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CHAPTER 5

RETAIL MARKET STRATEGY

CONVERSION NOTES

Berman & Evans Chapters 2, 3, 17, 19, & 20

CASES AND ANCILLARY CASES

CASE 3: Gadzooks Targets the Teen Market

Synopsis: Gadzooks is a speia!ty retai!er o" as#a! !othin$ and aessories tar$eted spei"ia!!y to

teena$ers% he ase desri'es Gadzook(s positionin$, vision and merhandizin$ strate$iesand demonstrates ho) Gadzook(s is takin$ advanta$e o" spei"i nihe opport#nities in theteena$e market%

CASE 4: Sears Looks for a New Dre!ton

Synopsis: Sears is a )e!!*kno)n department store, in operation sine its 'e$innin$s as a )athmerhant in 1++ and as a store in 192-% he ase traes the history o" Sears, in!#din$some prominent #ps and do)ns, as )e!! as the ompetitive environment, in!#din$ reentompetition "rom diso#nt stores% .t desri'es Sears( strate$y in the 1990s to emer$e "rom'ankr#pty and re$ain the prominene it one had in /merian retai!in$%

CASE ": Do##ar Genera# and $a%#& Do##ar '(& Low and Se## Low

Synopsis: o!!ar Genera! and ami!y o!!ar are eemp!ars o" the retai! ate$ory kno)n as va!#eretai!ers% he ase desri'es the tar$et market, !oation, merhandisin$, '#yin$ andoperations strate$ies o" va!#e retai!ers and a!so identi"ies some trends%

CASE ): Aho#d: The 'ggest S(*er%arket Yo( +a,e Ne,er +eard -f

Synopsis: /ho!d is a !ar$e $!o'a! s#permarket hain head#artered in the 4ether!ands% .t is theseond !ar$est "ood retai!er in the )or!d )ith sa!es o" over 50 'i!!ion in 2002, '#t its namedoes not appear on any o" the severa! s#permarket hains it o)ns and operates in o#ntriesaro#nd the )or!d% he ase desri'es /ho!d(s $!o'a! and 6%S% strate$ies and ompetitivestren$ths vis**vis other !ar$e "ood retai!ers s#h as 8a!*art and Carre"o#r%

CASE ./: A%er!an Eag#e and A0er!ro%0e 1 $t!h 'att#e for the Teen2Co##ege Market

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Synopsis: /merian Ea$!e and /'errom'ie & ith are riva! retai!ers vyin$ "or a ompetitive!eadership position amon$ the same se$ment o" the teena$eo!!e$e st#dent market% Eah,ho)ever, p#rs#es a s!i$ht!y di""erent strate$y, even tho#$h some simi!arities have 'een theiss#es "or !e$a! ontestation% he ase detai!s the strate$ies, merhandisin$, operations,and ompetitive positions o" the t)o retai!ers%

CASE .4: +o%e De*ot: New Dre!tons

Synopsis: ;ome epot is the !ar$est home improvement speia!ty retai!er in the )or!d and the seond!ar$est retai!er in the 6nited States% he ase do#ments reent han$es at the ;omeepot a"ter the insta!!ation o" a ne) CEhypothetia! ompany? m#st deide )hether she )ants the'#siness to $ro) and ho) to ahieve $ro)th% his ase an $enerate a dis#ssion o"

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or$anizationa! and personne! iss#es assoiated )ith r#nnin$ a sma!! speia!ty store% .t ana!so i!!#strate strate$i and imp!ementation deisions made 'y a retai! entreprene#r%

An!##ar& Case A.: The Ga* and -#d Na,&

Synopsis: he Gap is a m#!tinationa! appare! man#"at#rin$ and retai!in$ on$!omerate% .n an e""ort

to epand and diversi"y its appea!, the ompany has in reent years opened #p

An!##ar& Case A3: C#e,e#and C#n!

Synopsis: he C!eve!and C!ini is a )e!!*respeted hea!th are provider "ain$ a han$in$ompetitive environment% .n response to this han$in$ environment, the C!eve!and C!iniis openin$ "ai!ities in So#th !orida%

An!##ar& Case A4: Nketown

Synopsis: 4ike, the man#"at#rer o" the !eadin$ 'rand o" ath!eti shoes, has opened retai! o#t!ets tosho)ase their prod#ts% hese o#t!ets have a #ni#e and hi$h!y entertainin$ storeenvironment%

An!##ar& Case A: S%on and S%th

Synopsis: )o partners in a medi#m*sized )omen(s speia!ty store !ook at potentia! han$es in#stomer 'ase and dis#ss opport#nities to attrat yo#n$er #stomers%

An!##ar& Case A6: M(stafa Center: Snga*ore8s A##9n9-ne Reta#er

Synopsis: #sta"a Center is a )e!!*kno)n retai!er in Sin$apore that provides one*stop shoppin$%he store om'ines a department store, $roery store, pharmay, hote!, and serviesretai!in$ in!#din$ #rreny ehan$e and trave! a$eny%

An!##ar& Case A: Mar;(ette Ar%&2Na,& S(r*#(s Store

Synopsis: /rmy4avy s#rp!#s store is onsiderin$ vario#s ne) strate$i diretions

An!##ar& Case A": Monar!h De*art%ent Stores

Synopsis: onarh epartment Stores is eperienin$ the prospet o" a de!inin$ rate o" sa!es$ro)th% he ompany president sets #p a top mana$ement ommittee to eva!#ate thepossi'i!ity o" inreasin$ the $ro)th rate thro#$h 'eomin$ more invo!ved in nonstoreretai!in$% he team has made its report% he president m#st no) hoose "rom amon$ thenonstore a!ternatives proposed 'y the mana$ement ommittee% >4ote: onarh stores is a

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"ititio#s ompany% he deve!opment o" the ase )as $#ided 'y the a#thor(s administrativeeperiene in department store retai!in$%?

An!##ar& Case A..: To&s s

Synopsis: esri'es han$es made 'y oys @( 6s to its retai! market strate$y and ep!ores iss#es o"adaptation to han$in$ ons#mer needs and $ro)th strate$ies%

An!##ar& Case A.: Sn0ad8s Men and 'o&8s Store

Synopsis: he ase he!ps to i!!#strate marketin$ phi!osophy, positionin$ deision, and $eo$raphi!oation% he ase a!so s#pports that a !o) ost strate$y is not a!)ays the most pro"ita'!eaven#e on a !on$*term 'asis%

An!##ar& Case A.3: Reta#ng n Chna

Synopsis: he ase is 'ased on the eperienes o" the a#thors, )ho spent severa! )eeks in theShan$hai S#zho# area o" China in s#mmer, 199-% #rin$ this time, they met )ith themana$ers o" severa! department stores in the area% he irst epartment Store is an at#a!store in S#zho#, '#t the name has 'een han$ed% S#zho# is onsidered to 'e a seondarymarket in China, meanin$ that the !oa! a#thorities and individ#a! entreprene#rs determine'#siness onditions% .n ontrast, a ity s#h as Shan$hai is onsidered to 'e "irst tiereonomi area, and reeives etensive s#pport "rom the entra! $overnment to deve!op itseonomy and stim#!ate '#siness%

An!##ar& Case A.: ?nn9D@e Stores In!B and D##ard De*art%ent Stores In!B:Co%*arng Strateg! 5roft Mode#s

Synopsis: 8inn iie, a s#permarket hain, and i!!ards, a re$iona! department store hain, havedi""erent retai! strate$ies that res#!t in the "irms havin$ di""erent "inania! per"ormanestandards% Can 'e #sed )ith omp#ter disks aompanyin$ the tet'ook%

An!##ar& Case A3 ?o#f Ca%era

Synopsis: 8o!" Camera )as "o#nded in 197=% .t is no) one o" the t)o !ar$est speia!ty photoretai!ers in the o#ntry% .ts $ro)th has 'een the res#!t o" a stead"ast ommitment to#stomer satis"ation providin$ the 'est se!etion o" photo and video prod#ts andaessories, "o!!o)ed 'y the 'est servie at the !o)est possi'!e pries%

IDE- CASES

Dideo Se$ment 1: 8a!*art: he ar$est @etai!er in he 8or!d

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Teaching Use: .!!#stration o" retai! strate$y "ators !eadin$ to 8a!*art(s s#ess%

Featured Retailer:

8a!*art

Summary:

