1. Retail Market Strategy
Retail and Financial Strategy

2. Objectives Explain target markets Discuss market segmentation
Explain competitive advantage
Describe types of retail business expenses
Explain the importance of business credit
Explain types of retail business risks

3. What Is Retail Strategy?
Retailers make many critical decisions
Merchandise and services to offer
Price to charge
Store location
Advertising
Displays
Sales associates
Retail Mix
Retailers target specific customer groups as the primary focus !

4. Target Market Most important decision
Specific group of people on whom a retailer focuses merchandise and service-offering decisions.
Most important decision
Affects all other decisions that come after it.
Must meet the wants and needs of the target market.
Use target-market profile to provide information about potential customers

5. Market Segmentation
Retailers compile an analysis by specific characteristics.
DEMOGRAPICS
GEOGRAPHICS
Market
Segmentation
PSYCHOGRAPHICS
PRODUCT BENEFIT

6. Demographics Statistics that describe a population Age Gender Income
Discretionary income – money customers have left after providing for their basic needs in life – food and shelter
Occupation
Education
Ethnic background

7. Psychographics
Study of consumers lifestyles as reflected in attitudes, interests, and opinions
What do consumers use their leisure time for?

8. Geographics Information such as
Where customers live
Cool or warm climate?
What part of town?
Example: Area with a large population of families; Children’s clothing store may succeed in such area.

9. Product Benefits
Marketers study consumer’ behaviors, needs and wants regarding specific products
Example:
A company will make different types of vitamins for different age groups with different needs.

10. Product Mix Type of merchandise retail store offers.
Reflect needs and wants of customers
Clothing Store – Age? Type of clothing? Shoes? Accessory?
Retailer wants to make store appealing to the consumer
What sets retailer apart from others

11. Service Mix Services offered by the establishment Parking
credit cards and checks
returns and refunds
gift wrapping
alterations
delivery
repairs

12. Competitive Advantage
Intangible factor that makes one retail establishment more desirable to customers than another.
Customers can purchase same or similar product at any location however what will make customer choose one over other:
Customer Service
Attention to Detail
Stocking unusual merchandise not found anywhere else
Learning customers’ names and preferences
Follow up call
Customer Loyalty

13. WORKSHEET 5.1
The following is an example of a simple consumer survey. This information is used by retailers to determine what kind of products to market to you.
Mark which category each question falls into:
Demographics
Psychographics
Geographics
Product Benefits

14. Retail Business Expenses
Every business generates expenses before it opens its doors.
3 major expenses:
Operating
Interest
Cost of Goods Sold

15. Operating Expenses Everyday Expenses Rent Office supplies Telephone
Internet Access
Salaries
Utilities

16. Interest Expenses
Retail business can have loans to cover the costs of store fixtures, equipment, merchandise purchases, or store building.
Retailer must always pay any outstanding loans the business may have.

17. Cost of Goods Sold What retailer pays for the merchandise.
Price includes merchandise cost and shipping

18. Retail Loans
Revenue from merchandise/services covers most business expenses.
Loans to help with other aspects such as repair or purchasing more merchandising.
Short Term (30, 60, 90 Days)
Long Term (5-30 yrs)

19. Business Credit Retailers use credit when making purchases.
Retailer purchases from Supplier; Supplier agrees to wait 30 or 60 days for payment. “Trade Credit”
Business Credit Cards
Consider several factors before being given credit
Capacity – ability to pay
Character – reliability
Credit History – amount of past debt and record of payment
Capital – assets owned after debt
Collateral – property or valuables owned for security

20. Profit Everyone wants to make PROFIT Sales – Expenses = Profit
Businesses must make a profit to stay in business.

21. Business Risks Risk is everywhere.
Businesses have a department to sole concentrate on Risk Management to minimize negative impact on the business.
3 Types of Business Risks

22. Economic Risks Negative shift in the nation’s economy.
Retailers must be on extra alert.
Why?

23. Human Risks Security risk include Internal and External Theft
Internal: employee theft
What can a retailer do to ensure employee is honest?
External: shoplifting
Protection – How can retailers protect themselves?
Vendors?
Safety risk include accidents that take place in store with customers.

24. Natural Risks Hurricanes, Floods, Tornadoes, Earthquakes, Fires
Some other risks, may or may not cover:
Riots, Civil unrest, Oil or Chemical Spills, Arson, Terrorism
Retailers should always have insurance to cover building, merchandise, equipment, fixtures
Very Costly

26. CHECKING CONCEPTS *HAND IN*
EXPLAIN TARGET MARKETS.
NAME FOUR CATEGORIES USED WHEN DESCRIBING A BUSINESS’S MARKET SEGMENTATION.
DISCUSS HOW RETAILERS DETERMINE THEIR PRODUCT MIX AND THEIR SERVICES MIX.
DEFINE COMPETITIVE ADVANTAGE.
DESCRIBE THE THREE CATEGORIES OF RETAIL BUSINESS EXPENSES.
EXPLAIN THE IMPORTANCE OF BUSINESS CREDIT.
DEFINE PROFIT USING A MATHEMATICAL EQUATION.
NAME AND EXPLAIN THE THREE TYPES OF BUSINESS RISKS.

27. MATH *HAND IN*
DURING MARCH, TERRIFIC TOYS HAD OPERATING EXPENSES OF $10,000, INTEREST EXPENSES OF $2,000. AND COST OF GOODS SOLD OF $14,000. TO MAKE A $5,000 PROFIT, HOW MUCH DO SALES NEED TO BE?
ALITA MAKES SALSA TO SELL AT PERUVIAN CULTURE NIGHT AT HER SCHOOL. SHE BUYS THE SALSA INGREDIENTS FOR $25.09 AND TWO BOXES OF CONTAINERS FOR $3.29 EACH. SHE SELLS EACH CONTAINER OF SALSA FOR $3.75. SHE SELLS 23 SALSA CONTAINERS. HOW MUCH PROFIT HAS SHE MADE?

28. SPICE UP YOUR MARKET *HAND IN*
GUACAMOLE

29. Group Work *HAND IN* YOU ARE OPENING A BUSINESS IN YOUR COMMUNITY
CREATE NAME FOR BUSINESS, WHAT PRODUCT/SERVICE YOU ARE PROVIDING.
DEVELOP A TARGET-MARKET PROFILE FOR YOUR BUSINESS.