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Strategic Retail Management


Course Instructions

Please read the instructions given below related to Course "Strategic Retail Management"

There are 5 sections in this course. All sections are mandatory.

In Section 1 of this course you will cover these topics:

An Introduction To Retailing

The Competitive Environment

Building And Sustaining Relationships In Retailing

Strategic Planning In Retailing


Retail Institutions By Ownership

Retail Institutions By Store-Based Strategy Mix

Web, Nonstore-Based, And Other Forms Of Nontraditional Retailin

Identifying And Understanding Consumers


Trading-Area Analysis

Site Selection

Retail Organization And Human Resource Management

Operations Management: Financial Dimensions


Operations Management: Operational Dimensions

Developing Merchandise Plans

Implementing Merchandise Plans


Pricing In Retailing

Establishing And Maintaining A Retail Image

Promotional Strategy

Strategic Retail Management > Section 1

Section 1- Instructions






You may take as much time as you want to complete the topic coverd in section 1.

There is no time limit to finish any Section, However you must finish All Sections before semester end date.

Strategic Retail Management > Section 1 > Topic 1

Topic Objective:

At the end of this topic students will be able:

l To understand the concept of Retail pricing

l To understand services in retail sector.

Topic Introduction:

Retailing: Business activities involved in selling goods and services to consumers for their personal, family, or household

use.

Channel of Distribution: All of the businesses and people involved in the physical movement and transfer of ownership

of goods and services from producer to consumer.

Sorting Process: Involves the retailer's collecting an assortment of goods and services from various sources, buying

them in large quantity, and offering to sell them in small quantities to consumers.

Topic Overview:

1. Retail pricing The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or

percentage) to the retailers cost. Another common technique is suggested retail pricing. This simply involves charging

the amount suggested by the manufacturer and usually printed on the product by the manufacturer.

In Western countries, retail prices are often called psychological prices or odd prices. Often prices are fixed and

displayed on signs or labels. Alternatively, there can be price discrimination for a variety of reasons, where the retailer

charges higher prices to some customers and lower prices to others. For example, a customer may have to pay

more if the seller determines that he or she is willing to. The retailer may conclude this due to the customer's wealth,

carelessness, lack of knowledge, or eagerness to buy. Another example is the practice of discounting for youths or

students. Retailers who are overstocked, or need to raise cash to renew stocks may resort to "sales", where prices

are "marked down", often by advertised percentages - "50% off".

2. Retail Services

Behind the scenes at retail there is another factor at work. Corporations and independent store owners alike are

always trying to get the edge on their competitors. One way to do this is to hire a merchandising solutions company

to design custom store displays that will attract more customers in a certain demographic. The nation's largest

retailers spend millions every year on in-store marketing programs that correspond to season and promotional

changes. As products change, so will a retail landscape.

3. Etymology

Retail comes from the French word retaillier which refers to "cutting off, clip and divide" in terms of tailoring (1365). It

first was recorded as a noun with the meaning of a "sale in small quantities" in 1433 (French). Its literal meaning for

retail was to "cut off, shred, paring". Like the French, the word retail in both Dutch and German (detailhandel and

Einzelhandel respectively) also refer to sale of small quantities of items.

Topic 1: An Introduction To Retailing


Topic Objective:

At the end of this topic students will be able: l To differentiate between the different retail types.

l To explain the different types of the retail places.

Topic Introduction:

Commerce: is a division of trade or production which deals with the exchange of goods and services from producer to

final consumer. It comprises the trading of something of economic value such as goods, services, information or money

between two or more entities. Commerce functions as the central mechanism which drives capitalism and certain other

economic systems (but compare command economy, for example).

Topic Overview:

1. Retail types There are three major types of retailing.

l The first is the market, a physical location where buyers and sellers converge. Usually this is done in town

squares, sidewalks or designated streets and may involve the construction of temporary structures (market

stalls).

l The second form is shop or store trading. Some shops use counter-service, where goods are out of reach of

buyers, and must be obtained from the seller. This type of retail is common for small expensive items (e.g.

jewelry) and controlled items like medicine and liquor. Self-service, where goods may be handled and examined

prior to purchase, has become more common since the 20th century.

l A third form of retail is virtual retail, where products are ordered via mail, telephone or online without having

been examined physically but instead in a catalog, on television or on a website. Sometimes this kind of retailing

replicates existing retail types such as online shops or virtual marketplaces such as Amazon.

2. Retail Places

Buildings for retail have changed considerably over time. Market halls were constructed in the Middle Ages, which were

essentially just covered marketplaces. The first shops in the modern sense used to deal with just one type of article,

and usually adjoined the producer (baker, tailor, cobbler). In the 19th century, in France, arcades were invented,

which were a street of several different shops, roofed over. Counters, each dealing with a different kind of article,

were invented; it was called a department store. One of the novelties of the department store was the introduction of

fixed prices, making haggling unnecessary, and browsing more enjoyable. This is commonly considered the birth of

consumerism In cities, these were multi-story buildings which pioneered the escalator. In the 1920s the first supermarket opened in the United States, heralding in a new era of retail: self-service. Around

the same time the first shopping mall was constructed which incorporated elements from both the arcade and the

department store. A mall consists of several department stores linked by arcades (many of whose shops are owned

by the same firm under different names). The design was perfected by the Austrian architect Victor Gruen All the

stores rent their space from the mall owner. By mid-century, most of these were being developed as single enclosed,

climate-controlled, projects in suburban areas. The mall has had a considerable impact on the retail structure and

urban development in the United States.

In addition to the enclosed malls, there are also strip malls which are 'outside' malls (in Britain they are called retail

parks. These are often comprised of one or more big-box stores or superstores.

l Local shops can be known as brick and mortar stores in the United States. Many shops are part of a chain: a

number of similar shops with the same name selling the same products in different locations. The shops may be

owned by one company, or there may be a franchising company that has franchising agreements with the shop

owners

l Some shops sell second-hand goods. In other cases, especially in the case of a nonprofit shop, the public

donates goods to the shop to be sold. In give-away shops goods can be taken for free.

l There are also 'consignment' shops, which are where a person can place an item in a store, and if it sells the

person gives the shop owner a percentage of the sale price. The advantage of selling an item this way is that the

established shop gives the item exposure to more potential buyers.

The term retailer is also applied where a service provider services the needs of a large number of individuals, such as

with telephone or electric power. Retailers may use facing to create the look of a perfectly-stocked store even when

it is not.

Topic 2: The Competitive Environment


Topic Objective:

At the end of this topic students will be able: l To understand the customer relationship management

Topic Introduction:

Customer: A customer refers to individuals or households that purchase goods and services generated within the

economy. The word historically derives from "custom," meaning "habit"; a customer was someone who frequented a

particular shop, who made it a habit to purchase goods there, and with whom the shopkeeper had to maintain a

relationship to keep his or her "custom," meaning expected purchases in the future.