8a!*art is the !ar$est retai! merhant in the )or!d% his se$ment dis#sses the history o" the "irm #p to thepresent% Sam 8a!ton started his retai!in$ areer 'y openin$ a Ben rank!in "ranhised variety store in asma!! to)n in /rkansas% hen he attempted to onvine Ben rank!in to a!!o) him to se!! his merhandise at!o)er pries so he o#!d open diso#nt stores in sma!! r#ra! omm#nities% 8hen Ben rank!in deided notto s#pport his onept, 8a!ton proeeded on his o)n to open his "irst diso#nt store in 190 in @od$ers,/rkansas% his store, store F1, is sti!! open%

he video then traes the evo!#tion o" 8a!*art nationa! epansion o" $enera! merhandise diso#ntstores, the !a#nhin$ o" SamAs C!#' )areho#se !#'s, and internationa! epansion% he video stresses theimportane 8a!*art p!aes on peop!e, 'oth #stomers and emp!oyees%

deo Seg%ent : Ranforest Caf

Teaching Use: @etai! Strate$y "or a theme resta#rant

Featured Retailer:

@ain"orest Ca"e

Summary

@ain"orest Ca"e is a theme resta#rant in )hih the #stomers are seated in a tropia! rain"orestenvironment% he video sho)s the #ni#e desi$n o" the resta#rant, the types o" "ood served, and the

merhandise so!d in the resta#rant% he #se o" proprietary anima! "i$#res on the merhandise and in theresta#rant desi$n is dis#ssed%

.n eem'er 2000, @ain"orest Ca" )as p#rhased "rom the "o#nders 'y andryAs Sea"ood @esta#rants%/t the time, @ain"orest Ca" )as eperienin$ some "inania! pro'!ems d#e to over epansion% he $ro)thstrate$y o" @ain"orest Ca" "o#sed the deve!opment o" @ain"orest Ca" resta#rants in 'oth hi$h*pro"i!eonentrated to#rist areas, and in en!osed shoppin$ ma!! !oations% ost o" the ma!! !oations had hi$hinitia! reven#es that )as "o!!o)ed 'y pro!on$ed reven#e de!ines% >he repeat '#siness )as not hi$h%?8hi!e these ma!! !oations $enerate reven#es si$ni"iant!y $reater than typia! as#a! dinin$ resta#rants,they a!so had hi$her operatin$ osts% Ths ,deo !o%*#e%ents Case . n the te@t0ookB

deo Seg%ent 3: '(#d a 'ear

Teaching Use: @etai! strate$y "or a speia!ty retai!er

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Featured Firm:

B#i!d a Bear 8orkshop

Summary:

B#i!d a Bear 8orkshop is a nationa! ma!!*'ased speia!ty store retai!er )ith over 100 !oations in the 6%S%he stores tar$et hi!dren and se!! store st#""ed anima!s% he #ni#e aspet o" the "irmAs retai!o""erin$ is that hi!dren an reate their o)n #ni#e anima!s and !othes them% he video dis#ssesthe ritia! iss#es s#h as emp!oyee trainin$ and h#man reso#re mana$ement "or a retai!er thatprovide a hi$h !eve! o" #stomer servie%his video omp!ements Case 2 in the tet'ook%

deo Seg%ent 4: Star0(!ks

Teaching Use: Eamp!e o" a retai! strate$y

Featured Retailer:

Star'#ks

Summary:

By 2002, Star'#ks )as the !eadin$ retai!ers o" speia!ty o""ee 'evera$es, 'eans, re!ated "ood andmerhandise% .ts ann#a! sa!es )ere 53%+ 'i!!ion, and inrease o" 29H over the previo#s year% Star'#kso)ned and operated 3,-00 retai! stores and !iensed an additiona! 300 airport stores in the 6S, Iapan, andGreat Britain% .n addition to its diret retai!in$ ativities, Star'#ks had "ormed strate$i a!!ianes )ithreyerAs Grand .e Cream, Barnes & 4o'!e Bookse!!ers, Capita! @eords, Jepsi*Co, and 4ordstrom toepand its prod#t and distri'#tion port"o!ios% ;o)ard Sh#!tz, Chairman and CE

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SearsA h#man reso#re mana$ement e""orts in rein"orin$ the 'rand ima$e% Ths ,deo !an 0e (sed wthCase 4 n the te@t0ook%

deo Seg%ent ..: M!Dona#ds: A G#o0a# Reta#er

Teaching Use: .!!#strates iss#es in epandin$ $!o'a!!y%

Featured Retailer:

ona!ds

Summary:

ona!d(s is tr#!y a $!o'a! ompany% .t is the )or!d(s !eadin$ "ood servie retai!er )ith more than 30,000resta#rants in 121 o#ntries servin$ = mi!!ion #stomers eah day% .t is one o" the )or!d(s most )e!!*kno)n and va!#a'!e 'rands and ho!ds a !eadin$ share in the $!o'a!!y 'randed #ik servie resta#rant

se$ment o" the in"orma! eatin$*o#t market in virt#a!!y every o#ntry in )hih it does '#siness% Some o"o""erin$s a!so are )e!!*kno)n 'rands themse!ves ** Serves Bi$ a, M#arter Jo#nder, Chiken 4#$$etsand E$$ #""in% his video demonstrates ho) ona!dAs adopts its approah in di""erent o#ntriesspei"ia!!y .ndia%

deo Seg%ent .: '(#dng a 'rand at R!h8s2Go#ds%th2Lazar(s

Teaching Use: .!!#stration o" a positionin$ strate$y )ithin a ompetitive market

Featured Retailer:

@ihAsGo!dsmiths, a division o" ederated epartment Store

Summary:

@ihAsazar#sGo!dsmithAs >@G? is a re$iona! department store hain head#artered in /t!anta, Geor$ia,and o)ned 'y ederated epartment Stores% .t emp!oys 17,200 peop!e in 7 stores !oated in nineid)estern and so#theastern states )ith ann#a! sa!es o" 52%2 'i!!ion% he division )as "ormed in 199-)hen ederated epartment Stores mer$ed three re$iona! department store hains% 8hi!e the stores in eahre$ion ontin#e to arry the name o" the re$iona! hains, thereAs on!y one head#arters o""ie% @ather than#sin$ the "#!! name o" the division% he video sho)s the "ormer CE

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Summary:

B#rdines is a re$iona! department store hain division o" ederated stores !oated in !orida% B#rdinesA!on$*term strate$y a!)ays in!#ded the possi'i!ity o" epandin$ into other So#theast states either thro#$ha#isition or 'y openin$ ne) stores% ;o)ever, in 19++, a ne) department store ompetitor entered theso#th !orida market% 8hen ayAs opened t)o stores, B#rdines 'e$an to re*eva!#ate its !on$*term

strate$y% 4ote that in 1992, ederated a#ired ayAsN ho)ever, 'oth ayAs and B!ooomin$da!es,divisions o" ederated, ompete a$ainst B#rdines in !orida%

B#rdines deided to position itse!" as he !orida Store and onentrate K#st on the !orida market% Byidenti"yin$ itse!" as the !orida store, B#rdines sari"ied the opport#nity to epand into other states% ostren$then its position in !orida, it has deve!oped #ni#e private*!a'e! / merhandise tai!ored to theneeds o" !oridians% B#rdines is repositionin$ its re$iona! department store hain as he !orida Store%his repositionin$ is omm#niated to #stomers thro#$h the merhandise mi, store desi$n, andadvertisin$%

deo Seg%ent ": C#osng the Ser,!e GA5S

Teaching Use: .!!#strate steps that retai!ers an take to deve!op ompetitive advanta$e 'asedon hi$h #a!ity #stomer servie%

Featured Company:

;ost arriott

@iverside ethodist ;ospita!

