch from other departments

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market expansion growth opportunity

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using the existing retail format in new market segments

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retail format development growth opportunity

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an opportunity in which a retailer develops a new retail format

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diversification growth opportunity

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a retailer introduces a new retail format directed toward a market segment that not currently served by the retailer

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related diversification growth opportunity

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retailer's present target market or retail format shares something in common with the new opportunity

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unrelated diversification

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lacks any commonality between the present business and the new business

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vertical integration

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diversification by retailers into wholesaling or manufacturing

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direct investment

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involves a retail firm investing in and owning a division or subsidiary that operates in a foreign country

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joint venture

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when the entering retailer pools its resources with a local retailer to form a new company in which ownership, control, and profits are shared

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strategic alliance

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collaborative relationship between independent firms

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franchising

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offers the lowest risk and requires the least investment

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strategic retail planning process

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entails the set of steps a retailer foes through to develop a strategic retail plan

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mission statement

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broad description of a retailers objectives and the scope of activities it plans to undertake

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situation audit

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an analysis of the opportunities and threats in the retail environment and the strengths and weaknesses of the retail business relative to its competitors

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barrier's to entry

Back 93

institute conditions in the retail market that make it difficult for other firms to enter the market (scale economies, customer loyalty, great locations)

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scale economies

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cost advantages to a retailer's size

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bargaining power of vendors

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the vendors have an opportunity to dictate prices and other terms, such as delivery dates, and thus reduce the retailer's profits.

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competitive rivalry

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the frequency and intensity of reactions to actions undertaken by competitors

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market attractiveness/ competitive position matrix

Back 97

provides a method for analyzing opportunities that explicitly considers both the retailer's capabilities and the retail market's attractiveness

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barrier's to entry

Back 98

institute conditions in the retail market that make it difficult for other firms to enter the market (scale economies, customer loyalty, great locations)

Front 99

scale economies

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cost advantages to a retailer's size

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bargaining power of vendors

Back 100

the vendors have an opportunity to dictate prices and other terms, such as delivery dates, and thus reduce the retailer's profits.

Front 101

competitive rivalry

Back 101

the frequency and intensity of reactions to actions undertaken by competitors

Front 102

market attractiveness/ competitive position matrix

Back 102

provides a method for analyzing opportunities that explicitly considers both the retailer's capabilities and the retail market's attractiveness

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perpetual map

Back 103

used to represent the customer's held image and preferences for retailers

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return on assets

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profit return on all the assets possessed by the firm

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strategic profit model

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method for summarizing the factors that affect a firm's financial performance as measured by the ROA

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net profit margin

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how much profit, after tax, a firm makes divided by its net sales

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asset turnover

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retailer's net sales divided by its assets

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net sales

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total revenue received by a retailer after all refunds have been paid to customers

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promotional allowances

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payments made by vendors to retailers in exchange for the retailer promoting the vendor's merchandise

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gross margin/gross profit

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net sales minus the cost of the goods sold

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operating expenses

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costs other than merchandise incurred
(salaries,advertising, utilities, etc)

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net profit

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gross margin minus operating expenses and taxes

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assets

Back 113

economic resources owned or controlled by a firm (inventory or store fixtures)

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current asset

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assets that can normally be converted to cash within one year

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accounts receivable

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primarily monies owed to the retailer from selling merchandise on credit to customers

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inventory turnover

Back 116

ratio like gross margin; used to evaluate how effectively retailers utilize their investment in inventory and reflects the cost the cost of goods sold from the income statement divided by the average inventory level from the balance sheet

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fixed asset

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those assets that require more than a year to convert to cash

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asset turnover

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an overall performance measure from the asset management component in the strategic profit model

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top-down planning

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goals are set at the top of the organization and passed down to the lower operating levels

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bottom-up planning

Back 120

lower levels in the company developing performance objectives that are aggregated up to develop overall company objectives

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input measures

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asses the amount of resources or money used by the retailer to achieve outputs such as sales

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output measures

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asses the results of a retailer's investment decisions

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productivity measure

Back 123

ratio of output to input; determines how effectively retailers use their resource-what return they get on their investment

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same store sales growth

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the growth in stores that have been open for over one year

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productivity measure

Back 125

ratio of output to input; determines how effectively retailers use their resource-what return they get on their investment

Front 126

same store sales growth

Back 126

the growth in stores that have been open for over one year

Front 127

productivity measure

Back 127

ratio of output to input; determines how effectively retailers use their resource-what return they get on their investment

Front 128

same store sales growth

Back 128

the growth in stores that have been open for over one year

Front 129

productivity measure

Back 129

ratio of output to input; determines how effectively retailers use their resource-what return they get on their investment

Front 130

same store sales growth

Back 130

the growth in stores that have been open for over one year

Front 131

productivity measure

Back 131

ratio of output to input; determines how effectively retailers use their resource-what return they get on their investment

Front 132

same store sales growth

Back 132

the growth in stores that have been open for over one year