assignment guidelines module : retail...

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© IMM Graduate School of Marketing Marking Guidelines 2

nd Semester 2014 RM / RM001

ASSIGNMENT GUIDELINES

MODULE : RETAIL MARKETING (RM) RETAIL MARKETING (RM001)

ASSIGNMENT : 2ND SEMESTER 2014

The following guidelines outline the basic topics that should have been covered in the student’s answers to the assignment. The guidelines do not cover every possibility and the marker is to use his/her discretion when allocating marks based on the quality of the student’s answers. In addition, students did not have to cover every point identified in these guidelines – they serve as a guide only. Marks are allocated based on the student’s comprehension of the work and insight shown through his/her examples and practical applications.

References are to the prescribed textbook: Levy, M. & Weitz, B.A., 2012. Retailing Management. 8th ed. McGraw-Hill.

Take note that 10 marks are allocated to presentation. This includes the following elements:

Spelling checked

Structure

Use of headings and paragraphs

Logical development of answers

Harvard referencing method. QUESTION 1 [20]

Students were required to give a comprehensive discussion on the topic of environmental sustainability (or going green) in retailing. They had to apply their discussion to the Northmead Pick n Pay throughout their answers by showing what changes can/need to be made in all aspects of its store to ensure that it is environmentally sustainable. In their answers students should consider the following topics (but not limited to) as a basis of their discussion:

Putting the concept of ‘going green’ into context with retailing (3)

Reasons for going green (6)

Ways to become green/changes to make (7)

Gaining employee cooperation in going green. (4)

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Students need to research this topic in detail by consulting books, articles, the Internet and any other reliable sources. It was essential that they apply all elements of their theoretical discussion to the retailer in the case study. Marks to be allocated at the discretion of the marker based on the quality of the student’s discussions and effort put into ensuring a complete and rounded answer.

Total = 20 marks

Given below are a number of points that could form part of the student’s answer – they cover the basic elements of the topic and serve to guide the marker on the types of issues that could have been covered by the student. It is by no means a complete discussion on the entire topic as this would take up many pages. Students were not required to address all the issues addressed below. Additionally, some of the points given might be repeated. This is because the points have been compiled from a number of article extracts and have been left in as they from part of the larger discussion.

Five Reasons for Retailers to Go Green The world is becoming more environmentally conscious, and retailers are no exception: Everyone from big-box retailers to mom-and-pop shops are getting “greener”. Multinational retailers like Tesco, Kingfisher, Starbucks and Safeway have made public pledges to promote environmental stewardship by boosting energy efficiency, offering sustainable products, eliminating waste and reducing greenhouse gases. Retailers large and small are adding solar panels and wind turbines to their warehouses while expanding their range of sustainable products. It’s worth the investment. Retailers that integrate customer-focused initiatives throughout their business have a greater number of loyal customers and outperform their competitors, according to an IBM study of 19,000 consumers. There are many reasons why retailers should consider increasing their focus on “going green”, including:

Developing more loyal customers. A recent report from The NPD Group, found that more than half of consumers surveyed consider themselves extremely or very interested in environmentally friendly products. Women (57 percent) appear to have a stronger interest in “green” products than men (47 percent) and are more likely to pay a higher price for eco-friendly products. Further, product origin, as well as ingredients and content, matter more to women shoppers. For example, are products organically grown? Tested on any animals?

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Conserving energy makes rands and sense. Some retailers are working to minimize the energy needed to heat, cool, light and operate the equipment in their stores and data centres. For example, U.K. Co-op launched a programme that lets POS devices sleep at night, reducing CO2 by 722 tons and saving an estimated £120,000 per year. Other retailers are supplementing power by using local generators, allowing them to offload power from the grid when it is under stress or more expensive.

Grocers and hypermarkets closely monitor the temperature and power usage in coolers, freezers and other temperature-controlled environments in the store to ensure the equipment is working properly and not expending too much energy. They also are able to better manage spoilage with this automated monitoring. Based upon a defined set of thresholds and dashboards, retailers can better manage their store environments and reduce energy consumption.

Building a sustainable supply chain. Companies see the link between a “greener” supply chain and improved efficiency and visibility; non-retailers are already reaping the benefits. General Motors, for example, recently reduced disposal costs by $12 million by establishing a reusable-container program with suppliers. To reduce their carbon footprint, suppliers are using bio-fuel, diesel and hybrid options to transport goods from warehouses to stores. In addition to energy efficiency, a sustainable supply chain also links products to their point of origin, improves product quality by ensuring that shipping practices are monitored and facilitates efficient and speedy recalls.

Developing smarter packaging. Stores are reshaping their milk cartons so that they can stack more cartons on each truck to purified water companies remolding their bottles to be lighter weight, companies are investing in smarter packaging methods. Similar to their European counterparts, U.S. retailers now urge shoppers to purchase cloth or plastic bags and deduct as much as five cents per bag when customers re-use them on return visits.