Summary:

his video desri'es the approahes #sed to deve!op a ompetitive advanta$e 'ased on servie 'y t)o

servie retai!ers% he video 'e$ins )ith a dis#ssion o" ;ost arriottAs operation o" retai! o#t!ets >"ood and$i"t'ook stores? in airports% ;ost arriott "o#ses on set standards "or hi$h #a!ity servies that areomm#niated to emp!oyees% h#s it "o#ses on !osin$ the Standards and e!ivery G/JS in the G/JSmode! sho)n in Chapter 19%

he seond ha!" o" the video "o#ses on @iverside ethodist ;ospita!, a 1,100*'ed hospita! in Co!#m'#s,

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/ market attrativenessompetitive position matri provides a method "or ana!yzin$ opport#nitiesthat ep!iit!y onsiders 'oth the retai!erAs apa'i!ities and the retai! marketAs attrativeness% hematriAs #nder!yin$ premise is that a marketAs attrativeness determines its !on$*term pro"itpotentia! "or the opport#nity, and the retai!erAs ompetitive position indiates the pro"it potentia! "orthe opport#nity% he matri indiates that the $reatest investments sho#!d 'e made in the

opport#nities )here the retai!er has a stron$ ompetitive position in the most attrative markets%

his eerise is desi$ned to $o )ith the /ppendi to hapter - and the Get

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ANN-TATED ->TLINE INSTR>CT-R N-TES

IB ?hat Is A Reta# Strateg&

he term strate$y is "re#ent!y #sed in

retai!in$% or eamp!e, retai!ers ta!k a'o#ttheir merhandise strate$y, promotionstrate$y, !oation strate$y, and private*'randstrate$y%

@etai! strate$y isnAt K#st another epression

"or retai! mana$ement%

See PPT 5-2, 5-3, 5-4Ask students to list all the decisions a retailermakes !o" determine "hich are strategic and"hich are tactical #h$%

Ask students "hat are strategic decisions &t$'e o()o*+ the$ make "hen looking (or a )o* a(tergraduation and "hat are tactical decisions&making u' and sending out resumes+See PPT -

AB Defnton of Reta# Market Strateg&

/ reta# strateg&is a statement identi"yin$ 1?

the retai!er(s tar$et market 2? the "ormat theretai!er p!ans to #se to satis"y the tar$et

market(s needs, and 3? the 'ases #pon )hihthe retai!er p!ans to '#i!d a s#staina'!eompetitive advanta$e%

he target %arketis the market se$ments>s?

to)ard )hih the retai!er p!ans to "o#s itsreso#res and retai! mi%

/reta# for%atis the retai!er(s type o" retai!

mi >nat#re o" merhandise and servieso""ered, priin$ po!iy, advertisin$ andpromotion pro$rams, approah to store

desi$n and vis#a! merhandisin$, and typia!!oation?%

/ s(stana0#e !o%*ett,e ad,antage is an

advanta$e over ompetition that an 'emaintained over a !on$ time%

See PPT 5-5 to PPT 5-.

/iscuss the retail strateg$ o( the retailers listed

*elo" Put the names o( each o( the retailers listed*elo" on the *oard and ask the students toidenti($ the retail (ormat and the target markets(or each Then com'are "ith the in(ormationlisted *elo"

Autozone, a Mem'his-*ased auto 'arts retailer"ith annual sales e0ceeding 12 *illion, is thelargest auto su''l$ retailer in the S ts targetmarket is lo"er-income 'eo'le "ho re'air theircars themseles out o( economic necessit$--the$cant a((ord to hae their cars re'aired *$ othersAutozone has *uilds lo$alt$ in this segment *$

'roiding e0ce'tional conenience and sericeStores are located in neigh*orhoods near theircustomers and sta$ o'en until midnight Almostall em'lo$ees &called Autozoners+ hae 'riorautomotie re'air e0'erience The$re encouragedto go out to the store 'arking lot "ith a customerto check on the e0act 'art needed and een hel'the customer install sim'le items like headlightsand hoses

Starbucks Star*ucks is a national chain o( oergourmet co((ee ca(es generating annual sales oer

1566 million The (riendl$ and kno"ledge counterserers called 7*aristas7 &talian (or *artenders+educate customers a*out Star*ucks 'roductsThe com'an$ has entered into some creatie'artnershi's to 'ut its ca(es in !ordstrom and8arnes 9 !o*les stores and sere its co((ee onnited Airlines

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IIB Target Market And Reta# $or%at

he reta#ng !on!e*tis a mana$ement

orientation that "o#ses a retai!er ondeterminin$ the needs o" its tar$et market and

satis"yin$ those needs more e""etive!y ande""iient!y than its ompetitors%

he se#e!ton of a target %arket"o#ses the

retai!er on a $ro#p o" ons#mers )hoseneeds it )i!! attempt to satis"y%

he se!etion o" a retai! "ormat o#t!ines the

retai! mi to 'e #sed to satis"y needs o"#stomers in the tar$et market%

he reta# strateg&determines the markets in

)hih a retai!er )i!! ompete%

8e de"ine a reta# %arket, not as a spei"i

p!ae )here '#yers and se!!ers meet, '#t as a$ro#p o" ons#mers )ith simi!ar needs >amarket se$ment? and a $ro#p o" retai!ers#sin$ a simi!ar retai! "ormat to satis"y thoseons#mer needs%

See PPT 5-6, 5-

Ask students (or local retailers that com'etedirectl$ against each other #hat is the targetmarket o( the retailers% #hat is the retail (ormat

used%

PPT 5- sho"s the com'etition across retail(ormats (or arious segments o( the "omensa''arel market

See PPT 5-2, 5-3

;eie" di((erent "a$s that market can *esegmented -- target market can *e de(ined &seecha'ter 4+ -- geogra'hic, demogra'hic,

's$chogra'hic, *u$ing situation

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IIIB '(#dng A S(stana0#e Co%*ett,eAd,antage

he "ina! e!ement in a retai! strate$y is the

retai!er(s approah to '#i!din$ s#staina'!e

ompetitive advanta$e%

Some advanta$es are s#staina'!e over a !on$

period o" time )hi!e others an 'e d#p!iated'y ompetitors a!most immediate!y%Esta'!ishin$ a ompetitive advanta$e meansthat a retai!er '#i!ds a )a!! aro#nd itsposition in the retai! market%

1? #stomer !oya!ty, >2? !oation, >3?h#man reso#re mana$ement, >=? distri'#tionand in"ormation systems, and >7? #stomerservie%

See PPT 5-4, 5-5

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.B 5ostonng

/ retai!er '#i!ds #stomer !oya!ty 'y

deve!opin$ a !ear and distintive ima$e o"its retai! o""erin$ and onsistent!y rein"orin$

that ima$e thro#$h its merhandise andservie% 5ostonngis the desi$n andimp!ementation o" a retai! mi to reate anima$e o" the retai!er in the #stomer(s mindre!ative to its ompetitors%

/ *er!e*t(a# %a*is "re#ent!y #sed to

represent the #stomer(s ima$e andpre"erene "or retai!ers%

See PPT 5-=

PPT 5-= sho"s a h$'othetical 'erce'tual ma' o("omens a''arel market

/escri*e the 'ositions o( the retailers andsegment ideal 'oints Ask students "hat retailerdo customers in segment 5 're(er most% #hatstore is seen as most similar to !eiman Marcus%Most similar to >mart%

B Lo&a#t& 5rogra%sB

Lo&a#t& *rogra%sare part o" an overa!!

#stomer re!ationship mana$ement pro$ram>C@? pro$ram >detai!ed in Chapter 11?%em'ers o" !oya!ty pro$rams #se some typeo" !oya!ty ard% J#rhase in"ormation isstored in a h#$e data'ase kno)n as a datawareho(se%

See PPT 5-2

Ask students ho" the$ "ould use customer'urchase in(ormation collected, sa$, oer the 'ast$ear, to attract re'eat *u$ing

Ask student "hether or not the$ are mem*ers o((re?uent sho''er clu*s

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the #antities that are re#ired, at a !o)erde!ivered ost than their ompetitors%@etai!ers an ahieve these e""iienies 'ydeve!opin$ sophistiated distri'#tion andin"ormation systems%

/iscuss

EB >n;(e Mer!handse

8hi!e it is di""i#!t "or many retai!ers to

deve!op a ompetitive advanta$e thro#$hmerhandise, many retai!ers rea!ize as#staina'!e ompetitive advanta$e 'ydeve!opin$ *r,ate9#a0e# 0rands>a!so a!!edstore 'rands?, )hih are prod#ts deve!oped,marketed, and avai!a'!e on!y at that retai!er%

Ask students i( the$ *u$ 'riate-la*el *rands (romtheir local su'ermarket ( so, (or "hich 'roductcategories% ( not, "h$ not% Also, ho" doestheir ie" o( 'riate-la*el *rands sold at storeslike ;adio Shack and Shar'er mage di((er (romthe 'riate-la*el *rands sold at su'ermarkets anddiscount stores%

