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Chapter 7

Building and Sustaining Relationships with Customers. Chapter 7. RETAIL MANAGEMENT: A STRATEGIC APPROACH. Identifying and Understanding Consumers. - Kevin Coupe, Morningnewsbeat.com. “So here is the simple truth, as revealed at FMI Midwinter 2004: ‘It’s the customer, stupid.’ ”.

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Chapter 7

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  1. Building and Sustaining Relationships with Customers Chapter 7 RETAIL MANAGEMENT: A STRATEGIC APPROACH Identifying and Understanding Consumers

  2. - Kevin Coupe, Morningnewsbeat.com “So here is the simple truth, as revealed at FMI Midwinter 2004: ‘It’s the customer, stupid.’ ”

  3. “[The] industry has gotten good at cutting costs, employing technology, pursuing efficiency. But we don’t talk anymore about strategic initiatives for the consumer.” Tim Hammonds, FMI CEO FMI Midwinter Executive Conference In order to develop and implement strategic initiatives for the consumer (and thus build and sustain relationships) a retailer must UNDERSTAND THE CONSUMER

  4. Consider: Les Ailes de la Mode • Who • Launched in 1993 • Montreal-based retailer with 5 upscale department stores by 2002 • Offered a variety of high-end services (5 restaurants including a sushi bar, beauty salon, karaoke, heated stone floors, artist’s lounge and children’s carousel) • Main competitors  Olgilvy’s and Holt Renfrew • What • Hard times… • Ottawa expansion unsuccessful • Lost ~$36 million in 2003 and over $60 million in 2004 • Moved down-market with sale to Fairweather for $6.2 million on Aug. 8, 2005 • In 2011 – still operating Swimwear division (Bikini Village: 59 outlets in PQ and ON); There were 3 Les Ailes department stores in PQ and 6 Les Aisles Xpress locations • Les Ailes officially closed February 2014 • Why • Overestimated the size of the high end market • Most Canadian customers have different value perception of clothing – more practical, “IKEA fashion”

  5. Elements of a Retail Strategy Strategy Development Process

  6. What Makes Retail Shoppers Tick

  7. VALS

  8. NEEDS AND DESIRES • 2. PERSONAL MOTIVES • role playing • physical activity • self-gratification • diversion • sensory stimulation • 3. SOCIAL MOTIVES • social experiences • peer group interaction • status and power • pleasure of bargaining • hobbies Why Do Customers Shop? They need to or want to 1. TO MAKE A PURCHASE “Retail Therapy”

  9. How Customers Shop • The Consumer Decision Making Process • How they make the decision to purchase • Affected by demographics and lifestyle • Impact of Internet and mobile technologies on process • Shopping Behaviour • How they travel the store • Time in store • Type of products purchased • Can be affected by retailer actions

  10. Consumers try to reduce risk of making a purchase. What are some risks and what things can retailers do to reduce them? • functional • financial • physical • psychological • social • time loss Warranties, guarantees, exchange privileges Lowest price in town (EDLP), price matching, money back guarantee Meet or exceed required safety programs Testimonials, lessen post-purchase dissonance (slogans, follow-up calls) Maintain image, Teen boards Convenient hours of service, free replacement while repairs being made

  11. Methods of Understanding Customers • Should retailers ask what customers want and give it to them? • Art Turock’s perspective - not entirely • Consumers tend to think in terms of improving goods and services which they are familiar with • Not only concerned with current customers • Truly innovative products may take a while to catch on • Therefore: Ask, but be open to other ideas and use other sources • Some methods of understanding customers include: • Secondary Data Collection and Analysis • Survey • Observation • Datamining • Neuromarketing • You can read more here: http://www.cbc.ca/news/health/marketers-exploiting-secrets-of-the-living-brain-1.1273976

  12. What are the pros and cons of a retailer quickly reacting to what it feels is an emerging trend? Pros • Generate excitement among customers • Perceived as an innovator • Obtaining a “first mover” advantage • Less competition at this stage • May be able to use a market skimming price strategy Cons • Challenges in anticipating demand • Trend may not be real • Embarrassment; significant losses • Overestimates (i.e Les Ailes) • New products created may not be fully tested by the manufacturer • safety/liability and image issues

  13. Devise a Marketing Strategy • Mass • Concentrated • Differentiated

  14. Takeaways • Successful retailers understand their customers • They know: • Who they are (and how many there are) • How and why they shop • What they are looking for and • How to reach them • That understanding is built into the strategy and coordinated effort is exerted to meet the needs and wants of these customers while earning a return for company stakeholders

  15. The Changing Face of Home Improvement Part 3, Case 2 • Do you think it was necessary for Home Depot and Rona to initiate more female-friendly strategies? Why or why not? • Will the strategies being employed by Home Depot and Rona turn off their more professional customers? • Visit the Rona website (www.rona.ca) and that of Home Depot (www.homedepot.ca). What evidence is there that either of these retailers is addressing the hiving phenomenon?

  16. Do you think it was necessary for Home Depot and Rona to initiate more female-friendly strategies? Why or why not? • Most Canadian Homeowners (73%) Have Undertaken a ‘Do-It-Yourself’ Project • The Kitchen (38%) is the Room Canadians Most Wish to Renovate • Ipsos Reid, Wednesday, August 18, 2010

  17. Will the strategies being employed by Home Depot and Rona turn off their more professional customers?

  18. Visit the Rona website (www.rona.ca) and that of Home Depot (www.homedepot.ca). What evidence is there that either of these retailers is addressing the hiving phenomenon?

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