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Chapter 2

Chapter 2. RETAIL MANAGEMENT: A STRATEGIC APPROACH 11th Edition BERMAN EVANS. Building and Sustaining Relationships in Retailing. BERMAN EVANS. 1. 1. What is Value?. The bottom line: Consumers will demand “more for less” from the shopping experience

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Chapter 2

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  1. Chapter 2 RETAIL MANAGEMENT: A STRATEGIC APPROACH 11th Edition BERMAN EVANS Building and Sustaining Relationships in Retailing BERMAN EVANS 1 1

  2. What is Value? • The bottom line: • Consumers will demand “more for less” from the shopping experience • They will spend less time shopping • Consumers will shop different formats for different needs 2 2

  3. What is Value? (cont.) Channel Perspective • Value is a series of activities and processes (the “value chain”) that provide a certain value for the consumer. Customer Perspective • Value is a perception that the shopper has of the value chain. • It is the view of all the benefits from a purchase versus the price paid. 3 3

  4. Retail Value Chain • Represents the total bundle of benefits offered to consumers through a channel of distribution • Store location and parking, retailer ambience, customer service, brands/products carried, product quality, retailer’s in-stock position, shipping, prices, image, and other elements 4 4

  5. Three Aspects of Value-Oriented Retail Strategy Expected Augmented Potential 5 5

  6. Potential Pitfalls to Avoid in Planning a Value-Oriented Retail Strategy • Planning value solely from a price perspective • Providing value-enhanced services that customers do not want or will not pay extra for • Competing in the wrong value/price segment • Believing augmented elements alone create value • Paying lip service to customer service 6 6

  7. Customer Service • Expected customer service is the service level that customers want to receive from any retailer such as basic employee courtesy. • Augmented customer service includes the activities that enhance the shopping experience and give retailers a competitive advantage. 7 7

  8. Fundamental Decisions • What customer services are expected and what customer services are augmented for a particular retailer? • What level of customer service is proper to complement a firm’s image? • Should there be a choice of customer services? • Should customer services be free? • How can a retailer measure the benefits of providing customer services against their costs? • How can customer services be terminated? 8 8

  9. Table 2-1a: Typical Customer Services • Credit • Delivery • Alterations/ Installations • Packaging/gift wrapping • Complaints/Return handling • Gift certificates • Trade-ins • Trial purchases • Special sales • Extended store hours • Mail/phone orders 9 9

  10. Table 2-1b: Miscellaneous Customer Services • Bridal registry • Interior designers • Personal shoppers • Ticket outlets • Parking • Water fountains • Payphones • Baby strollers • Restrooms • Restaurants • Babysitting • Fitting rooms • Beauty salons • Fur storage • Shopping bags • Information 10 10

  11. Figure 2-6: Turning Around Weak Customer Service Focus on Customer Concerns Empower Frontline Employees Show That You Are Listening Express Sincere Understanding Apologize and Rectify the Situation 11 11

  12. Figure 2-7: Elements Contributing to Effective Channel Relationships 12 12

  13. Three Kinds of Service Retailing • Rented goods services • Whereby consumers lease and use goods for specified period of time • Owned goods services • Whereby goods owned by consumers are repaired, improved, or maintained. • Nongoods services • Whereby intangible personal services are offered to consumers who than experience the services rather than posses them. 13 13

  14. There are four unique aspects of service retailing that influence relationship building and customer retention • Intangibility • Intangibility of many services makes a consumer ‘s choice of competitive offerings tougher than with goods • Inseparability • The service provider and his or her service are some times inseparable • Perishability • The perishability of many services prevent storage and increase risk • Variability • The aspect of human nature involved in many services makes them more variable 14 14

  15. Figure 2-8a: Characteristics of Service Retailing Intangibility • No patent protection possible • Difficult to display/communicate service benefits • Service prices difficult to set • Quality judgment is subjective • Some services involve performances/experiences 15 15

  16. Figure 2-8b: Characteristics of Service Retailing Inseparability • Consumer may be involved in service production • Centralized mass production difficult • Consumer loyalty may rest with employees 16 16

  17. Figure 2-8c: Characteristics of Service Retailing Perishability • Services cannot be inventoried • Effects of seasonality can be severe • Planning employee schedules can be complex 17 17

  18. Figure 2-8d: Characteristics of Service Retailing Variability • Standardization and quality control hard to achieve • Services may be delivered in locations • beyond control of management • Customers may perceive variability • even when it does not actually occur 18 18

  19. Figure 2-10: Innovative Marketing at McDonald’s 19 19

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