Customer needs: may be defined as the goods or services a customer requires to achieve specific goals. Different

needs are of varying importance to the customer. Customer expectations are influenced by cultural values, advertising,

marketing, and other communications, both with the supplier and with other sources. Both customer needs and

expectations may be determined through interviews, surveys, conversations, data mining or other methods of collecting

information. Customers at times do not have a clear understanding of their needs. Assisting in determining needs can be

a valuable service to the customer. In the process, expectations may be set or adjusted to correspond to known

product capabilities or service.

Topic Overview:

1. Customer Relationship Management Customer relationship management (CRM) is a multifaceted process, mediated by a set of information technologies

that focuses on creating two-way exchanges with customers so that firms have an intimate knowledge of their

needs, wants, and buying patterns. In this way, CRM helps companies understand, as well as anticipate, the needs of

current and potential customers. Functions that support this business purpose include sales, marketing, customer

service, training, professional development, performance management, human resource development, and

compensation. Many CRM initiatives have failed because implementation was limited to software installation without

alignment to a customer-centric strategy.

1.1 Technology considerations

A database for customer life cycle (time series) information about each customer and prospect and their

interactions with the organization, including order information, support information, requests, complaints,

interviews and survey responses.

Customer Intelligence - Translating customer needs and profitability projection into game plans for different

segments or groups of customers, captured by customer interactions (Human, automated or combinations of

both) into software that tracks whether that game plan is followed or not, and whether the desired outcomes are

obtained.

Business Modeling Customer Relationship Strategy, Goals and outcomes: Numbers and description of whether

goals were met and models of customer segments and game plans worked as hypothesized.

1.2 Types / Variations of CRM

There are several different approaches to CRM, and at present there is no one software package that allows all of

these approaches to be applied. When companies consider implementing a CRM strategy, they usually talk about

either Campaign Management or Sales Force Automation. Although CRM is much more than either of those parts,

software packages are usually based around one or the other idea (with SFA being the most popular).

1.3 Operational CRM

Operational CRM provides support to "front office" business processes, including sales, marketing and service.

Each interaction with a customer is generally added to a customer's contact history, and staff can retrieve

information on customers from the database when necessary.

One of the main benefits of this contact history is that customers can interact with different people or different

contact channels in a company over time without having to describe the history of their interaction each time.

Topic 3: Building And Sustaining Relationships In Retailing


Topic Objective:


l To understand the strategic model

l To understand the marketing concepts in practice mainly the Consumer centric Business.

l To analyze the types of strategies used in the consumer business.

Topic Introduction:

Strategy: A strategy is a long term plan of action designed to achieve a particular goal. Strategy is differentiated from

tactics, or immediate actions, with resources at hand by its nature of being extensively premeditated, and often

practically rehearsed.

Topic Overview:

1. Strategic models

Marketing participants often employ strategic models and tools to analyze marketing decisions. When beginning a

strategic analysis, the 3Cs can be employed to get a broad understanding of the strategic environment. An Ansoff

Matrix is also often used to convey an organization's strategic positioning of their marketing mix. The 4Ps can then

be utilized to form a marketing plan to pursue a defined strategy.

2. Marketing in Practice

2.1 The Consumer-Centric Business There are a many companies especially those in the Consumer Package Goods (CPG) market that adopt the

theory of running their business centred around Consumer, Shopper & Retailer needs. Their Marketing

departments spend quality time looking for "Growth Opportunities" in their categories by identifying relevant

insights (both mindsets and behaviours) on their target Consumers, Shoppers and retail partners. These

Growth Opportunites emerge from changes in market trends, segment dynamics changing and also internal

brand or operational business challenges. The Marketing team can then prioritise these Growth Opportunites

and begin to develop strategies to exploit the opportunities that could include new or adapted products,

services as well as changes to the 4Ps.

Real-life marketing primarily revolves around the application of a great deal of common-sense; dealing with a

limited number of factors, in an environment of imperfect information and limited resources complicated by

uncertainty and tight timescales. Use of classical marketing techniques, in these circumstances, is inevitably

partial and uneven.

Thus, for example, many new products will emerge from irrational processes and the rational development

process may be used (if at all) to screen out the worst non-runners. The design of the advertising, and the

packaging, will be the output of the creative minds employed; which management will then screen, often by

'gut-reaction', to ensure that it is reasonable.

For most of their time, marketing managers use intuition and experience to analyze and handle the complex,

and unique, situations being faced; without easy reference to theory. This will often be 'flying by the seat of the

pants', or 'gut-reaction'; where the overall strategy, coupled with the knowledge of the customer which has

been absorbed almost by a process of osmosis, will determine the quality of the marketing employed. This,

almost instinctive management, is what is sometimes called 'coarse marketing'; to distinguish it from the

refined, aesthetically pleasing, form favored by the theorists.

3. Types of strategies

Marketing strategies may differ depending on the unique situation of the individual business. However there are a

number of ways of categorizing some generic strategies. A brief description of the most common categorizing

schemes is presented below:

l Strategies based on market dominance - In this scheme, firms are classified based on their market share or

dominance of an industry. Typically there are three types of market dominance strategies:

l Leader

l Challenger

l Follower

l Porter generic strategies - strategy on the dimensions of strategic scope and strategic strength. Strategic

scope refers to the market penetration while strategic strength refers to the firm ’s sustainable competitive

advantage.

l Product differentiation

l Market segmentation

l Innovation strategies - This deals with the firm's rate of the new product development and business model

innovation. It asks whether the company is on the cutting edge of technology and business innovation. There are

three types:

l Pioneers

l Close followers

l Late followers

l Growth strategies - In this scheme we ask the question, “How should the firm grow?”. There are a number of

different ways of answering that question, but the most common gives four answers:

l Horizontal integration

l Vertical integration

l Diversification

l Intensification

A more detailed scheme uses the categories:

l Prospector

l Analyzer

l Defender

l Reactor

l Marketing warfare strategies - This scheme draws parallels between marketing strategies and military

strategies.

Topic 4: Strategic Planning In Retailing











Topic Objective:


l To distinguish the types of brands

l To comprehend the brand architecture.

Topic Introduction:

Retail concentration: By "Retail concentration" we mean the market-share belonging to generally the top 4 or 5 firms

of the Great distribution present in a regional market, as a percentage on the total.

Topic Overview:

1. Types of brands A number of different types of brands are recognized. A "premium brand" typically costs more than other products in

the same category. An "economy brand" is a brand targeted to a high price elasticity market segment. A "fighting

brand" is a brand created specifically to counter a competitive threat. When a company's name is used as a product

brand name, this is referred to as corporate branding. When one brand name is used for several related products, this

is referred to as family branding. When all a company's products are given different brand names, this is referred to as

individual branding. When a company uses the brand equity associated with an existing brand name to introduce a

new product or product line, this is referred to as "brand leveraging." When large retailers buy products in bulk from

manufacturers and put their own brand name on them, this is called private branding, store brand, white labelling,

private label or own brand (UK). Private brands can be differentiated from "manufacturers' brands" (also referred to

as "national brands"). When two or more brands work together to market their products, this is referred to as "co-

branding". When a company sells the rights to use a brand name to another company for use on a non-competing

product or in another geographical area, this is referred to as "brand licensing." An "employment brand" is created

when a company wants to build awareness with potential candidates. In many cases, such as Google, this brand is an

integrated extension of their consumer.