Becoming more socially responsible. Companies are under increasing pressure from governments, advocacy groups, investors, consumers and even prospective employees to make their operations, products and services more socially responsible. A recent IBM study of 7,500 CEOs found that companies doubled their focus on environmental issues in the past two years. More important, the study found that retail CEOs plan on increasing their investment in corporate social responsibility by 49 percent over the next three years.

For retailers, “going green” means operating more efficiently, especially by controlling energy use. It also means sourcing products that are sustainable, thus giving shoppers the opportunity to support brands that they trust and feel good about. The bottom line: Social responsibility and “going green” are not disconnected from building customer loyalty, improving revenue and managing costs. Retailers need to recognize social and environmental initiatives for what they are — smart business. Source: http://www.stores.org/stores-magazine-january-2009/five-reasons-retailers-go-green. [Accessed: 20 February 2014].

http://www.stores.org/stores-magazine-january-2009/five-reasons-retailers-go-green

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10 Ways to Green Your Retail Store Going green can help small retailers stand out from competitors, but few seem to be focusing on becoming more environmentally friendly. An MIT Sloan Management Review study released last year found that while most big retail chains already have green initiatives in place, only 9 percent of businesses with fewer than 1,000 employees have embraced sustainability as a core value. That small percentage may reflect two of the major challenges small retailers face: their landlord and their budget. When you don’t own your store and don’t have a lot to spend, it’s hard to make expensive changes that could bring big energy savings, such as adding insulation or installing skylights. But going green doesn’t necessarily have to be costly. Here are 12 easy steps you can take to reduce your carbon footprint and cut waste: 1. Switch to energy-efficient lighting. You may be able to reap some cost savings and reduce energy use by trading incandescent or older fluorescent light bulbs for newer light-emitting diode (LED) or compact fluorescent (CFL) lights. If you have five years left on your lease, the savings could pay for the project before the lease ends. 2. Clean greener. If you purchase your store’s cleaning supplies, it shouldn’t cost much to simply switch to less-toxic products as you run out of current stocks. Or you can make your own. Simply using a combination of water and distilled vinegar can give you a home-made cleaning spray in no time. 3. Buy used fixtures. A great way to both recycle and save money is to scavenge for salvaged fixtures -- ideally ones made of natural materials -- rather than spend big for new shelving made from metal or petroleum-based plastics. Some stores use antique wood cabinets and shelves throughout their store. 4. Create a living wall. Improve air quality with a wall full of indoor plants placed under air-conditioning vents. This is an especially good move at indoor malls, where air can be re-circulated and stale. 5. Make bags and receipts optional. Many recommend getting rid of plastic bags and substituting reusable or recycled paper bags. Then, ask customers if they need a bag at all. Also, ask them if you can save a tree and email the receipt. The bonus: You capture emails for future marketing. 6. Buy energy-efficient equipment. If you're purchasing a new computer, printer or other equipment, compare Energy Star ratings and buy the most efficient item. Countertop point-of-sale machines use a lot of electricity, but you could reduce energy consumption by switching to mobile payments on smartphones or tablets paired with a device. 7. Turn it off. Many businesses leave cash registers, computers and other devices on day and night. Instead, shut everything off each night to avoid sucking "vampire power" to dormant equipment.

http://sloanreview.mit.edu/feature/sustainability-advantage/

http://www.diylife.com/spring-cleaning/cleaning-with-vinegar/

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8. Turn it down. Put timers on lights in sporadically used areas such as bathrooms. Also, see if you can use less overhead lighting during the day, at least in parts of the store near windows. 9. Stock green. Examine the materials lists on the merchandise you sell for petroleum byproducts, metals and other nonreplenishable materials. Investigate whether similar products made from renewable resources are available. Take a look at where goods are made, too. If possible, switch to products made closer to your store to reduce the environmental costs of transportation. 10. Cut packaging. Encourage existing vendors to ship products in less elaborate packaging and consider switching to suppliers that are less wasteful. For the waste you do receive, try to expand your recycling efforts and compost if you have a restaurant. The critical final step for any green initiative is training. Make sure workers understand your policies for reducing and managing waste and cutting electricity use, and put it in writing. Get staffers' ideas and incorporate them into the plan, too. Source: http://www.entrepreneur.com/article/223225#. [Accessed: 20 February 2014].

8 Reasons for Retailers to "Go Green!" From growing your green customer base to growing your bottom line, the benefits of going green make it a great strategy for any retail store. Eco-friendly retailing practices can help your business stand out in your community, all while lowering your overhead costs and creating a healthier space for your customers and staff. Here are some green tips for retailers: 1. Save Money on Lighting Whether you own or rent your store’s space, thinking about your store’s lighting can have a major impact on your utility bill (and on your environmental footprint.) Consider this: energy efficient options like Compact Fluorescent Lightbulbs (CFLs) and Light-Emitting Diodes (LEDs) use up to 75% less energy than traditional incandescent lighting. CFLs last up to 10 times as long as incandescent bulbs, while LEDs last 50 times as long! This all adds up to a lot of money saved on your utility costs (and also less time wasted with replacing old lighting.) Just a single bulb replacement can mean $100s in savings over the life of the energy efficient alternative. The more light bulbs you replace, the more you save! Energy-efficient lighting comes in a full range of colors, shapes and sizes, including dimmable and outdoor options, so you won’t need to compromise on your customers’ shopping experience when you make the switch. It’s easy to maintain the intensity and quality of light that you’re used to!

