Presentation on theme: "Retail Market Strategy"— Presentation transcript:
1 Retail Market Strategy Retail and Financial Strategy
2 Objectives Explain target markets Discuss market segmentation Explain competitive advantageDescribe types of retail business expensesExplain the importance of business creditExplain types of retail business risks
3 What Is Retail Strategy? Retailers make many critical decisionsMerchandise and services to offerPrice to chargeStore locationAdvertisingDisplaysSales associatesRetail MixRetailers 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 decisionAffects 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 SegmentationRetailers compile an analysis by specific characteristics.DEMOGRAPICSGEOGRAPHICSMarketSegmentationPSYCHOGRAPHICSPRODUCT 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 shelterOccupationEducationEthnic background
7 PsychographicsStudy of consumers lifestyles as reflected in attitudes, interests, and opinionsWhat do consumers use their leisure time for?
8 Geographics Information such as Where customers liveCool 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 BenefitsMarketers study consumer’ behaviors, needs and wants regarding specific productsExample: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 customersClothing Store – Age? Type of clothing? Shoes? Accessory?Retailer wants to make store appealing to the consumerWhat sets retailer apart from others
11 Service Mix Services offered by the establishment Parking credit cards and checksreturns and refundsgift wrappingalterationsdeliveryrepairs
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 ServiceAttention to DetailStocking unusual merchandise not found anywhere elseLearning customers’ names and preferencesFollow up callCustomer Loyalty
13 WORKSHEET 5.1The 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:DemographicsPsychographicsGeographicsProduct Benefits
14 Retail Business Expenses Every business generates expenses before it opens its doors.3 major expenses:OperatingInterestCost of Goods Sold
16 Interest ExpensesRetail 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 LoansRevenue 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 CardsConsider several factors before being given creditCapacity – ability to payCharacter – reliabilityCredit History – amount of past debt and record of paymentCapital – assets owned after debtCollateral – 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 theftWhat can a retailer do to ensure employee is honest?External: shopliftingProtection – 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, TerrorismRetailers should always have insurance to cover building, merchandise, equipment, fixturesVery 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?