2. Brand Architecture

The different brands owned by a company are related to each other via brand architecture. In product brand

architecture, the company supports many different product brands each having its own name and style of expression

but the company itself remains invisible to consumers. Procter & Gamble, considered by many to have created

product branding, is a choice example with its many unrelated consumer brands such as Tide, Pampers, Ivory and

Pantene. With endorsed brand architecture, a mother brand is tied to product brands, such as The Courtyard Hotels

(product brand name) by Marriott (mother brand name). Endorsed brands benefit from the standing of their mother

brand and thus save a company some marketing expense by virtue promoting all the linked brands whenever the

mother brand is advertised.. In the third model only the mother brand is used and all products carry this name and all

advertising speaks with the same voice. A good example of this brand architecture, most often known as corporate

branding, is the UK-based conglomerate Virgin. Virgin brands all its businesses with its name (e.g., Virgin Megastore,

Virgin Atlantic, Virgin Brides) and uses one style and logo to support each of them.

There are several challenges associated with setting objectives for a brand or product category.

l Brand managers sometimes limit themselves to setting financial and market performance objectives. They

may not question strategic objectives if they feel this is the responsibility of senior management.

l Most product level or brand managers limit themselves to setting short term objectives because their

compensation packages are designed to reward short term behaviour. Short term objectives should be seen as

milestones towards long term objectives.

l Often product level managers are not given enough information to construct strategic objectives.

l It is sometimes difficult to translate corporate level objectives into brand or product level objectives. Changes

in shareholders' equity are easy for a company to calculate. It is not so easy to calculate the change in

shareholders' equity that can be attributed to a product or category. More complex metrics like changes in the

net present value of shareholders' equity are even more difficult for the product manager to assess.

l In a diversified company, the objectives of some brands may conflict with those of other brands. Or worse,

corporate objectives may conflict with the specific needs of your brand. This is particularly true in regard to the

trade-off between stability and riskiness. Corporate objectives must be broad enough that brands with high risk

products are not constrained by objectives set with cash cows in mind. The brand manager also needs to know

senior management's harvesting strategy. If corporate management intends to invest in brand equity and take a

long term position in the market (i.e. penetration and growth strategy), it would be a mistake for the product

manager to use short term cash flow objectives (ie. price skimming strategy). Only when these conflicts and

tradeoffs are made explicit, is it possible for all levels of objectives to fit together in a coherent and mutually

supportive manner.

l Brand managers sometimes set objectives that optimize the performance of their unit rather than optimize

overall corporate performance. This is particularly true where compensation is based primarily on unit

performance. Managers tend to ignore potential synergies and inter-unit joint processes.

l Brands are sometimes criticized within social media web sites and this must be monitored and managed (if

possible)

Topic 5: Retail Institutions By Ownership


Topic Objective:

At the end of this topic students will be able: l To understand the transfer mechanism.

l To review the sales techniques.

Topic Introduction:

Strategic Environmental Assessment (SEA): is a system of incorporating environmental considerations into policies,

plans and programmes. It is sometimes referred to as Strategic Environmental Impact Assessment. The specific term

Strategic Environmental Assessment relates to European Union policy.

Strategic management: is the art, science and craft of formulating, implementing and evaluating cross-functional

decisions that will enable an organization to achieve its long-term objectives

Door-to-door: is a sales technique in which a salesperson walks from one door of a house to another trying to sell a

product or service to the general public. A variant of this involves cold calling first, when another sales representative

attempts to gain agreement that a salesperson should visit. Door-to-door selling is usually conducted in the afternoon

hours, when the majority of people are at home.

Topic Overview:

1. Transfer mechanism There are several ways in which consumers can receive goods from a retailer:

l Counter service, where goods are out of reach of buyers, and must be obtained from the seller. This type of

retail is common for small expensive items (e.g. jewelry) and controlled items like medicine and liquor. It was

common before the 1900s in the United States, and is more common in certain countries.[which?]

l Delivery (commerce), where goods are shipped directly to consumer's homes or workplaces. Mail order from

a printed catalog was invented in 1744 and common in the late 1800s and early 1900s. Ordering by telephone is

now common, either from a catalog, newspaper or television advertisement, or local restaurant menu for

immediate service (especially for pizza delivery). Direct marketing (including telemarketing) and television

shopping channels are also used to generate telephone orders. Online shopping started gaining significant market

share in developed countries in the 2000s.

l Door-to-door sales where the salesperson sometimes travels with the goods for sale.

l Self-service, where goods may be handled and examined prior to purchase, has become more common since

the 1920s.

2. Sales techniques





changes. As products change, so will a retail landscape. Retailers may use facing to create the look of a perfectly-

stocked store even when it is not.

A destination store is one that customers will initiate a trip specifically to visit, sometimes over a large area. These

stores are often used to "anchor" a shopping mall or plaza, generating foot traffic which is capitalized on by smaller

retailers.

Topic 6: Retail Institutions By Store-Based Strategy Mix


Topic Objective:


l To explain the types of non-store retailers.

l To distinguish between electronic shopping and mail order shopping.

l To understand product suitability.

l To explore the concept of online shopping.

Topic Introduction: E-Tailer: An e-tailer is a retailer that primarily uses the Internet as a medium for customers to shop for the goods or

services provided.

Online shopping: is the process consumers go through to purchase products or services over the Internet. An online

shop, eshop, e-store, internet shop, webshop, webstore, online store, or virtual store evokes the physical analogy of

buying products or services at a bricks-and-mortar retailer or in a shopping mall.

Topic Overview: 1. Non-store Retailers

Industries in the Nonstore Retailers subsector retail merchandise using methods, such as the broadcasting of

infomercials, the broadcasting and publishing of direct-response advertising, the publishing of paper and electronic

catalogs, door-to-door solicitation, in-home demonstration, selling from portable stalls and distribution through

vending machines. Establishments in this subsector include mail-order houses, vending machine operators, home

delivery sales, door-to-door sales, party plan sales, electronic shopping, and sales through portable stalls (e.g., street

vendors, except food). Establishments engaged in the direct sale (i.e., nonstore) of products, such as home heating

oil dealers and newspaper delivery are included in this subsector.

2. Electronic Shopping and Mail-Order Houses

This industry comprises establishments primarily engaged in retailing all types of merchandise using non-store means,

such as catalogs, toll free telephone numbers, or electronic media, such as interactive television or computer. Included

in this industry are establishments primarily engaged in retailing from catalog showrooms of mail-order houses.