$B endor Re#atons

By deve!opin$ stron$ re!ations )ith vendors,retai!ers may $ain e!#sive ri$hts >1? to se!!merhandise in a re$ion, >2? to '#ymerhandise at !o)er pries or )ith 'etterterms than ompetitors )ho !ak s#hre!ations, or >3? to reeive merhandise inshort s#pp!y%

@e!ationships )ith vendors, !ike re!ationships

)ith #stomers, are deve!oped over a !on$time and may not 'e easi!y o""set 'y aompetitor%

See PPT 5-22

/iscuss the e0am'le o( >marts strateg$ o(haing electronic links "ith its endors and'roides man$ o( its endors "ith 'oint-o(-saledata 8$ deelo'ing com'uter links "ith itsendors, >mart increases its o''ortunit$ to haethe right merchandise at the right store "hen thecustomer "ants it /iscuss ho" this can *e anim'ortant com'etitie adantage

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GB C(sto%er Ser,!e

@etai!ers a!so '#i!d a s#staina'!e ompetitive

advanta$e 'y o""erin$ ee!!ent #stomerservie%

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AB Market 5enetraton

/ %arket *enetratonopport#nity invo!ves

diretin$ investments to)ard eistin$#stomers #sin$ the present retai!in$ "ormat%

/pproahes "or inreasin$ marketpenetration in!#de attratin$ ne) #stomers'y openin$ more stores in the tar$et marketor openin$ the stores "or !on$er ho#rs%

Cross9se##ngmeans that sa!es assoiates in

one department attempt to se!!omp!ementary merhandise "rom otherdepartments to their #stomers% ore ross*se!!in$ inreases sa!es "rom eistin$#stomers%

Donsider The Ea', Cands nd, and >mart#hat "ould *e e0am'les o( market 'enetrationo''ortunities the$ could 'ursue%

'B Market E@*anson

/%arket e@*ansonopport#nity emp!oys

the eistin$ retai!in$ "ormat in ne) marketse$ments%

Donsider The Ea', Cands nd, and >mart #hat

"ould *e e0am'les o( market e0'ansiono''ortunities the$ could 'ursue%

0am'le o( market e0'ansion is #al-Marto'ening stores in large cities The Ea' startingEa' >ids

CB Reta# $or%at De,e#o*%ent

/ reta# for%at de,e#o*%ent opport#nity

invo!ves o""erin$ #stomers a ne) retai!"ormat**a "ormat invo!vin$ a di""erent retai!mi**to the same tar$et market%

/dK#stin$ the type o" merhandise or

servies o""ered typia!!y invo!ves a sma!!investment, )hi!e providin$ an entire!ydi""erent "ormat, s#h as a store*'asedretai!er $oin$ into e!etroni retai!in$, re#irea m#h !ar$er and riskier investment%

mart starting a discount homeim'roement center -- 8uilders S?uare Candsnd o'ening retail stores

DB D,ersf!aton

/ d,ersf!aton opport#nity invo!ves a ne)

retai! "ormat direted to)ard a market

se$ment that is not present!y 'ein$ served%

Donsider The Ea', Cands nd, and >mart #hat"ould *e e0am'les o( diersi(icationo''ortunities the$ could 'ursue%

0am'le o( diersi(ication is >mart *u$ing#alden 8ooks

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.B Re#ated ,ers(s (nre#ated d,ersf!aton

iversi"iation opport#nities are either

re!ated or #nre!ated%

.n a re#ated d,ersf!aton o**ort(nt&, thepresent tar$et market andor retai! "ormatshares somethin$ in ommon )ith the ne)opport#nity% his ommona!ity mi$ht entai!p#rhasin$ "rom the same vendors, #sin$ thesame distri'#tion andor mana$ementin"ormation system, or advertisin$ in thesame ne)spapers to simi!ar tar$et markets%

.n ontrast, an (nre#ated d,ersf!aton

!aks any ommona!ty 'et)een the present'#siness and the ne) '#siness%

/iscuss the e0am'le o( DPenne$s t"oinestments in electronic sho''ing &TeleActionand DPenne$ Teleision Sho''ing Dhannel+TeleAction "as an interactie electronic homesho''ing s$stem selling a ariet$ o( merchandise,(rom (ood to ticket reserations Since little o( themerchandise "as sold through the Penne$ storesor catalog, the s$stem "as an unrelateddiersi(ication *ecause it didnt inole Penne$scatalog ordering and distri*ution s$stem Gn theother hand, the Teleision Sho''ing Dhannel "asa related diersi(ication *ecause it o((ers'redominantl$ Penne$ merchandise shi''edthrough its mail-order catalog distri*utions$stem ts like an electronic catalog TH sho"

For The Ea', Cands nd, and >mart, "hat "ould*e e0am'les o( related ersus unrelateddiersi(ication o''ortunities% #hat a*out Sears*u$ing a manu(acturer o( home a''liances%

B ert!a# ntegraton

ert!a# ntegratonis diversi"iation 'y

retai!ers into )ho!esa!in$ or man#"at#rin$%

8hen a retai!er inte$rates 'y p#rhasin$ or

other)ise partnerin$ )ith distri'#tion orman#"at#rin$ onerns, it is en$a$in$ in0a!kward ntegraton%

Some man#"at#rers and desi$ners forward9

ntegrateinto retai!in$%

#h$ is ertical integration a diersi(ication%

EB Strateg! -**ort(ntes and Co%*ett,eAd,antage

ypia!!y, retai!ers have the $reatest

ompetitive advanta$e in opport#nities thatare simi!ar to their present retai! strate$y%h#s, retai!ers )o#!d 'e most s#ess"#!en$a$in$ in market penetration opport#nities

that don(t invo!ve enterin$ ne), #n"ami!iarmarkets or operatin$ ne), #n"ami!iar retai!"ormats%

8hen retai!ers p#rs#e market epansion

opport#nities, they '#i!d on their stren$ths inoperatin$ a retai! "ormat and app!y thisompetitive advanta$e in a ne) market%

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@etai!ers have the !east ompetitive

advanta$e )hen they p#rs#e diversi"iationopport#nities% hese opport#nities are$enera!!y risky and o"ten don(t )ork%

B G#o0a# Growth -**ort(ntes

.nternationa! epansion is one "orm o" a

market epansion strate$y% he mostommon!y tar$eted re$ions are eio,atin /meria, E#rope, China, and Iapan%

.nternationa! epansion is risky 'ea#se

retai!ers #sin$ this $ro)th strate$y m#st dea!)ith di""erenes in $overnment re$#!ations,#!t#ra! traditions, di""erent s#pp!y hainonsiderations, and !an$#a$e%

See PPT 5-2

Ask students to generate international gro"tho''ortunities (or The Ea', The #et Seal, #al-Mart, and a regional grocer$ store chain/iscuss "h$ di((erent o''ortunities might *eattractie to each o( these retail chains

AB ?ho s S(!!essf(# and ?ho Isn7t

@etai!ers, parti#!ar!y store retai!ers )ith

stron$ 'rand names, may have a stron$ompetitive advanta$e )hen ompetin$$!o'a!!y%

Some 6%S% retai!ers may have a ompetitive

advanta$e in $!o'a! markets 'ea#se the/merian #!t#re is em#!ated in manyo#ntries, parti#!ar!y amon$ yo#n$ peop!e%

Some !ar$e E#ropean and Iapanese retai!ers

have onsidera'!y more eperiene operatin$retai! stores in nondomesti markets%

Cate$ory ki!!ers and hypermarket retai!ers

may 'e parti#!ar!y s#ited to s#eedinternationa!!y 'ea#se o" the epertisetheyAve a!ready deve!oped at home%

#hich S *ased retailers hae *een success(ulgoing glo*al%

#hich non-S *ased retailers hae *eensuccess(ul in the S%

/iscuss the reasons "h$ categor$ killers andh$'ermarkets ma$ *e more success(ulinternationall$ These reasons include: &+e0'erienced use o( technolog$ to manageinentories, control glo*al logistical s$stems andtailor merchandise assortmentsB &2+ *u$ingeconomies o( scale and e((icient distri*utions$stemsB &3+ deelo'ment o( uni?ue s$stems andstandardized (ormats (acilitating *etter controlB&4+ (ocused communications due to narro"assortment and (ocused strateg$B and &5+"illingness o( glo*al consumers to (orgo serice(or lo"er 'rices

'B He&s to S(!!ess

o#r harateristis o" retai!ers that have

s#ess"#!!y ep!oited internationa! $ro)thopport#nities are: >1? $!o'a!!y s#staina'!eompetitive advanta$e, >2? adapta'i!ity, >3?$!o'a! #!t#re, and >=? deep pokets%

See PPT 5-2.

