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RMG 200 Study Guide - Final Guide: Warehouse Club, Sita, Home Improvement

Retail Management
Course Code
RMG 200
Ken Wong
Study Guide

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Retailing: set of business activities that adds value to the
product/services sold to consumers for their
personal/family use.
Retailer: Business that sells products and services to
consumers for their personal or family use (right
merchandise, price, place, + quantities at right time)
Function: provide product/service, break bulk (receive
large quatities), hold inventory, provide service and
services (various method of payment, staff)
Distribution channel: set of firms that facilitate the
movement of products from the point of production to the
point of sale to the ultimate consumer (manufacturing,
wholesaler, retailer, consumer)
Vertical integration: firm performs more than one set of
activities in the channel (investment by retailer in
wholesaling or manufacturing)
- Backward integration: retailer performs some
distribution + manufacturing activities
- Forward integration: manufacturer undertakes retailing
activities (ex. Roots operate own store)
Intratype competition: competition b/w retailers that sell
similar merch using different format (discount department
stores) -located close w similar good
Scrambled merchandising: offering of merchandise not
typically associated with the store type, such as clothing in
drugstore. Increases intertype competition.
Retail Strategy: how firm plans to focus its resources to
accomplish its objectives (target market, nature of
merch/service + how to build long-term/sustainable
competitive advantage over competitors)
Ethics: principles governing the behaviour of individuals +
companies to establish appropriate behaviour and indicate
what is right and wrong.
Elements in the retail mix: Product, place, value
(quality/price), people (climate-what its like to shop in store
+ knowledge), communication (promotional mix)
Variety (breadth of merch)- # of merchandise categories
Assortment (depth of merch)- # of diff items in category
Each different item of merchandise is called SKU (stock
keeping unit)
General Merchandise Retailers:
Discount Store (mass merchandiser)- wide variety, limited
service, low price. (Full-line discount- broad variety)
Specialty store: limited # of complementary merch, high
level of service + under 744 SQM)
Category killer/specialist: Discount retailer narrow but deep
assortment of merchandise)
Home improvement Centre: category specialist, equipment
and materials to make home improvement)
Department store: wide variety + deep assortment, customer
service + separate departments.
Leased Department: area in retail store leased/rented to
independent company. Responsible for retail mix decisions
and pays % of sales as rent.
Drugstores: specialty stores- health and personal grooming
Off-price retailer: inconsistent assortment of brand-name,
fashion-oriented soft good at low prices (Winner). Includes:
- Closeout retailer: sell broad but inconsistent assortment of
merchandise obtained from store closing/bankruptcy
- Outlet stores: owned by manufactures, department or
specialty store chain. Factory outlet: owned by manufactures.
Value Retailer: general merchandise discount stores (lower-
income urban, mid-income suburban or rural + smaller than
discount stores)
Food Retailers-
Combination stores: sell food + nonfood items
Conventional supermarket: self-service food store with
limited sales on general merchandise.
Superstores: larger supermarket
Power perimeter: area around outside walls of supermarket
that have fresh merchandise categories
Supercentre: large store combining discount + supermarket
Hypermarket: large, combination food + general merch.
Big-box store: large limited service retailer
Warehouse club: offer limited assortment of food + general
merch with little service and low prices (Cost-co)
Convenience store: limited variety + assortment of merch.
Non-store retail format: electronic retailing (e-
tailing/internet/online retailing), catalogue retailing, direct-
mail selling (to home), television home shopping, and
vending machines)
Stages of buying process (customer decision making):
-need/problem recognition, information search, evaluation of
alternatives, product choice, outcome, post purchase
Utilitarian – customers shop to accomplish specific task
Hedonic- customers shop for pleasure
Need to socialize, need to know, need to be serviced, need to
feel good (reward), need a thrill (sales). Multi-attribute
model: customer see a retailer G/S as collection of attributes
(performance and importance)
Marketing segmentation- easier marketing, find niches
(underserved), efficient to group potential customers into
Priori segmentation- without primary research. Secondary
data source. Post Hoc segmentation- primary research
7 mental model of consumer market segment: benefit
segmentation (physical/emotional benefit-candle), lifecycle
and lifestyle segmentation (group customer by psychological
+ personality difference), choice rule segmentation (logical
choice- feature/price OR experiential- I feel good), belief
segmentation, brand loyalty segmentation, price sensitivity
segmentation + search and shopping segmentation.
Social factor affecting buying decision: beliefs (about
performance of retailer/product), values, attitudes (evaluation
of retailer), family, reference groups, culture.
Retail Strategy: target market, retail format (retail mix-
communication, people, product, place, value) and
sustainable competitive advantage. (price and promotion)
External environmental factors: economic stability, consumer
behaviour, regulations, competition, technology
Mirco- retailers can control and microenvironment- cant
Microenvironment: market analysis/ SWOT/ PEST
Porter 5 forces: bargaining power of supplier, bargaining
power of customer, threat of new entrant, threat of substitute,
competitive rivalry.
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