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McGraw-Hill Companies, The
Retailing Management / Edition 6

Retailing Management / Edition 6

by Michael Levy
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    ISBN-13: 2900073019788
    Publisher: McGraw-Hill Companies, The
    Publication date: 04/28/2006
    Edition description: Older Edition
    Pages: 688
    Product dimensions: 6.00(w) x 1.25(h) x 9.00(d)

    About the Author

    Michael Levy received an undergraduate and M.S. degrees in business administration from the University of Colorado at Boulder and a Ph.D. in business administration from Ohio State University. He is the Charles Clarke Reynolds Professor of Marketing Emeritus at Babson College and CEO of RetailProf LLC. Dr. Levy received the inaugural ACRA Academic Lifetime Achievement Award; the 2009 Lifetime Achievement Award, American Marketing Association, Retailing Special Interest Group; the Babson Faculty Scholarship Award; and the Distinguished Service Award, Journal of Retailing. Marketing Educator rated him one of the best researchers in marketing. Dr. Levy has published more than 50 articles in leading marketing and logistics journals and is co-author of the sixth edition of Marketing. He has performed research projects with major retailers and retail technology firms, including Accenture, Federated Department Stores, Khimetrics, Mervyn’s, Neiman Marcus, ProfitLogic, and Zale Corp.

    Barton A. Weitz received an undergraduate degree in electrical engineering from MIT and an M.B.A. and Ph.D. in business administration from Stanford University. He was a member of the faculty at the University of California–Los Angeles Graduate School of Business and the Wharton School at the University of Pennsylvania and is JCPenney Emeritus Eminent Scholar Chair in Retail Management in the Warrington College of Business Administration at the University of Florida (UF). Dr. Weitz founded the UF David F. Miller Center for Retailing Education and Research, which is supported by contributions from JCPenney, Macy’s, Walmart, Office Depot, and Home Depot. He has won awards for teaching excellence and published in leading academic journals on channel relationships, electronic retailing, store design, salesperson effectiveness, and sales force and human resource management. Dr. Weitz is past chair of the American Marketing Association and was honored as the AMA/Irwin Distinguished Educator.

    Dhruv Grewal received a Ph.D. from Virginia Tech and is the Toyota Chair in Commerce and Electronic Business and professor of marketing at Babson College. His academic interests focus is on marketing foundations and research, retailing, pricing, and value-based strategies. Dr. Grewal was awarded the 2005 Lifetime Achievement in Behavioral Pricing Award by Fordham University and was listed in the World's Most Influential Scientific Minds by Thomson Reuters in 2014. He is a coauthor of Marketing Research, has published more than 70 articles in leading journals, and serves on numerous editorial boards. Dr. Grewal is a recipient of the 2005 Sherwin-Williams Distinguished Teaching Award, SMA; 2003 AMA Award for Innovative Excellence in Marketing Education; 1999 AMS Great Teachers in Marketing Award; and 1998 Executive MBA Teaching Excellence Award. He has taught executive seminars and joined in research with numerous firms, including IRI, TJX, Radio Shack, Monsanto, McKinsey, and Motorola.