3. Product suitability

Many successful purely virtual companies deal with digital products, (including information storage, retrieval, and

modification), music, movies, office supplies, education, communication, software, photography, and financial

transactions. Examples of this type of company include: Google, eBay and Paypal. Other successful marketers use

Drop shipping or affiliate marketing techniques to facilitate transactions of tangible goods without maintaining real

inventory. Examples include numerous sellers on eBay.

Some non-digital products have been more successful than others for online stores. Profitable items often have a

high value-to-weight ratio, they may involve embarrassing purchases, they may typically go to people in remote

locations, and they may have shut-ins as their typical purchasers. Items which can fit through a standard letterbox

— such as music CDs, DVDs and books — are particularly suitable for a virtual marketer, and indeed Amazon.com,

one of the few enduring dot-com companies, has historically concentrated on this field.

Products such as spare parts, both for consumer items like washing machines and for industrial equipment like

centrifugal pumps, also seem good candidates for selling online. Retailers often need to order spare parts specially,

since they typically do not stock them at consumer outlets -- in such cases, e-commerce solutions in spares do

not compete with retail stores, only with other ordering systems. A factor for success in this niche can consist of

providing customers with exact, reliable information about which part number their particular version of a product

needs, for example by providing parts lists keyed by serial number.

Products less suitable for e-commerce include products that have a low value-to-weight ratio, products that have

a smell, taste, or touch component, products that need trial fittings — most notably clothing — and products

where colour integrity appears important. Nonetheless, Tesco.com has had success delivering groceries in the UK,

albeit that many of its goods are of a generic quality, and clothing sold through the internet is big business in the

U.S. Also, the recycling program Cheapcycle sells goods over the internet, but avoids the low value-to-weight ratio

problem by creating different groups for various regions, so that shipping costs remain low.

4. Online shopping

Online shopping is the process consumers go through to purchase products or services over the Internet. An online

shop, eshop, e-store, internet shop, webshop, webstore, online store, or virtual store evokes the physical analogy of

buying products or services at a bricks-and-mortar retailer or in a shopping mall. The metaphor of an online catalog is

also used, by analogy with mail order catalogs. All types of stores have retail web sites, including those that do and do

not also have physical storefronts and paper catalogs. Online shopping is a type of electronic commerce used for

business-to-business (B2B) and business-to-consumer (B2C) transactions.

In general, shopping has always catered to middle class and upper class women. Shopping is fragmented and

pyramid-shaped. At the pinnacle are elegant boutiques for the affluent, a huge belt of inelegant but ruthlessly efficient

“discounters” flog plenty at the pyramid’s precarious middle. According to the anaylsis of Susan D. Davis, at its base

are the world ’s workers and poor, on whose cheapened labor the rest of the pyramid depends for its incredible

abundance. Shopping has evolved from single stores to large malls with different services such as offering delivery,

attentive service and store credit and accepting return. These new additions to shopping have encouraged and

targeted middle class women. In recent years, online shopping has become popular; however, it still caters to the

middle and upper class. In order to shop online, one must be able to have access to a computer and most of the

time, own a credit card. This technology separates social classes and their ability to shop.

The shopping landscape not only helps distract us from the enormous social segregation by race and class that the

most privileged Americans find completely natural, it helps to reproduce this segregation. Shopping has evolved with

the growth of technology and that means an even larger separation between social classes and their means to shop.

Social position strongly influences individual preferences and tastes in popular culture. According to research found in

the Journal of Electronic Commerce, if we focus on the demographic characteristics of the in-home shopper, in

general, the higher the level of education, income, and occupation of the head of the household, the more favorable

the perception of non-store shopping. It should be remembered that an influential factor in consumer attitude towards

non-store shopping is exposure to technology, since it has been demonstrated that increased exposure to technology

increases the probability of developing favourable attitudes towards new shopping channels.

Online shopping widened the target audience to men and women of the middle class. At first, main users of online

shopping were young men with a high level of income and a university education. This profile is changing. For

example, in USA in the early years of Internet there were very few women users, but by 2001 women were 52.8%

of the online population. Sociocultural pressure has made men generally more independent in their purchase decisions,

while women place greater value on personal contact and social relations. In addition, male shoppers are more

independent when deciding on purchasing products because unlike women, they don’t necessarily need to see or try

on the product.

One third of people that shop online use a search engine to find what they are looking for and about one fourth of

people find websites by word of mouth. Word of mouth has increased as a leading way that people find websites to

shop from. When an online shopper has a good first experience with a certain website sixty percent of the time they

will return to that website to buy more. Books are one of the things bought most online, however clothes, shoes and

accessories are all very popular things to buy online. Cosmetics, nutrition products and groceries are increasingly being

purchased online. About one fourth of travelers are buying their plane tickets online because it is a quick and easy way

to compare airline travel and make a purchase. Online shopping provides more freedom and control than shopping in

a store. According to sociological perspective online shopping is arguably the most predictable way to shop. One

knows exactly what website to go to, how much the product will cost, and how long it will take for the product to

reach them. Online shopping has become extremely routine and predictable, which is one of it’s great appeals to the

consumer.

Consumers find a product of interest by visiting the website of the retailer directly, or do a search across many

different vendors using a shopping search engine. Once a particular product has been found on the web site of the

seller, most online retailers use shopping cart software to allow the consumer to accumulate multiple items and to

adjust quantities, by analogy with filling a physical shopping cart or basket in a conventional store. A "checkout"

process follows (continuing the physical-store analogy) in which payment and delivery information is collected, if

necessary. Some stores allow consumers to sign up for a permanent online account so that some or all of this

information only needs to be entered once. The consumer often receives an e-mail confirmation once the transaction

is complete. Less sophisticated stores may rely on consumers to phone or e-mail their orders (though credit card

numbers are not accepted by e-mail, for security reasons).

Topic 7: Web, Nonstore-Based, And Other Forms Of Nontraditional Retailin

Category U.S. online sales (2006)

Apparel, accessories and footwear $18.3 billion

Computer hardware and software $17.2 billion

Autos and auto parts $16.7 billion

Home furnishings $10.0 billion

Total products sales (excluding travel) $146.4 billion

Travel $73.5 billion


Topic Objective:


l To understand evolution of loyalty programs.

l To analyze the trend of loyalty programs in different sectors of the US market.

l To differentiate between club cards and loyalty programs.

Topic Introduction: Shopping: is the examining of goods or services from retailers with intent to purchase at that time. Shopping is the

activity of selection and/or purchase. In some contexts it is considered a leisure activity as well as an economic one.

Customer Retention: is the activity that the selling organization undertakes to reduce customer account defections.