.B G#o0a##& s(stana0#e !o%*ett,ead,antage Donsider a retailer such as #al-Mart #hat are

international market conditions necessar$ (or#al-Mart to succeed "ith its lo" costs, e((icient

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Entry into nondomesti markets is most

s#ess"#! )hen the epansion opport#nity isonsistent )ith the retai!er(s ore 'ases o"ompetitive advanta$e%

o'erations strateg$%

B Ada*ta0#t&

8hi!e s#ess"#! $!o'a! retai!ers '#i!d on

their ore ompetenies, they a!so reo$nize#!t#ra! di""erenes and adapt their orestrate$y to the needs o" !oa! markets%

Government re$#!ations and #!t#ra! va!#es

a!so a""et store operations% Somedi""erenes, s#h as ho!idays, ho#rs o"operations, and re$#!ations $overnin$ part*time emp!oyees and terminations are easy toidenti"y%

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ret#rns%

B ont ent(re

/Jont ,ent(reis "ormed )hen the enterin$

retai!er poo!s its reso#res )ith a !oa!retai!er to "orm a ne) ompany in )hiho)nership, ontro!, and pro"its are shared%

/ Koint vent#re red#es the entrantAs risks%

he !oa! partner #nderstands the market andaess to reso#res vendors and rea! estate%

Jro'!ems )ith this entry approah an arise

i" the partners disa$ree or the $overnmentp!aes restritions on the repatriation o"pro"its%

#ould a retailer more likel$ to use a )oint enture"hen entering Danada or "hen entering Dhina%/iscuss

3B Strateg! A##an!e

/ strateg! a##an!eis a o!!a'orative

re!ationship 'et)een independent "irms% oreamp!e, a "orei$n retai!er mi$ht enter aninternationa! market thro#$h diretinvestment '#t deve!op an a!!iane )ith a!oa! "irm to per"orm !o$istia! and)areho#sin$ ativities%

Strategic alliances are o(ten used (or learninga*out a countr$s uni?ue enironment and other*usiness conditions

4B $ran!hsng

$ran!hsngo""ers the !o)est risk andre#ires the !east investment% ;o)ever, theentrant has !imited ontro! over the retai!operations in the "orei$n o#ntry, pro"itpotentia! is red#ed, and the risk o" assistin$in the reation o" a !oa! domesti ompetitoris inreased%

IB The Strateg! Reta# 5#annng 5ro!ess

he strateg! reta# *#annng *ro!essis the

set o" steps that a retai!er $oes thro#$h to

deve!op a strate$i retai! p!an%

.t desri'es ho) retai!ers se!et tar$et market

se$ments, determine the appropriate retai!"ormat, and '#i!d s#staina'!e ompetitiveadvanta$es%

he p!annin$ proess an 'e #sed to

"orm#!ate strate$i p!ans at di""erent !eve!s

PPT 5-36 charts the ste's in the strategic'lanning 'rocess

Eo through the arious stages o( the 'lanning'rocess (or a local retailer or 'ick an idea (or a

ne" retail *usiness and deelo' a strategic 'lan(or the *usiness

Eo through the arious stages o( the 'lanning'rocess (or the e0am'le o( Ei(ts To Eo gien inte0t

PPT 5-3 to PPT 5-44 detail the a''lication o(the 'lanning 'rocess (or Ei(ts To Eo

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)ithin a retai! orporation%

AB Ste* .: Defne the '(sness Msson

he %sson state%entis a 'road

desription o" a retai!er(s o'Ketives and thesope o" ativities it p!ans to #ndertake% .tsho#!d de"ine the $enera! nat#re o" the tar$etse$ments and retai! "ormats that the "irm )i!!onsider%

.n deve!opin$ the mission statement,

mana$ers m#st ans)er "ive #estions: >1?8hat '#siness are )e inR >2? 8hat sho#!d'e o#r '#siness in the "#t#reR >3? 8ho areo#r #stomersR >=? 8hat are o#rapa'i!itiesR >-? 8hat do )e )ant toaomp!ishR

#h$ does a retailer need to hae a (ormalmission statement% /e(ine a mission (or Sears,"hich includes its (inancial serices, insurancecom'an$, and real estate *rokerage /e(ine amission (or #al-mart

/e(ine a mission (or $our college or uniersit$

'B Ste* : Cond(!t a St(aton A(dt

/ st(aton a(dtis an ana!ysis o" the

opport#nities and threats in the retai!environment and the stren$ths and)eaknesses o" the retai! '#siness re!ative toits ompetitors%

/ sit#ation a#dit is omposed o" three

e!ements: market attrativeness ana!ysis,ompetitor ana!ysis, and se!"*ana!ysis%

See PPT 5-3

Donduct a situation audit (or an$ de'artmentstore most (amiliar to students

.B Market $a!tors

Some ritia! "ators re!ated to ons#mers

and their '#yin$ patterns are market size and$ro)th, sa!es y!ia!ity, and seasona!ity%arket size, typia!!y meas#red in retai!sa!es do!!ars, is important 'ea#se itindiates a "irm(s opport#nity "or $eneratin$reven#es to over its investment%

ar$e markets are attrative to !ar$e retai!

"irms, '#t they are a!so attrative to sma!!entreprene#rs 'ea#se they o""er moreopport#nities to "o#s on a market se$ment%Gro)in$ markets are typia!!y moreattrative than mat#re or de!inin$ markets%

.n $enera!, markets )ith hi$h!y seasona!

sa!es are #nattrative 'ea#se a !ot o"reso#res are needed to aommodate the

#hat makes a market attractie% Ask (ore0am'les o( attractie and unattractie

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peak season, '#t are #nder#ti!ized the rest o"the year%

B Co%*ett,e $a!tors

he nat#re o" the ompetition in retai!markets is a""eted 'y 'arriers to entry, the'ar$ainin$ po)er o" vendors, andompetitive riva!ry% @etai! markets are moreattrative )hen ompetitive entry is ost!y%

'arrers to entr&are onditions in a retai!

market that make it di""i#!t "or "irms toenter the market% hese onditions in!#desa!e eonomies, #stomer !oya!ty, andavai!a'i!ity o" !oations%

S!a#e e!ono%esare ost advanta$es d#e to

a retai!er(s size% arkets dominated 'y !ar$eompetitors )ith sa!e eonomies aretypia!!y #nattrative%

@etai! markets dominated 'y a )e!!*

esta'!ished retai!er that has deve!oped a !oya!$ro#p o" #stomers o""er !imited pro"itpotentia!%

he avai!a'i!ity o" !oations may impede

ompetitive entry%

/ retai! market )ith hi$h entry 'arriers isvery attrative "or retai!ers present!yompetin$ in that market, '#t #nattrative"or retai!ers not a!ready in that market%

/nother ompetitive "ator is the 0arganng

*ower of ,endorsB arkets are #nattrative)hen a "e) vendors ontro! the merhandiseso!d in it% .n these sit#ations, the vendorshave an opport#nity to ditate pries andother terms, s#h as de!ivery dates, and th#sred#e the retai!er(s pro"its%

he "ina! ind#stry "ator is the !eve! o"

!o%*ett,e r,a#r&in the retai! market,)hih is the "re#eny and intensity o"reations to ations #ndertaken 'yompetitors% Conditions that may !ead tointense riva!ry in!#de: >1? a !ar$e n#m'er o"ompetitors that are a!! a'o#t the same size,>2? s!o) $ro)th, >3? hi$h "ied osts, and >=?