    Table of Contents

    The World of Retailing
    Introduction to the World of Retailing     4
    What Is Retailing?     6
    A Retailer's Role in a Supply Chain     7
    Retailers Create Value     7
    Social and Economic Significance of Retailing     9
    Social Responsibility     9
    Retail Sales     9
    Employment     9
    Global Retailers     9
    Structure of Retailing and Supply Chains around the World     11
    Opportunities in Retailing     13
    Management Opportunities     13
    Entrepreneurial Opportunities     13
    The Retail Management Decision Process     15
    Understanding the World of Retailing-Section I     15
    Developing a Retail Strategy-Section II     17
    JCPenney Moves from Main Street to the Mall     19
    Implementing the Retail Strategy-Sections III and IV     21
    Whole Foods Market: An Organic and Natural Food Supermarket Chain     21
    Ethical and Legal Considerations     23
    Summary     25
    Key Terms     25
    Get Out and Do It!     25
    Discussion Questions and Problems     26
    Suggested Readings     26
    Careers in Retailing     26
    Sources of Information about Retailing     30
    Types of Retailers     34
    Retailer Characteristics     36
    Type of Merchandise     36
    Variety and Assortment     37
    Services Offered     39
    Prices and the Cost of Offering Breadth and Depth of Merchandise and Services     39
    Food Retailers     40
    Supermarkets     41
    Supercenters     44
    Warehouse Clubs     45
    Convenience Stores     46
    General Merchandise Retailers     47
    Department Stores     47
    Full-Line Discount Stores     49
    Specialty Stores     49
    Drugstores     51
    Category Specialists     51
    Extreme Value Retailers     53
    Off-Price Retailers     53
    Nonstore Retailers     55
    Electronic Retailers     55
    Catalog and Direct-Mail Retailers     55
    Direct Selling     57
    Television Home Shopping     57
    Vending Machine Retailing     58
    Services Retailing     59
    Differences between Services and Merchandise Retailers     60
    Types of Ownership      62
    Independent, Single-Store Establishments     62
    Corporate Retail Chains     63
    Franchising     63
    Summary     65
    Key Terms     65
    Get Out and Do It!     65
    Discussion Questions and Problems     66
    Suggested Readings     67
    Comparison Shopping     67
    Multichannel Retailing     70
    Retail Channels for Interacting with Customers     72
    Store Channel     72
    Catalog Channel     74
    Internet Channel     74
    Evolution toward Multichannel Retailing     83
    Overcoming the Limitations of an Existing Format     83
    Capabilities Needed for Multichannel Retailing     85
    Who Has These Critical Resources?     86
    Will Manufacturers Bypass Retailers and Sell Directly to Consumers?     87
    Which Channel Is the Most Profitable?     88
    Issues in Multichannel Retailing     88
    Integrated Shopping Experience     89
    Brand Image     89
    Merchandise Assortment     90
    Pricing     91
    Shopping in the Future     91
    Shopping Experience     91
    Supporting the Shopping Experience      92
    Summary     93
    Key Terms     93
    Get Out and Do It!     93
    Discussion Questions and Problems     94
    Suggested Readings     94
    Customer Buying Behavior     96
    The Buying Process     98
    Need Recognition     99
    Information Search     102
    Evaluation of Alternatives: The Multiattribute Model     105
    Purchasing the Merchandise or Service     110
    Postpurchase Evaluation     111
    Types of Buying Decisions     111
    Extended Problem Solving     111
    Limited Problem Solving     111
    Habitual Decision Making     112
    Social Factors Influencing the Buying Process     113
    Family     113
    Reference Groups     114
    Culture     114
    Market Segmentation     116
    Criteria for Evaluating Market Segments     116
    Approaches for segmenting Markets     117
    Composite Segmentation Approaches     123
    Summary     123
    Key Terms     124
    Get Out and Do It!     124
    Discussion Questions and Problems     125
    Suggested Readings      126
    Customer Buying Behavior and Fashion     126
    Retailing Strategy
    Retail Market Strategy     132
    What Is a Retail Strategy?     134
    Definition of Retail Market Strategy     134
    Target Market and Retail Format     135
    Building a Sustainable Competitive Advantage     137
    Customer Loyalty     138
    Location     140
    Human Resource Management     141
    Distribution and Information Systems     141
    Unique Merchandise     141
    Vendor Relations     142
    Customer Service     142
    Multiple Sources of Advantage     142