The success of this activity is when the customer account places an additional order before a 12-month period has

expired. Note that ideally these orders will need to contribute similar financial amounts to the previous 12 months. It can

also be described as a series of actions that the selling organization undertakes to reduce defections. This is the selling

organization's perspective of what they have to implement after the agreement in principle stage of the buying cycle.The

success of the customer retention process is measured when the customer places an additional order before a 12-

month period has expired.

Retention Rate: is the percentage of the total number of customers who have repeatedly placed an order (or made a

transaction) during a twelve month period measured over a number of years, compared to the total number of

customers in the same period.

Loyalty programs: are structured marketing efforts that reward, and therefore encourage, loyal buying behaviour —

behavior which is potentially of benefit to the firm.

Topic Overview:

1. Loyalty programs In marketing generally and in retailing more specifically, a loyalty card, rewards card, points card, or club card is a

plastic or paper card, visually similar to a credit card or debit card, that identifies the card holder as a member in a

loyalty program. Loyalty cards are a system of the loyalty business model. In the United Kingdom it is typically called

a loyalty card, in Canada a rewards card or a points card, and in the United States either a discount card, a club card

or a rewards card. Cards typically have a barcode or magstripe that can be easily scanned, and some are even chip

cards. Small keyring cards (also known as keytags) which serve as key fobs are often used for convenience in

carrying and ease of access.

A retail establishment or a retail group may issue a loyalty card to a consumer who can then use it as a form of

identification when dealing with that retailer. By presenting the card, the purchaser is typically entitled to either a

discount on the current purchase, or an allotment of points that can be used for future purchases. Hence, the card is

the visible means of implementing a type of what economists call a two-part tariff.

The card issuer requests or requires customers seeking the issuance of a loyalty card to provide a usually minimal

amount of identifying or demographic data, such as name and address. Application forms usually entail agreements by

the store concerning customer privacy, typically non-disclosure (by the store) of non-aggregate data about

customers. The store — one might expect — uses aggregate data internally (and sometimes externally) as part of its

marketing research.

Where a customer has provided sufficient identifying information, the loyalty card may also be used to access such

information to expedite verification during receipt of cheques or dispensing of medical prescription preparations, or for

other membership privileges (e.g., access to a club lounge in airports, using a frequent flyer card).

1.1 Loyalty Cards in the US Supermarkets In the U.S., several major supermarket chains and at least one major pharmacy require the cards in order for

customers to receive the advertised loyalty price. These include Kroger and Safeway (each through both their

own name and many of their regional chain names), Albertsons, Winn-Dixie, Harris Teeter, Ingles, Giant Eagle,

Tops, and CVS/pharmacy. Cards from other, even competing chains will generally work at other stores to

receive the advertised loyalty price, because only a few companies make the cards, but stores generally will not

allow this since it will not allow a customer to be tracked, though a customer can make it work if they use a

self-checkout. Even though this will work to receive the advertised loyalty price, any points and/or future

discounts someone may be trying to earn from using the card at another store will not be added since a

different chain would use a tracking system with a database independent of the other chain. However, some

stores may also allow a customer to use the store's card if a customer does not have theirs on hand (Kroger

does not allow this although customers can enter their phone number to bring their card up if they forget it, or

have another customer's phone number entered) or if the customer is new and agrees to sign up right away.

Many of the stores allow accumulation of fuel discounts. Some have tie-ins with airline frequent flyer programs,

and some agree to donate a percentage of sales to a designated charity. Most notably, Wal-Mart does not

have a loyalty card plan (though someone who purchases a gift card can generally get a 3 cent discount per

gallon of gas at the fuel stations located on Wal-Mart premises).

1.2 Loyalty Cards in the US Supermarkets The practice is also common among book and music retailers, from large chains to independent retailers. In

some instances, the customer purchases the card and receives a percentage discount on all purchases for a

period of time (often one year), while in other instances, a customer receives a one-time percentage discount

upon reaching a specified purchase level. (For example, a bookseller's loyalty card program might provide a

customer with a 10% off coupon once the customer has spent $200.00 at the bookseller.) Best Buy's loyalty

program similarly offers points redeemable for dollar-amount discounts after accumulating a set number of

points along with other discounts from time to time, though the card is not required to receive their advertised

price in most cases.

1.3 Loyalty Cards in the US Music Stores Independent hardware stores such as Ace Hardware and True Value added customer loyalty programs in order

to compete more effectively against larger chains as well as gather customer data. In addition, office supply

retailers Staples, Inc. and Office Depot started issuing club cards in 2005.

1.4 Loyalty Cards in the US hotel Chains Almost all of the major hotel chains (Best Western, Choice Hotels, Holiday Inn, Marriott, Super 8 Motels, etc.)

have similar cards that allow guests to earn either points (redeemable for discounts, future stays or other

prizes) or airline miles (Hilton's HHonors program allows guests to earn both points and miles on the same

stay, the only program to date that does so). All major US Airlines also offer rewards credit cards. Other travel

related reward programs include SeaMiles, with points that can be redeemed for cruises. For now, most American retailers have not implemented club cards. In a few cases (e.g., Federated

Department Stores, Kohl's) this is because the retailer already issues its own credit cards, and thus already has

a direct relationship with the consumers most likely to shop at its stores. Also, many retailers are simply not

large enough to justify the cost of creating, promoting, and operating a club card program.

2. Club Cards

Some supermarket customer loyalty cards inadvertently work at the scanners of other non-affiliated stores. For

example, a Kroger card has been successfully recognized as a respective loyal club member at stores in the Food

Lion, Pathmark and Winn-Dixie chains. An example of a so-called consumer-centric card (without cost, registration, or

information-tracking) is the MyJoeCard operating in Kansas City.

A few states have begun regulating club cards. For example, supermarkets in the U.S. state of California are subject

to the Supermarket Club Card Disclosure Act of 1999 . Some grocery chains have dropped their loyalty card

programs. Rainbow Foods in Minnesota ended its loyalty card program after being acquired by Roundy's, leaving

Minnesota with no major grocers that use such cards.

3. Online Loyalty Programs

There are a few online loyalty programs that offer rewards for being a loyal shopper. The largest of these are

Memolink, Mypoints, and Ebates. Some online loyalty programs focus on "other-directed" consumers, these include

uPromise, Schoolpop, and iGive.com.

Topic 8: Identifying And Understanding Consumers





Site Selection






Topic Objective:



Topic Introduction:





Topic Overview:




stalls).








2. Retail Places







consumerism In cities, these were multi-story buildings which pioneered the escalator.

In the 1920s the first supermarket opened in the United States, heralding in a new era of retail: self-service. Around

the same time the first shopping mall was constructed which incorporated elements from both the arcade and the

department store. A mall consists of several department stores linked by arcades (many of whose shops are owned

by the same firm under different names). The design was perfected by the Austrian architect Victor Gruen All the

stores rent their space from the mall owner. By mid-century, most of these were being developed as single enclosed,

climate-controlled, projects in suburban areas. The mall has had a considerable impact on the retail structure and

urban development in the United States.