See PPT 5-33

#hat are e0am'les o( retail markets that haehigh entr$ *arriers% Co" entr$ *arriers% Arethere entr$ *arriers (or a ne" (ast (ood (ranchisein the local communit$% A ne" de'artment store%a ne" discount store s'ecializing in to$s% Take aset o( local com'etitors and ealuate ho" intensethe rialr$ is

Dom'are com'etitie issues (or a *ricks andmortar retailer ersus a clicks and mortar andclicks onl$ retailer

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the !ak o" pereived di""erenes 'et)eenompetin$ retai!ers%

3B En,ron%enta# $a!tors

Environmenta! "ators that a""et marketattrativeness are tehno!o$ia!, eonomi,re$#!atory, and soia! han$es%

8hen a retai! market is $oin$ thro#$h

si$ni"iant han$es in tehno!o$y, presentompetitors are v#!nera'!e to ne) entrantsthat are ski!!ed at #sin$ the ne) tehno!o$y%

Some retai!ers are more a""eted 'y

eonomi onditions than others%

Government re$#!ations an red#e the

attrativeness o" a retai! market%

ina!!y, trends in demo$raphis, !i"esty!es,

attit#des, and persona! va!#es a""et retai!markets( attrativeness%

See PPT 5-32

Anal$ze some 'otential changes in theenironment such as 'eo'le *ecoming morehealth conscious a*out the (ood the$ eat, moreconcerned a*out the enironment, more interestedin haing e0'eriences rather than *u$ing'roducts ;eie" some o( the changes discussedin Dha'ter 4 Ask students ho" these changes"ill a((ect s'eci(ic retailers%

Eoernment regulations reduce the attractienesso( a retail market *$ making it costl$ to *uildstores &zoning la"s+ and hire em'lo$ees &"ageregulations+

4B Strengths and ?eakness Ana#&ss

he most ritia! aspet o" the sit#ation a#dit

is "or a retai!er to determine its #ni#eapa'i!ities in terms o" its stren$ths and)eaknesses re!ative to the ompetition% /strengths and weaknesses ana#&ssindiatesho) )e!! the '#siness an seize opport#nitiesand avoid harm "rom threats in theenvironment%

See PPT 5-34

PPT 5-34 details a (ormat o( strengths and"eakness anal$sis This could *e a''lied to alocal retailer

CB Ste* 3: Identf& Strateg! -**ort(ntes

/"ter omp!etin$ the sit#ation a#dit, the net

step is to identi"y opport#nities "or inreasin$retai! sa!es% he strate$i a!ternatives arede"ined in terms o" the s#ares in the retai!market matri%

See PPT 5-35

DB Ste* 4: E,a#(ate Strateg! -**ort(ntes

he eva!#ation o" strate$i opport#nities

identi"ied in the sit#ation a#dit determinesthe retai!er(s potentia! to esta'!ish as#staina'!e ompetitive advanta$e and reap!on$*term pro"its "rom the opport#nities#nder eva!#ation%

See PPT 5-45, 5-4

Eo through the e0am'le in the te0t ealuating themerchandise categories in a de'artment store

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h#s, a retai!er m#st "o#s on opport#nities

that #ti!ize its stren$ths and its area o"ompetitive advanta$e%

Both the market attrativeness and the

stren$ths and )eaknesses o" the retai!er needto 'e onsidered in eva!#atin$ strate$iopport#nities%

he $reatest investments sho#!d 'e made in

market opport#nities )here the retai!er has astron$ ompetitive position%

and com'etitie 'osition o( some o''ortunitiesthe local college *ookstore is 'resentl$ 'ursuingand is considering:

a college te0t*ooks,

* clothing "ith the college name on it,

c (ashiona*le *rand name clothing,

d (ast (ood,

e renting ideo ta'es

3? the !eve! o"investment needed to ahieve the o'Ketive%

ypia!!y, the per"ormane !eve!s are

"inania! riteria s#h as ret#rn oninvestment, sa!es, or pro"its%

Ask students "hich o''ortunities the *ookstoreshould 'ursue ;elate these o''ortunities to the

com'etitie adantages the *ookstore has

$B Ste* 6: De,e#o* a Reta# M@ to I%*#e%entStrateg&

he net step is to deve!op a retai! mi "or

eah opport#nity in )hih investment )i!! 'emade and to ontro! and eva!#ateper"ormane%

GB Ste* : E,a#(ate 5erfor%an!e and MakeAdJ(st%ents

he "ina! step in the p!annin$ proess is

eva!#atin$ the res#!ts o" the strate$y andimp!ementation pro$ram%

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." the retai!er "ai!s to meet its o'Ketives,

reana!ysis is needed% his reana!ysis starts)ith revie)in$ the imp!ementation pro$ramsN'#t it may indiate that the strate$y >or eventhe mission statement? needs to 'e

reonsidered% his on!#sion )o#!d res#!tin startin$ a ne) p!annin$ proess, in!#din$a ne) sit#ation a#dit%

+B Strateg! 5#annng n the Rea# ?or#d

Strate$i deisions are made in a se#entia!

manner% /"ter the '#siness mission isde"ined, the sit#ation a#dit is per"ormed,strate$i opport#nities are identi"ied,a!ternatives are eva!#ated, o'Ketives are set,reso#res are a!!oated, the imp!ementationp!an is deve!oped, and "ina!!y, per"ormane iseva!#ated and adK#stments are made%

B#t, at#a! p!annin$ proesses have

interations amon$ the steps% or eamp!e,the sit#ation a#dit may #nover some !o$ia!a!ternative "or the "irm to onsider, eventho#$h this a!ternative is not in!#ded in themission statement%

Ask students to relate the strategic decisionmaking 'rocess to the strateg$ the$ used (orseeking a )o* a(ter graduation /id the$ gothrough all the ste's% #h$ or "h$ not% /idtheir strateg$ change as the$ "ere looking% #h$%

IIB S(%%ar&

A**end@ A: >sng The Market

Attra!t,eness9Co%*ett,e 5ostonMatr@

here are si steps in #sin$ the matri to

eva!#ate opport#nities "or strate$iinvestments:

1% e"ine the strate$i opport#nities to 'e

eva!#ated%

2% .denti"y key "ators determinin$ market

attrativeness and the retai!er(s ompetitive

position%

3% /ssi$n )ei$hts to eah "ator #sed to

determine market attrativeness andompetitive position%

=% @ate eah strate$i investment

opport#nity on the attrativeness o" itsmarket and the retai!er(s ompetitive position

See PPT 5-45 to 5-55

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in that market%

-% Ca!#!ate eah opport#nity(s sore "or

market attrativeness and ompetitiveposition%

% J!ot eah opport#nity on the matri%

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ANS?ERS T- DISC>SSI-N K>ESTI-NS AND 5R-'LEMS

.B $or ea!h of the fo(r reta#ers ds!(ssed at the 0egnnng of the !ha*ter des!r0e ther strateg&and 0ass of !o%*ett,e ad,antageB

Loh!(s Corporation attempts to #ti!ize the 'est "eat#re o" department stores )ith those o" diso#ntstores% he merhandise and 'rands o""ered are those that may 'e avai!a'!e at department stores,'#t the onveniene, in!#din$ !oation and store desi$n "ators are simi!ar to those in diso#ntstores% hey retain a ompetitive advanta$e in terms o" attratin$ #stomers to !oations a)ay"rom the ma!!, and there'y pre!#din$ ons#mers "rom prie omparison shoppin$% ;o)ever, inorder to keep on attratin$ #stomers to s#h a)ay*"rom*ma!! !oations, Loh!(s ens#res that aessto the store as )e!! as to the merhandise )ithin is as onvenient as possi'!e%

@estoration ;ard)are tar$et a nihe market o" )ea!thy ons#mers )i!!in$ to spend money onnosta!$i and hi$h prie home "#rnishin$s% he merhandise assortment o" )himsia!, nosta!$iand retro items ens#res ompetitive di""erentiation "rom other retai!ers in the area%

Chio(s speia!izes in om"orta'!e, easy*to*)ear appare! desi$ned "or )omen in the a$e $ro#p o"3-*-- years o!d% he ompany se!!s on!y its o)n 'rand and has omp!ete ontro! over its s#pp!yhain% he emphasis on private !a'e!s, a stron$ #stomer !oya!ty pro$ram, and a hi$h*#a!ity#stomer servie )ith emphasis on person*to*person re!ationship )ith eah #stomer, di""erentiatethe retai!er "rom other ompetitors, and ens#re not on!y repeat sa!es, '#t a!so a hi$her transationsize amon$ its !oya! patrons%