    Growth Strategies     144
    Market Penetration     144
    Market Expansion     145
    Retail Format Development     145
    Diversification     145
    Strategic Opportunities and Competitive Advantage     146
    Global Growth Opportunities     146
    Who Is Successful and Who Isn't?     146
    Keys to Success     148
    Evaluating Global Growth Opportunities     150
    Entry Strategies     152
    The Strategic Retail Planning Process     153
    Define the Business Mission      154
    Conduct a Situation Audit     154
    Identify Strategic Opportunities     159
    Evaluate Strategic Opportunities     159
    Establish Specific Objectives and Allocate Resources     159
    Develop a Retail Mix to Implement Strategy     159
    Evaluate Performance and Make Adjustments     159
    Strategic Planning in the Real World     160
    Summary     161
    Key Terms     161
    Get Out and Do It!     161
    Discussion Questions and Problems     162
    Suggested Readings     162
    Using the Market Attractiveness/Competitive Position Matrix     163
    Financial Strategy     166
    Objectives and Goals     168
    Financial Objectives     168
    Societal Objectives     168
    Personal Objectives     169
    Strategic Profit Model     169
    Profit Margin Management Path     171
    Asset Management Path     176
    Return on Assets     179
    Illustration: Kelly Bradford's Evaluation of the Growth Opportunity     181
    Setting and Measuring Performance Objectives     184
    Top-Down versus Bottom-Up Process     185
    Accountable for Performance      185
    Performance Objectives and Measures     186
    Types of Measures     186
    Assessing Performance: The Role of Benchmarks     188
    Summary     190
    Key Terms     190
    Get Out and Do It!     190
    Discussion Questions and Problems     191
    Suggested Readings     191
    Retail Locations     192
    Types of Locations     194
    Unplanned Retail Locations     195
    Freestanding Sites     195
    City or Town Locations     196
    Shopping Centers     199
    Neighborhood and Community Shopping Centers     200
    Power Centers     201
    Shopping Malls     201
    Lifestyle Centers     204
    Fashion/Specialty Centers     205
    Outlet Centers     205
    Theme/Festival Centers     207
    Larger, Multiformat Developments-Omnicenters     207
    Mixed Use Developments     207
    Other Location Opportunities     208
    Airports     209
    Temporary Locations     209
    Resorts     210
    Store within a Store     210
    Location and Retail Strategy     210
    Shopping Behavior of Consumers in Retailer's Target Market     210
    Size of Target Market     212
    Uniqueness of Retail Offering     212
    Legal Considerations     213
    Environmental Issues     213
    Zoning and Building Codes     213
    Summary     214
    Key Terms     214
    Get Out and Do It!     214
    Discussion Questions and Problems     215
    Suggested Readings     215
    Retail Site Location     216
    Evaluating Specific Areas for Locations     218
    Economic Conditions     218
    Competition     219
    Strategic Fit     220
    Operating Costs     220
    Number of Stores in an Area     221
    Economies of Scale from Multiple Stores     221
    Cannibalization     221
    Evaluating a Site for Locating a Retail Store     222
    Site Characteristics     222
    Traffic Flow and Accessibility     223
    Location Characteristics     224
    Restrictions and Costs     225
    Locations within a Shopping Center     225
    Trade Area Characteristics     227
    Trade Area Definition     227
    Factors Affecting the Size of the Trade Area     228
    Measuring the Trade Area for a Retail Site     229
    Sources of Information about the Trade Area     230
    Competition in the Trade Area     234
    Estimating Potential Sales for a Store Site     235
    Huff Gravity Model     235
    Regression Analysis     237
    Analog Approach     238
    Illustration of Site Selection: Edward Beiner Optical     238
    Competitive Analysis     239
    Define Present Trade Area     239
    Trade Area Characteristics     240
    Match Characteristics of Present Trade Area with Potential Sites     241
    Negotiating a Lease     241
    Types of Leases     241
    Terms of the Lease     242
    Summary     243
    Key Terms     243
    Get Out and Do It!     244
    Discussion Questions and Problems     244
    Suggested Readings     245
    Human Resource Management     246
    Gaining Competitive Advantage Through Human Resource Management     248
    Objectives of Human Resource Management     248
    The Human Resource Triad     250
    Special HR Conditions Facing Retailers     250
    Designing the Organization Structure for a Retail Firm     252