In addition to the enclosed malls, there are also strip malls which are 'outside' malls (in Britain they are called retail

parks. These are often comprised of one or more big-box stores or superstores.

l Local shops can be known as brick and mortar stores in the United States. Many shops are part of a chain: a

number of similar shops with the same name selling the same products in different locations. The shops may be

owned by one company, or there may be a franchising company that has franchising agreements with the shop

owners

l Some shops sell second-hand goods. In other cases, especially in the case of a nonprofit shop, the public

donates goods to the shop to be sold. In give-away shops goods can be taken for free.

l There are also 'consignment' shops, which are where a person can place an item in a store, and if it sells the

person gives the shop owner a percentage of the sale price. The advantage of selling an item this way is that the

established shop gives the item exposure to more potential buyers.

The term retailer is also applied where a service provider services the needs of a large number of individuals, such as

with telephone or electric power. Retailers may use facing to create the look of a perfectly-stocked store even when

it is not.

Topic 9: Trading-Area Analysis


Topic Objective:


l To understand the logics and considerations behind urban planning.

l To describe the different aspects of planning.

Topic Introduction:

Market: is a physical location where buyers and sellers converge. Usually this is done in town squares, sidewalks or

designated streets and may involve the construction of temporary structures (market stalls).

Self-service: where goods may be handled and examined prior to purchase, has become more common since the 20th

century.

Topic Overview:

1. Urban Planning Urban, city, and town planning are the disciplines of land use planning that explore a very wide range of aspects of the

built and social environments of urbanized municipalities and communities. Other professions deal in more detail with a

smaller scale of development, namely architecture, landscape architecture and urban design. Regional planning deals

with a still larger environment, at a less detailed level.

Another key role of urban planning is urban renewal, and re-generation of inner cities by adapting urban planning

methods to existing cities suffering from long-term infrastructural decay.

2. Aspects of planning

In developed countries, there has been a backlash against excessive man-made clutter in the visual environment,

such as signposts, signs, and hoardings. Other issues that generate strong debate amongst urban designers are

tensions between peripheral growth, increased housing density and planned new settlements. There are also unending

debates about the benefits of mixing tenures and land uses, versus the benefits of distinguishing geographic zones

where different uses predominate. Regardless, all successful urban planning considers urban character, local identity,

respect for heritage, pedestrians, traffic, utilities and natural hazards.

Planners are important in managing the growth of cities, applying tools like zoning to manage the uses of land, and

growth management to manage the pace of development. When examined historically, many of the cities now

thought to be most beautiful are the result of dense, long lasting systems of prohibitions and guidance about building

sizes, uses and features. These allowed substantial freedoms, yet enforce styles, safety, and often materials in

practical ways. Many conventional planning techniques are being repackaged using the contemporary term smart

growth.

There are some cities that have been planned from conception, and while the results often don't turn out quite as

planned, evidence of the initial plan often remains.

2.1 Safety Historically within the Middle East, Europe and the rest of the Old World, settlements were located on higher

ground (for defense) and close to fresh water sources. Cities have often grown onto coastal and flood plains at

risk of floods and storm surges. Urban planners must consider these threats. If the dangers can be localized

then the affected regions can be made into parkland or Greenbelt, often with the added benefit of open space

provision. Extreme weather, flood, or other emergencies can often be greatly mitigated with secure emergency

evacuation routes and emergency operations centers. These are relatively inexpensive and unintrusive, and

many consider them a reasonable precaution for any urban space. Many cities will also have planned, built

safety features, such as levees, retaining walls, and shelters. In recent years, practitioners have also been expected to maximize the accessibility of an area to people with

different abilities, practicing the notion of "inclusive design," to anticipate criminal behaviour and consequently to

"design-out crime" and to consider "traffic calming" or "pedestrianisation" as ways of making urban life more

pleasant. City planning tries to control criminality with structures designed from theories such as socio-architecture or

environmental determinism. These theories say that an urban environment can influence individuals' obedience

to social rules. The theories often say that psychological pressure develops in more densely developed,

unadorned areas. This stress causes some crimes and some use of illegal drugs. The antidote is usually more

individual space and better, more beautiful design in place of functionalism.

Oscar Newman’s defensible space theory cites the modernist housing projects of the 1960s as an example of

environmental determinism, where large blocks of flats are surrounded by shared and disassociated public

areas, which are hard for residents to identify with. As those on lower incomes cannot hire others to maintain

public space such as security guards or grounds keepers, and because no individual feels personally responsible,

there was a general deterioration of public space leading to a sense of alienation and social disorder Source

Jane Jacobs is another notable environmental determinist and is associated with the "eyes on the street"

concept. By improving ‘natural surveillance’ of shared land and facilities of nearby residents by literally increasing

the number of people who can see it, and increasing the familiarity of residents, as a collective, residents can

more easily detect undesirable or criminal behavior.

The "broken-windows" theory argues that small indicators of neglect, such as broken windows and unkempt

lawns, promote a feeling that an area is in a state of decay. Anticipating decay, people likewise fail to maintain

their own properties. The theory suggests that abandonment causes crime, rather than crime causing

abandonment.

Some planning methods might help an elite group to control ordinary citizens. Haussmann's renovation of Paris

created a system of wide boulevards which prevented the construction of barricades in the streets and eased

the movement of military troops. In Rome, the Fascists in the 1930s created ex novo many new suburbs in

order to concentrate criminals and poorer classes away from the elegant town.

Other social theories point out that in Britain and most countries since the 18th century, the transformation of

societies from rural agriculture to industry caused a difficult adaptation to urban living. These theories

emphasize that many planning policies ignore personal tensions, forcing individuals to live in a condition of

perpetual extraneity to their cities. Many people therefore lack the comfort of feeling "at home" when at home.

Often these theorists seek a reconsideration of commonly used "standards" that rationalize the outcomes of a

free (relatively unregulated) market.

2.2 Transport

Transport within urbanized areas presents unique problems. The density of an urban environment can create

significant levels of road traffic, which can impact businesses and increase pollution. Parking space is another

concern, requiring the construction of large parking garages in high density areas which could be better used for

other development.

Good planning uses transit oriented development, which attempts to place higher densities of jobs or residents

near high-volume transportation. For example, some cities permit commerce and multi-story apartment

buildings only within one block of train stations and multilane boulevards, and accept single-family dwellings and

parks farther away.

Floor area ratio is often used to measure density. This is the floor area of buildings divided by the land area.

Ratios below 1.5 could be considered low density, and plot ratios above five very high density. Most exurbs are

below two, while most city centres are well above five. Walk-up apartments with basement garages can easily

achieve a density of three. Skyscrapers easily achieve densities of thirty or more.