Star'#ksA tar$et market are those peop!e )ho appreiate $o#rmet o""ee and a ertain a"*sty!e!i"esty!e% heir primary retai! "ormat remains their retai! stores, either individ#a!!y !oated or!oated )ithin other stores, s#h as Barnes & 4o'!e, and other nontraditiona! !oations, s#h asairports, o!!e$e amp#ses and )ithin airp!anes% hey have a ompetitive advanta$e )ith their!oya! #stomers, '#t a!so provide servie to #stomers 'y in"ormin$ and ed#atin$ them a'o#to""ee and re!ated prod#ts%

B ?hat a**roa!hes !an a reta#er (se to de,e#o* a !o%*ett,e ad,antage

here are seven 'asi approahes "or retai!ers to deve!op a s#staina'!e ompetitive advanta$e%hese in!#de: >1? #stomer !oya!ty, >2? !oation, >3? h#man reso#re mana$ement, >=? distri'#tionand in"ormation systems, and >7? #stomer servie%

Dustomer Co$alt$:.n order to keep #stomers ommitted to shoppin$ at their store>s?, retai!ers an'#i!d #stomer !oya!ty 'y >1? emphasizin$ a #ni#e positionin$, and >2? deve!opin$ !oya!typro$rams% or eamp!e, #stomers an try to desi$n a retai! mi that reates an ima$e in the#stomerAs mind o" the store, )hih )i!! keep them ommitted to the store% C@?pro$ram, and maintainin$ and ana!yzin$ #stomer p#rhasin$ data, retai!ers an deve!op strate$iesthat )o#!d reate and maintain a !oya! #stomer 'ase%

Cocation: oation is one o" the most important "ators in retai!in$% or eamp!e, i" a retai!er isthe on!y one o" its kind in a ertain area, or is set in a hi$h!y tra""iked area )ith a visi'!e store"ront, the store has a ompetitive advanta$e over its ompetitors%

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senior itizen and or st#dent diso#nts?%

/iersi(ication: Bak)ard inte$ration into e!etronis man#"at#re )o#!d represent a re!ateddiversi"iation strate$y "or Cir#it City, )hi!e openin$ retai! stores "or a#tomo'i!e servie andrepair )o#!d represent an #nre!ated diversi"iation strate$y%

4B Draw and e@*#an a *ostonng %a* #ke the one shown n E@h0t 93 for the reta#ers and!(sto%er seg%ents dea# *onts for &o(r fa,orte reta#erB

St#dentsA ans)ers )i!! depend on the market in )hih they !ive and their pre"erene o" retai!er% ora 'iy!e retai!er, the dimensions o#!d 'e: ;i$h prieservie and !o) prieservie "or onedimension and 'road assortment >mo#ntain 'ikes, road 'ikes, tandems, kids, !ots o" aessories?and narro) assortment >road 'ikes on!y? on the other dimension%

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B Do a st(aton ana#&ss for M!Dona#dsB ?hat s ts %sson ?hat are ts strengths andweaknesses ?hat en,ron%enta# threats %ght t fa!e o,er the ne@t ./ &ears +ow !o(#d t*re*are for these threats

ona!ds( mission is to provide hy$ieni "ood )ith the minim#m )aitin$ time to #stomersthro#$h onvenient!y !oated o#t!ets%

Its strengths include:8e!! kno)n 'rand name )ith a !oya! $ro#p o" #stomers%Consisteny in o""erin$ over time and at di""erent !oation% hey mi$ht not have the 'est "ood, '#t

yo# kno) )hat yo# are $ettin$ )hen yo# $o to a ona!d(s%Ee!!ent systems "or de!ivery a !imited men# )ith onsistent #a!ity and !o) ost%Ee!!ent !oations aross the 6S and )or!d%

Some weaknesses include:4arro) men# optionimited #stomization option patrons typia!!y do not have the option to #stomize a spei"i

item >e%$%, a ham'#r$er )ith more onions, !ess !ett#e, more 'ee", et%?ast "oods, in $enera!, may not 'e pereived to 'e n#tritio#s or hea!thy 'y some ons#mers,

there"ore !imitin$ "#t#re market epansion%

Environmental ThreatsJeop!e 'eome more hea!th onsio#s a'o#t )hat they eatin$%o prepare "or this, ona!d(s mi$ht add more hea!thy items to the men# !ike ve$$ie '#r$ers and

sa!ads%he #a!ity and onveniene o" "rozen "ood mi$ht make it easy "or peop!e prepare a #ik "rozen

mea! at home or at the o""ie% o prepare "or this threat, ona!d(s mi$ht se!! "rozenmea!s in $roery stores%

6B ?hat are Ne%an Mar!(s7 and Saks $fth A,en(e7s 0ases for s(stana0#e !o%*ett,ead,antage Are the& rea##& s(stana0#e

4eiman ar#s and Saks i"th /ven#e o""er etensive servie and stok "ashion merhandise thato#!d 'e a!!ed "ashion "or)ard, sine these may 'e o""ered "irst andor e!#sive!y at theseretai!ers% heir pries are hi$her than those har$ed 'y other retai!ers "or simi!ar prod#tate$ories, '#t 'oth 4eiman ar#s and Saks i"th /ven#e ater to a )ea!thier than avera$e tar$etmarket o" #stomers "or )hom "ashion and servie may 'e more important than !o) prie%

he m#!tip!e 'ases "or ompetitive advanta$es #sed 'y 4eiman ar#s and Saks are #ni#epositionin$, !oation in #psa!e ma!!s or nei$h'orhoods so as to 'e !oser to tar$et marketse$ments, #ni#e merhandise, and a heavy emphasis on #stomer servie% he om'ination o"these so#res o" ompetitive advanta$es make their strate$y #ite s#staina'!e%

B Ass(%e &o( are nterested n o*enng a resta(rant n &o(r townB Go thro(gh the ste*s n thestrateg! *#annng *ro!ess shown n E@h0t 9B $o!(s on dong a st(aton a(dt of the #o!a#resta(rant %arket dentf&ng a#ternat,es e,a#(atng a#ternat,es and se#e!tng a target%arket and a reta# %@ for the resta(rantB

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>1? e"ine the B#sinessAs mission: ookin$ to 'e in the .ta!ian resta#rant '#siness, my tar$etmarket )o#!d 'e those #stomers in the my !oa! to)n and s#rro#ndin$ to)ns interested in payin$money "or an a#thenti .ta!ian mea! in a romanti settin$% he mission o" this resta#rant )o#!d 'eto have hi$h #a!ity "ood, in a romanti settin$, )hi!e avoidin$ 'ein$ too epensive "or thoseinterested in a speia! mea!%

>2? Cond#t a sit#ation a#dit: arket ators in!#de, the size o" the market interested in .ta!ian"ood and the $ro)th potentia! o" this parti#!ar market% Competitive "ators in!#de ho) hard it isto enter the .ta!ian @esta#rant arket in!#din$ the start #p osts, and the amo#nt o" other .ta!ian@esta#rants in the area a!on$ )ith a!ternatives% he environmenta! "ators )o#!d in!#de the soia!and eonomi% / setion o" the resta#rant '#siness "o#ses on the soia! aspet o" dinin$ o#t% .sthere a $ro)in$ trend in those peop!e eatin$ o#tR 8ith the shi"tin$ ro!es o" )omen in soiety, thereis o"ten !ess time "or ookin$, )hih may in t#rn inrease dinin$ o#t% he eonomy is a!so in a'oom, and peop!e have etra money to spend on dinin$ o#t% he ana!ysis o" stren$ths and)eaknesses a!!o)s a retai!er to K#d$e their potentia! s#ess% he stren$ths and )eaknesses in thissit#ation o#!d in!#de my "inania! reso#res, the avai!a'i!ity o" a $ood !oation, my resta#rantmana$ement eperiene, my need to '#i!d #stomer !oya!ty, and my prospets o" $ood operations%

>3? .denti"y Strate$i -? Esta'!ish Spei"i ? eve!op a @etai! mi to imp!ement strate$y: >erhandise and servies o""ered, merhandisepriin$, advertisin$ and promotiona! pro$rams, store desi$n, and onveniene o" the storeAs!oation?: he resta#rant )i!! o""er a !ar$e variety o" .ta!ian dishes )ith a !ar$e eperiene )aitin$sta"", the priin$ )i!! 'e medi#m to hi$h to attrat the #psa!e #stomer and sho) the va!#e o" the"ood, the advertisin$ )i!! start )ith p#'!iity on the openin$ o" the '#siness and then "o#s on )ordo" mo#th, promotiona! pro$rams may 'e imp!emented to those "re#ent eaters, store desi$n )i!! 'esma!!, e!e$ant, and romanti )ith many ta'!es "or t)o and private ta'!es, and the !oation )o#!d 'ein a do)nto)n area% /"ter this strate$y is imp!emented, a retai! mi an 'e deve!oped "or the$ro)th opport#nities%