    Matching Organization Structure to Retail Strategy     253
    Organization of a Single-Store Retailer     253
    Organization of a National Retail Chain     255
    Organization Structures of Other Types of Retailers     259
    Retail Organization Design Issues     259
    Centralization versus Decentralization     259
    Coordinating Merchandise and Store Management     260
    Winning the Talent War     261
    Attracting Talent: Employment Marketing     262
    Developing Talent: Selection and Training     262
    Motivating Talent: Aligning Goals     263
    Keeping Talent: Building Employee Commitment     266
    Issues in Retail Human Resource Management     269
    Managing Diversity     269
    Legal and Regulatory Issues in Human Resource Management     270
    Use of Technology     273
    Summary     273
    Key Terms     273
    Get Out and Do It!     274
    Discussion Questions and Problems     275
    Suggested Readings     275
    Information Systems and Supply Chain Management     276
    Creating Strategic Advantage Through Supply Chain Management and Information Systems      278
    Improved Product Availability     279
    Higher Return on Investment     279
    Strategic Advantage     280
    Information Flows     282
    Data Warehouse     284
    Electronic Data Interchange     285
    Pull and Push Supply Chains     286
    The Physical Flow of Merchandise-Logistics     287
    Distribution Centers versus Direct Store Delivery     287
    The Distribution Center     289
    Reverse Logistics     292
    Logistics for Fulfilling Catalog and Internet Orders     292
    Outsourcing Logistics     293
    Collaboration Between Retailers and Vendors in Supply Chain Management     295
    Using EDI     296
    Sharing Information     296
    Vendor-Managed Inventory     297
    Collaborative Planning, Forecasting, and Replenishment     299
    Radio Frequency Identification (RFID)     299
    Benefits of RFID     301
    Impediments to the Adoption of RFID     301
    Summary     302
    Key Terms     302
    Get Out and Do It!     303
    Discussion Questions and Problems     303
    Suggested Readings     303
    Customer Relationship Management     304
    The CRM Process     306
    What Is Loyalty?     306
    Overview of the CRM Process     308
    Collecting Customer Data     308
    Customer Database     308
    Identifying Information     309
    Privacy and CRM Programs     311
    Analyzing Customer Data and Identifying Target Customers     313
    Identifying the Best Customers     314
    Developing CRM Programs     318
    Customer Retention     318
    Converting Good Customers into Best Customers     321
    Dealing with Unprofitable Customers     322
    Implementing CRM Programs     323
    Summary     324
    Key Terms     324
    Get Out and Do It!     324
    Discussion Questions and Problems     325
    Suggested Readings     325
    Merchandise Management
    Managing Merchandise Assortments     328
    Merchandise Management Process Overview     330
    The Buying Organization     330
    Merchandise Category-The Planning Unit     332
    Evaluating Merchandise Management Performance-GMROI     334
    Managing Inventory Turnover     336
    Merchandise Management Process      337
    Types of Merchandise Management Planning Processes     338
    Forecasting Sales     340
    Category Life Cycles     340
    Forecasting Staple Merchandise     342
    Forecasting Fashion Merchandise Categories     345
    Sales Forecasting for Service Retailers     348
    Developing an Assortment Plan     349
    Category Variety and Assortment     349
    Determining Variety and Assortment     349
    Setting Inventory and Product Availability Levels     352
    Product Availability     352
    Summary     353
    Key Terms     354
    Get Out and Do It!     354
    Discussion Questions and Problems     354
    Suggested Readings     355
    Merchandise Planning Systems     356
    Staple Merchandise Management Systems     359
    The Inventory Management Report     360
    Fashion Merchandise Management Systems     362
    Monthly Sales Percentage Distribution to Season (Line 1)     362
    Monthly Sales (Line 2)     363
    Monthly Reductions Percentage Distribution to Season (Line 3)     363
    Monthly Reductions (Line 4)     364
    BOM (Beginning-of-Month) Stock-to-Sales Ratio (Line 5)      364
    BOM Stock (Line 6)     366
    EOM (End-of-Month) Stock (Line 7)     366
    Monthly Additions to Stock (Line 8)     367
    Evaluating the Merchandise Budget Plan     367
    Open-to-Buy System     367
    Calculating Open-to-Buy for the Current Period     368
    Allocating Merchandise to Stores     369
    Amount of Merchandise Allocated to Each Store     370