City authorities may try to encourage lower densities to reduce infrastructure costs, though some observers

note that low densities may not accommodate enough population to provide adequate demand or funding for

that infrastructure. In the UK, recent years have seen a concerted effort to increase the density of residential

development in order to better achieve sustainable development. Increasing development density has the

advantage of making mass transport systems, district heating and other community facilities (schools, health

centres, etc) more viable. However critics of this approach dub the densification of development as 'town

cramming' and claim that it lowers quality of life and restricts market-led choice.

Problems can often occur at residential densities between about two and five. These densities can cause traffic

jams for automobiles, yet are too low to be commercially served by trains or light rail systems. The

conventional solution is to use buses, but these and light rail systems may fail where automobiles and excess

road network capacity are both available, achieving less than 1% ridership.

The Lewis-Mogridge Position claims that increasing road space is not an effective way of relieving traffic jams as

latent or induced demand invariably emerges to restore a socially-tolerable level of congestion.

2.3 Environmental factors

Environmental protection and conservation are of utmost importance to many planning systems across the

world. Not only are the specific effects of development to be mitigated, but attempts are made to minimize the

overall effect of development on the local and global environment. This is commonly done through the

assessment of Sustainable urban infrastructure. In Europe this process is known as Sustainability Appraisal.

In most advanced urban or village planning models, local context is critical. In many, gardening and other

outdoor activities assumes a central role in the daily life of citizens. Environmental planners are focusing on

smaller systems of resource extraction, energy production and waste disposal. There is even a practice known

as Arcology, which seeks to unify the fields of ecology and architecture, using principles of landscape

architecture to achieve a harmonious environment for all living things. On a small scale, the eco-village theory

has become popular, as it emphasizes a traditional 100-140 person scale for communities.

An urban planner is likely to use a number of quantitative tools to forecast impacts of development on the

environmental, including roadway air dispersion models to predict air quality impacts of urban highways and

roadway noise models to predict noise pollution effects of urban highways. As early as the 1960s, noise

pollution was addressed in the design of urban highways as well as noise barriers. The Phase I Environmental

Site Assessment can be an important tool to the urban planner by identifying early in the planning process any

geographic areas or parcels which have toxic constraints.

2.4 Light and Sound

The canyon effect is a colloquial, non-scientific term referring to street space bordered by very high buildings.

This type of environment may disallow direct sunlight to reach sidewalk level during most of the daylight hours.

While an oft-decried phenomenon, this is very rare outside of very dense, hyper-tall urban environments, such

as those found in Lower and Midtown Manhattan, Chicago's Loop and Kowloon in Hong Kong. In urban

planning, sound is usually measured as a source of pollution.

Topic 10: Site Selection


Topic Objective:

At the end of this topic students will be able: l To understand human resource management.

l To distinguish the unique feature in HRM

l To comprehend the academic theory in HRM

l To understand the goal of HRM

Topic Introduction:

Human resource management (HRM): is the strategic and coherent approach to the management of an

organization's most valued assets - the people working there who individually and collectively contribute to the

achievement of the objectives of the business. Topic Overview:

1. Human Resource Management The terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel

management" as a description of the processes involved in managing people in organizations. Human Resource

management is evolving rapidly. Human resource management is both an academic theory and a business practice

that addresses the theoretical and practical techniques of managing a workforce.

2. Features

Its features include:

l Personnel administration

l Personnel management

l Manpower management

l Industrial management

But these traditional expressions are becoming less common for the theoretical discipline. Sometimes even industrial

relations and employee relations are confusingly listed as synonyms, although these normally refer to the relationship

between management and workers and the behavior of workers in companies.

The theoretical discipline is based primarily on the assumption that employees are individuals with varying goals and

needs, and as such should not be thought of as basic business resources, such as trucks and filing cabinets. The field

takes a positive view of workers, assuming that virtually all wish to contribute to the enterprise productively, and that

the main obstacles to their endeavors are lack of knowledge, insufficient training, and failures of process.

HRM is seen by practitioners in the field as a more innovative view of workplace management than the traditional

approach. Its techniques force the managers of an enterprise to express their goals with specificity so that they can

be understood and undertaken by the workforce, and to provide the resources needed for them to successfully

accomplish their assignments. As such, HRM techniques, when properly practiced, are expressive of the goals and

operating practices of the enterprise overall. HRM is also seen by many to have a key role in risk reduction within

organisations.

3. Academic theory

The goal of human resource management is to help an organization to meet strategic goals by attracting, and

maintaining employees and also to manage them effectively. The key word here perhaps is "fit", i.e. a HRM approach

seeks to ensure a fit between the management of an organization's employees, and the overall strategic direction of

the company.

The basic premise of the academic theory of HRM is that humans are not machines, therefore we need to have an

interdisciplinary examination of people in the workplace. Fields such as psychology, industrial engineering, industrial

and organizational psychology, industrial relations, sociology, and critical theories: postmodernism, post-structuralism

play a major role. Many colleges and universities offer bachelor and master degrees in Human Resources

Management.

4. Goal of human resource management

The goal of human resource management is to help an organization to meet strategic goals by attracting, and

maintaining employees and also to manage them effectively. The key word here perhaps is "fit", i.e. a HRM approach

seeks to ensure a fit between the management of an organization's employees, and the overall strategic direction of

the company.

The basic premise of the academic theory of HRM is that humans are not machines, therefore we need to have an

interdisciplinary examination of people in the workplace. Fields such as psychology, industrial engineering, industrial

and organizational psychology, industrial relations, sociology, and critical theories: postmodernism, post-structuralism

play a major role. Many colleges and universities offer bachelor and master degrees in Human Resources

Management.

One widely used scheme to describe the role of HRM, developed by Dave Ulrich, defines 4 fields for the HRM function:

l Strategic business partner

l Change agent

l Employee champion

l Administration

However, many HR functions these days struggle to get beyond the roles of administration and employee champion,

and are seen rather as reactive than strategically proactive partners for the top management. In addition, HR

organizations also have the difficulty in proving how their activities and processes add value to the company. Only in

the recent years HR scholars and HR professionals are focusing to develop models that can measure if HR adds value.

5. Critical Academic Theory

Postmodernism plays an important part in Academic Theory and particularly in Critical Theory. Indeed Karen Legge in

'Human Resource Management: Rhetorics and Realities' possess the debate of whether HRM is a modernist project or

a postmodern discourse. In many ways, critically or not, many writers contend that HRM itself is an attempt to move

away from the modernist traditions of personnel (man as machine) towards a postmodernist view of HRM (man as

individuals). Critiques include the notion that because 'Human' is the subject we should recognize that people are

complex and that it is only through various discourses that we understand the world. Man is not Machine, no matter

what attempts are made to change it i.e. Fordism / Taylorism, McDonaldisation (Modernism).

Critical Theory also questions whether HRM is the pursuit of "attitudinal shaping", particularly when considering

empowerment, or perhaps more precisely pseudo-empowerment - as the critical perspective notes. Many critics note

the move away from Man as Machine is often in many ways, more a Linguistic (discursive) move away than a real

attempt to recognise the Human in Human Resource Management.