>7? Eva!#ate Jer"ormane and ake /dK#stments: he "ina! step o" the p!annin$ proess iseva!#atin$ the res#!ts o" the strate$y and imp!ementation pro$ram%

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"B ?a#t Dsne& CoB s s*#ttng ts Dsne& Stores !han nto two se*arate reta# !on!e*tsB The frstgro(* Dsne& 5#a& s a%ed at kdsB The se!ond gro(* Dsne& Hds at +o%e s targetedtoward *arents wth a greater fo!(s on a**are# and #feste goods #ke sheets f(rnt(re and%rrors for kdsB Do &o( 0e#e,e ths s a good strateg&

/dvanta$es o" s#h a strate$y in!#des a "o#sed attention on merhandise at eah store, )hih

ena'!es the tar$et market "or eah to se!"*se!et the store they need "or the merhandise they desire%oreover, a "o#sed merhandisin$ strate$y )o#!d he!p isney train and assi$n emp!oyees most"ami!iar )ith the spei"i types o" prod#ts toys and !othin$ "or kids, vers#s home deoratin$and "#rnit#re "or kids% Better and "o#sed #stomer servie o#!d 'e provided at eah !oation andisney )o#!d 'e a'!e to trak and mana$e distri'#tion, operationa! e""iienies and #stomerp#rhasin$ in"ormation 'etter "or eah o" these 'road prod#t types more easi!y% ;o)ever, thedisadvanta$e in!#des the "at that "re#ent!y #stomers may )ish to o'tain 'oth types o" prod#tsat the same time, i%e,, toys as )e!! as "#rnit#re "or their kids% he strate$y )o#!d provide enhanedonveniene to #stomers i" 'oth stores are !oated adKaent to eah other% or eamp!e, Gap andGap Lids are "re#ent!y !oated !oser to eah other in most markets%

)B Identf& a store or ser,!e *ro,der that &o( 0e#e,e has an effe!t,e #o&a#t& *rogra%B E@*#anwh& t s effe!t,eB

/n eamp!e that )o#!d readi!y ome to mind to most st#dents are "re#ent "!yer pro$rams o"vario#s air!ines% any air!ines not on!y a)ard "re#ent "!yer mi!es on air!ine trave! '#t a!so arryo#t these pro$rams in partnership )ith redit ard ompanies and retai!ers% or eamp!e,ons#mers an earn e!ta Skyi!es )hen they har$e their p#rhases to /merian Epress, or dia!!on$ distane #sin$ /&% he e""etiveness o" s#h pro$rams depend on the etent to )hih thereare vario#s !eve!s o" re)ards and 'on#ses and the m#!tip!e opport#nities to earn points to)ards are)ard%

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irst, at the time o" )ritin$, /mazon%om has on!y sho)n modest pro"its% So the iss#e o"pro"ita'i!ity )i!! 'e dis#ssed in re!ative terms%

Music, lectronics and /H/s: hese $ro)th opport#nities )i!! most !ike!y 'e pro"ita'!e 'ea#se,!ike 'ooks, they do not need to 'e to#hed and "e!t to '#y them% ost #stomers )i!! "ee! veryom"orta'!e orderin$ these t)o ate$ories over the .nternet )itho#t previo#s vie)in$ or eperiene%

/mazon%om )i!! 'rin$ a ompetitive advanta$e to se!!in$ these items main!y thro#$h their namereo$nition over many other dot%om ompanies% /!so, /mazon has an amazin$ data'ase systemthat )i!! 'e a'!e to 'etter tar$et their #stomers and keep trak o" their p#rhases% /mazonAsdistri'#tion system )i!! 'e a'!e to de!iver the $oods in minima! time at a minima! ost%

So(t"are: Sine so"t)are is an in"ormation prod#t, even the distri'#tion o" the prod#t o#!d 'eover the .nternet% h#s, instead o" ost!y paka$in$ and stokin$ at retai! stores, /mazon o#!dsimp!y o""er the prod#t "or immediate do)n!oad, there'y a!so providin$ the immediate$rati"iation that is typia!!y !akin$ "or most prod#ts p#rhased over the .nternet% he !o)erosts o" distri'#tion o#p!ed )ith the a!ready !o)er osts o" operations, o#!d render this ate$ory#ite pro"ita'!e "or /mazon% ;o)ever, !ar$er so"t)are man#"at#rers, s#h as iroso"t, /do'e,@ea! 4et)orks, Broder'#nd, et% a!ready have their o)n retai! and distri'#tion site and may #se/mazon on!y "or epansion to market se$ments that they are not #rrent!y servin$%

nternet Trael Site: his market epansion to a ne) servie has its stren$ths and )eaknesses%/mazon may attrat a !ar$er #stomer 'ase 'y o""erin$ this ne) servie% ;o)ever, most trave!,in!#din$ air!ine trave! is no) vie)ed as a ommodity, )ith ons#mers o"ten deidin$ more onprie than on 'rand name% here is more intense ompetition and the pries may not 'e m#h!o)er on /mazon(s site as ompared to those o""ered diret!y 'y the servie providers%

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ANCILLARY LECT>RES AND EFERCISES

/ni!!ary Eerise

6se JJ -*7 to dis#ss ona!d(s strate$y, ana!yze its ompetitive position, and the potentia! threats it"aes%

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K(eston 5otenta# Res*onses

8hat is ona!d(s tar$et marketR 8hi!e ona!d(s has a 'road market, its prinip!etar$et market is pro'a'!y "ami!ies )ith yo#n$hi!dren% /nother market mi$ht 'e peop!e on the $oho) need to pik #p somethin$ to eat as they $o

"rom on task or appointment to another%

8hat is ona!d(s o""er >retai! "ormat in the!an$#a$e #sed in the tet?R

he initia! response )i!! pro'a'!y 'e the 'ene"itsthat ona!d(s o""ers its #stomers s#h asonveniene, !o) prie mea!, and pro'a'!y the'i$$est 'ene"it is onsisteny% .t mi$ht not 'e the'est ham'#r$er, '#t it )i!! not 'e the )orstit )i!!typia!!y 'e the same "rom !oation to !oation%

;o)ever, at a strate$i !eve! )hat ona!d(s isprovidin$ is "ast "ood"ood that an 'e prepared)ith an ind#stria!*!ike proessa proess that doesnot re#ired ski!!ed emp!oyees >he"s?%

8hat is ona!d(s 'asis o" ompetitiveadvanta$eR

a )e!! reo$nized and hi$h!y re$arded

internationa! 'rand name

#stomer !oya!ty arisin$ "rom the

onsisteny )ith )hih its servie isprovided

$ood !oations

a ski!! in providin$ #sin$ an ind#stria!*!ike

proess to provide a hi$h!y onsistent "oodo""erin$

8hat $ro)th opport#nities mi$ht ona!d(sonsiderR

market penetrationinrease mea!s served at

'reak"ast and dinner to the same #stomer thateat at !#nh% Get more #stomers to '#y renh"ires )hen they '#y a ham'#r$er% Se!! "ood theparents )hen they 'rin$ kids in "or a mea!%

market etensionepand to more o#ntries in

the )or!d%

retai! "ormat etensiondrive in one*ho#r "i!mproessin$ stores

8hat threats does ona!d(s "aeR ona!ds is rea!!y in a stron$ ompetitive positionand its is #n!ike!y that "irms #sin$ simi!ar "ormats!ike B#r$er Lin$ and 8endy(s )i!! 'e a'!e toserio#s!y ha!!en$e ona!ds "or ind#stry!eadership%

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;o)ever, there mi$ht 'e threats in the environments#h as peop!e 'eomin$ more hea!th onsio#s andde!ine to eat "ast "ood%

/nother threat mi$ht 'e the deve!opment o" hi$her#a!ity take*o#t "ood "rom a onvenient !oation andthe hi$her #a!ity "rozen "ood%

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N-TES