    Type of Merchandise Allocated to Stores     370
    Timing of Merchandise Allocations to Stores     371
    Analyzing Merchandise Management Performance     373
    Sell-Through Analysis Evaluating Merchandise Plan     373
    Evaluating the Assortment Plan and Vendors     373
    Summary     377
    Key Terms     377
    Get Out and Do It!     377
    Discussion Questions and Problems     378
    Suggested Readings     379
    Retailing Inventory Method     379
    Buying Merchandise     382
    Brand Alternatives     384
    National Brands     384
    Private-Label Brands     385
    Buying National Brand Merchandise     390
    Meeting National Brand Vendors     390
    National Brand Buying Process      392
    Developing and Sourcing Private-Label Merchandise     392
    Developing Private-Label Merchandise     392
    Sourcing Merchandise     394
    Global Sourcing     394
    Support Services for Buying Merchandise     395
    Resident Buying Offices     395
    Retail Exchanges     396
    Negotiating with Vendors     396
    Knowledge Is Power     397
    Negotiation Issues     398
    Tips for Effective Negotiating     399
    Strategic Relationships     401
    Defining Strategic Relationships     401
    Maintaining Strategic Relationships     402
    Building Partnering Relationships     403
    Legal and Ethical Issues for Buying Merchandise     404
    Summary     409
    Key Terms     409
    Get Out and Do It!     410
    Discussion Questions and Problems     410
    Suggested Readings     411
    Retail Pricing     412
    Considerations in Setting Retail Prices     414
    Customer Price Sensitivity and Cost     414
    Competition     416
    Legal and Ethical Pricing Issues     418
    Setting Retail Prices     420
    Setting Prices Based on Costs     420
    Merchandising Optimization Software     422
    Profit Impact of Setting a Retail Price: The Use of Break-Even Analysis     422
    Price Adjustments     423
    Markdowns     424
    Variable Pricing and Price Discrimination     427
    Pricing Strategies     431
    High/Low Pricing     431
    Everyday Low Pricing     432
    Advantages of the Pricing Strategies     432
    Pricing Services     433
    Matching Supply and Demand     433
    Determining Service Quality     435
    Pricing Techniques for Increasing Sales     435
    Leader Pricing     435
    Price Lining     435
    Odd Pricing     436
    The Internet and Price Competition     437
    Summary     437
    Key Terms     438
    Get Out and Do It!     438
    Discussion Questions and Problems     439
    Suggested Readings     439
    Retail Communication Mix     440
    Using Communication Programs to Develop Brand Images and Build Customer Loyalty     442
    Value of Brand Image     442
    Building Brand Equity     443
    Extending the Brand Name      447
    Methods of Communicating with Customers     447
    Paid Impersonal Communications     447
    Paid Personal Communications     451
    Unpaid Impersonal Communications     452
    Unpaid Personal Communications     453
    Strengths and Weaknesses of Communication Methods     455
    Planning the Retail Communication Program     457
    Establish Objectives     457
    Determine the Communication Budget     459
    Allocation of the Promotional Budget     463
    Plan, Implement, and Evaluate Communication Programs-Three Illustrations     463
    Summary     465
    Key Terms     465
    Get Out and Do It!     466
    Discussion Questions and Problems     466
    Suggested Readings     467
    Implementing Retail Advertising Programs     467
    Store Management
    Managing the Store     474
    Store Management Responsibilities     476
    Recruiting and Selecting Store Employees     477
    Job Analysis     477
    Job Description     478
    Locating Prospective Employees     478
    Screening Applicants to Interview     479
    Selecting Applicants     480
    Legal Considerations in Selecting and Hiring Store Employees     481
    Orientation and Training Programs for New Store Employees     482
    Orientation Programs     482
    Training Store Employees     483
    Motivating and Managing Store Employees     485
    Leadership     485
    Motivating Employees     486
    Setting Goals or Quotas     487
    Maintaining Morale     488
    Sexual Harassment     489
    Evaluating Store Employees and Providing Feedback     490
    Who Should Do the Evaluation?     490
    How Often Should Evaluations Be Done?     490
    Format for Evaluations     491
    Evaluation Errors     492
    Compensate and Reward Store Employees     492
    Extrinsic Rewards     493
    Intrinsic Rewards     493
    Compensation Programs     494
    Designing the Compensation Program     495