Topic 11: Retail Organization And Human Resource Management


Topic Objective:


l To differentiate between the main techniques and sectors of financial industry.

l To understand the corporate and personal finances.

l To understand financial management.

Topic Introduction:

Finance: The field of finance refers to the concepts of time, money and risk and how they are interrelated.

Managerial or corporate finance: is the task of providing the funds for a corporation's activities. For small business,

this is referred to as SME finance. It generally involves balancing risk and profitability, while attempting to maximize an

entity's wealth and the value of its stock.

Topic Overview:

1. The main techniques and sectors of the financial industry An entity whose income exceeds its expenditure can lend or invest the excess income. On the other hand, an entity

whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its

expenses, or increasing its income. The lender can find a borrower, a financial intermediary such as a bank, or buy

notes or bonds in the bond market. The lender receives interest, the borrower pays a higher interest than the lender

receives, and the financial intermediary pockets the difference.

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it

pays the interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different

sizes, to coordinate their activity. Banks are thus compensators of money flows in space.

A specific example of corporate finance is the sale of stock by a company to institutional investors like investment

banks, who in turn generally sell it to the public. The stock gives whoever owns it part ownership in that company. If

you buy one share of XYZ Inc, and they have 100 shares outstanding (held by investors), you are 1/100 owner of

that company. Of course, in return for the stock, the company receives cash, which it uses to expand its business in a

process called "equity financing". Equity financing mixed with the sale of bonds (or any other debt financing) is called

the company's capital structure.

Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance),

as well as by a wide variety of organizations including schools and non-profit organizations. In general, the goals of

each of the above activities are achieved through the use of appropriate financial instruments, with consideration to

their institutional setting.

Finance is one of the most important aspects of business management. Without proper financial planning a new

enterprise is unlikely to be successful. Managing money (a liquid asset) is essential to ensure a secure future, both for

the individual and an organization.

2. Personal finance

Personal financial decisions may involve paying for education, financing durable goods such as real estate and cars,

buying insurance, e.g. health and property insurance, investing and saving for retirement.

Personal financial decisions may also involve paying for a loan.

3. Corporate finance

Managerial or corporate finance is the task of providing the funds for a corporation's activities. For small business, this

is referred to as SME finance. It generally involves balancing risk and profitability, while attempting to maximize an

entity's wealth and the value of its stock.

Long term funds are provided by ownership equity and long-term credit, often in the form of bonds. The balance

between these forms the company's capital structure. Short-term funding or working capital is mostly provided by

banks extending a line of credit.

Another business decision concerning finance is investment, or fund management. An investment is an acquisition of

an asset in the hope that it will maintain or increase its value. In investment management -- in choosing a portfolio --

one has to decide what, how much and when to invest. To do this, a company must:

l Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax

considerations;

l Identify the appropriate strategy: active v. passive -- hedging strategy

l Measure the portfolio performance

4. Financial management

Financial management is duplicate with the financial function of the Accounting profession. However, financial

accounting is more concerned with the reporting of historical financial information, while the financial decision is

directed toward the future of the firm.

In the accounting sense of the term, net profit (before tax) is the sales of the firm less costs such as wages, rent,

fuel, raw materials, interest on loans and depreciation. Costs such as depreciation, amortization, and overhead are

ambiguous. Revenue may also be ambiguous when different products are sold as a package, or "bundled." Within US

business, the preferred term for profit tends to be the more ambiguous income.

l Gross profit is profit before Selling, General and Administrative costs (SG&A), like depreciation and interest; it is

the Sales less direct Cost of Goods (or services) Sold (COGS),

l Net profit after tax is after the deduction of either corporate tax (for a company) or income tax (for an

individual).

l Operating profit is a measure of a company's earning power from ongoing operations, equal to earnings before

the deduction of interest payments and income taxes.

l Economic profit, or EP, is a single-period metric to determine the value created by a company in one period -

usually a year. It is the net profit after tax less the equity charge, a risk-weighted cost of capital. This is almost

identical to the economist's definition of economic profit.

There are commentators who see benefit in making adjustments to economic profit such as eliminating the effect of

amortized goodwill or capitalizing expenditure on brand advertising to show its value over multiple accounting periods.

The underlying concept was first introduced by Schmalenbach, but the commercial application of the concept of

adjusted economic profit was by Stern Stewart & Co. which has trade-marked their adjusted economic profit as EVA

or Economic Value Added.

Topic 12: Operations Management: Financial Dimensions

Page 1 / 54



Course Instructions

Please read the instructions given below related to Course "Strategic Retail Management"

There are 5 sections in this course. All sections are mandatory.













Site Selection




Operations Management: Operational Dimensions

Developing Merchandise Plans

Implementing Merchandise Plans


Pricing In Retailing

Establishing And Maintaining A Retail Image

Promotional Strategy











Topic Objective:


l To understand the concept of Retail pricing

l To understand services in retail sector.

Topic Introduction:

Retailing: Business activities involved in selling goods and services to consumers for their personal, family, or household

use.

Channel of Distribution: All of the businesses and people involved in the physical movement and transfer of ownership

of goods and services from producer to consumer.

Sorting Process: Involves the retailer's collecting an assortment of goods and services from various sources, buying

them in large quantity, and offering to sell them in small quantities to consumers.

Topic Overview:

1. Retail pricing The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or

percentage) to the retailers cost. Another common technique is suggested retail pricing. This simply involves charging

the amount suggested by the manufacturer and usually printed on the product by the manufacturer.

In Western countries, retail prices are often called psychological prices or odd prices. Often prices are fixed and

displayed on signs or labels. Alternatively, there can be price discrimination for a variety of reasons, where the retailer

charges higher prices to some customers and lower prices to others. For example, a customer may have to pay

more if the seller determines that he or she is willing to. The retailer may conclude this due to the customer's wealth,

carelessness, lack of knowledge, or eagerness to buy. Another example is the practice of discounting for youths or

students. Retailers who are overstocked, or need to raise cash to renew stocks may resort to "sales", where prices

are "marked down", often by advertised percentages - "50% off".

2. Retail Services





changes. As products change, so will a retail landscape.

3. Etymology

Retail comes from the French word retaillier which refers to "cutting off, clip and divide" in terms of tailoring (1365). It

first was recorded as a noun with the meaning of a "sale in small quantities" in 1433 (French). Its literal meaning for

retail was to "cut off, shred, paring". Like the French, the word retail in both Dutch and German (detailhandel and

Einzelhandel respectively) also refer to sale of small quantities of items.

Topic 1: An Introduction To Retailing


Topic Objective:



Topic Introduction:





Topic Overview:




stalls).








2. Retail Places







consumerism In cities, these were multi-story buildings which pioneered the escalator. In the 1920s the first supe

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