    Legal Issues in Compensation     496
    Controlling Costs     496
    Labor Scheduling     497
    Green and Energy-Efficient Stores     498
    Store Maintenance     498
    Reducing Inventory Shrinkage     499
    Calculating Shrinkage     499
    Organized and High-Tech Retail Theft     499
    Detecting and Preventing Shoplifting     500
    Reducing Employee Theft     501
    Summary     503
    Key Terms     503
    Get Out and Do It!     504
    Discussion Questions and Problems     504
    Suggested Readings     505
    Store Layout, Design, and Visual Merchandising     506
    Store Design Objectives     508
    Store Design and Retail Strategy     508
    Influence Customer Buying Behavior     509
    Flexibility     510
    Cost     510
    Legal Considerations-Americans With Disabilities Act     510
    Design Trade-Offs     511
    Store Design     512
    Layouts     512
    Signage and Graphics     516
    Feature Areas     518
    Space Management     521
    Space Allocated to Merchandise Categories     521
    Location of Merchandise Categories and Design Elements     522
    Location of Merchandise within a Category: The Use of Planograms     525
    Visual Merchandising     527
    Fixtures     527
    Presentation Techniques     528
    Atmospherics     530
    Lighting      530
    Color     531
    Music     531
    Scent     531
    How Exciting Should a Store Be?     532
    Web Site Design     532
    Simplicity Matters     532
    Getting Around     533
    Let Them See It     533
    Blend the Web Site with the Store     533
    Prioritize     533
    Type of Layout     533
    Checkout     534
    Summary     535
    Key Terms     535
    Get Out and Do It!     535
    Discussion Questions and Problems     536
    Suggested Readings     537
    Customer Service     538
    Strategic Advantage Through Customer Service     540
    Customer Service Strategies     541
    Customer Evaluations of Service Quality     543
    The Gaps Model for Improving Retail Service Quality     546
    Knowing What Customers Want: The Knowledge Gap     547
    Setting Service Standards: The Standards Gap     549
    Meeting and Exceeding Service Standards: The Delivery Gap     552
    Communicating the Service Promise: The Communications Gap     556
    Service Recovery     557
    Listening to Customers      558
    Providing a Fair Solution     558
    Resolving Problems Quickly     559
    Summary     559
    Key Terms     559
    Get Out and Do It!     560
    Discussion Questions and Problems     560
    Suggested Readings     561
    Starting Your Own Retail Business     562
    Starting a Franchise Business     570
    Overview Grid     575
    Tractor Supply Company-Targeting the Hobby Farmer     576
    Rainforest Cafe: A Wild Place to Shop and Eat     577
    Providing a Retail Experience: Build-A-Bear Workshop     578
    Wal-Mart and Corporate Social Responsibility     579
    Should Retailers Use Blogs?     580
    Mall Anchors Away! The Franklins Discover Online Shopping     581
    The Sanchez Family Buys Bicycles     582
    Retailing in India: The Impact of Hypermarkets     583
    Diamonds: From Mine to Market     584
    Save-A-Lot     586
    Royal Ahold: The Biggest Supermarket Retailer You Have Never Heard Of     587
    The Competitive Environment in the 18- to 22-Year-Old Apparel Market     588
    Tiffany's and Blue Nile: Comparing Financial Performance     589
    Stephanie's Boutique: Selecting a Store Location      591
    Hutch: Locating a New Store     592
    Home Depot Changes Directions     597
    Avon Embraces Diversity     598
    Nordstrom Revamps Its Loyalty Program     599
    Nolan's Finest Foods: Category Management     600
    Developing a Buying Plan for Hughe's     602
    McFadden's Department Store: Preparation of a Merchandise Budget Plan     603
    Selling Pens to Wal-Mart     604
    How Much for a Good Smell?     605
    Promoting a Sale     606
    Macy's: A National Department Store Brand     606
    Discount Dining Draws a Crowd: Restaurant Weeks in Major Cities     608
    Enterprise Builds on People     609
    Diamond in the Rough     610
    Fresh Ideas in Grocery Store Layout     611
    Sephora     611
    A Stockout at Discmart: Will Substitution Lead to Salvation?     612
    Customer Service and Relationship Management at Nordstrom     613
    Lindy's Bridal Shoppe     614
    Is Apple America's Best Retailer?     616
    Starbucks Coffee Company     618
    New Product Development at Yankee Candle Company     621
    PetSmart: Where Pets Are Family     623
    Interviewing for a Management Trainee Position      625
    Glossary     629
    Name     677
    Company     683
    Subject     687

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