http://www.greenretaildecisions.com/news/2011/06/16/retail-waste-reduction-made-easy

http://www.entrepreneur.com/article/223225

http://www.greenirene.com/EnergyEfficientLighting-s/39.htm

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2. Save Money on Heating and Cooling Heating and cooling your store can make up as much as 50% of your utility bill. An overworked radiator or too much air conditioning can be setting your store back $1,000s each year! Here are a few ways to take control of your energy costs:

By installing a programmable thermostat, you can keep better control over your store’s HVAC (Heating, Ventilation, and Air Conditioning) system. A programmable thermostat can be scheduled to automatically change temperatures, so you won’t have to worry about wasting energy overnight or on days when your store is closed.

If you like to keep your store entrance propped open to attract foot traffic, consider conserving energy by running a fan rather than using air conditioning.

Finally, take care of your HVAC system. By making sure filters stay clean and ducts unobstructed, you’ll not only maximize energy-efficiency, but you’ll also remove the dust and mold particles that can trap bad smells or irritate the allergies of your customers and staff. Check your system’s air filters once a month and clean or replace the filter when necessary.

3. Save Money on Water The flow rate on most public bathroom faucets is 2.2 gallons per minute - that's the same amount used by many inefficient showerheads! Here are a few ideas for conserving water at the faucets in your store bathroom, and reducing your water bill:

A low-flow aerator helps to manage the amount of water that comes out of a sink, but it doesn’t change the water pressure. This is a cheap, quick, and effective solution that can save you 50-75% on each sink’s water use.

For sinks where a tap aerator isn’t an option (like some decorative faucets), you can still achieve the same savings! A tap flow control valve easily installs under the sink between the pipe and tap.

An instant-off water saver can save up to 10,000 litres of water per year by eliminating the waste of unused running water. Easily installed in place of current faucet aerators, it allows users to turn on the faucet only when they intentionally move the water saver rod. It also reduces the spread of infection and simplifies sink use since there is no need to adjust the faucet handles once it’s set up.

4. Reduce Waste, Save Money You may already be recycling paper, plastic and glass, but taking a look at your store’s waste stream can really help to find other opportunities to reduce your waste and save money. More and more businesses have found that cutting down on packaging can help a store’s bottom line:

Making products lighter reduces shipping costs.

Reducing packaging waste not only cuts down on the amount of trash that’s sent to landfills, it can also shrink your waste hauling fees!

http://www.greenirene.com/WaterConservation-s/22.htm

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Here are just a few of ideas to consider for reducing waste and saving money:

Think about eliminating paper and plastic single-use bags from your store, or offering a discount to shoppers who use reusable tote bags (tote bags could even be branded with your company logo for great publicity).

Talk to your suppliers about minimizing packaging or choosing recycled packaging materials.

Ask yourself if any of your products can be sold in bulk, or with less packaging.

If your store offers ready-to-eat food, also think about providing biodegradable plates, bowls, and cups. Quality alternatives (like sugarcane-based or corn-based products) are as durable as the usual Styrofoam, plastic or paper products, and they can be used with hot or cold foods. Your customers will appreciate helping them to reduce their waste, and you’ll eliminate many of the environmental health concerns that surround traditional products like BPA in plastic cups and bleaches in paper plates.

Taking on waste reduction won’t just help keep trash out of landfills; it’ll help you cut costs, and even help you design a more effective way for distributing what you sell. 5. A "Green Clean" Means Healthier Employees The way you clean your green retail business can have a profound impact, not just on how your space is perceived, but also on employee and customer health. Of the roughly 17,000 chemicals used in cleaning products, only about 30% have been fully tested for health effects. The “volatile organic compounds” (VOCs) released by many cleaners are particles that can reduce indoor air quality, triggering asthma or allergies. Other ingredients in many traditional cleaners have been linked to everything from headaches to cancers! To protect your employees, your customers, and yourself:

Always check cleaning product labels for known hazards, and study warning labels carefully.

Request a Material Safety Data Sheet (MSDS) for any chemicals your store uses so that your staff knows the best way to handle spills or exposure.

Switch to non-toxic cleaning alternatives. Enzyme cleaners are a safe and effective solution.

6. Better Air Quality = Happier Customers Customers won’t flock to a space that smells like strong chemical cleaners or sickly-sweet air fresheners. Skip antibacterial sprays, scented air fresheners and petroleum-based candles in your store, and go with healthier ways to improve or air quality:

A few carefully placed indoor plants can vastly improve indoor air-quality without hurting the look and feel of your store.

Choose soy-based candles or use natural air fresheners to give your store a signature scent.

http://www.greenirene.com/category-s/120.htm

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Remember that regular maintenance for your HVAC system pays off! Check your system’s air filters one a month and clean or replace the filter when necessary to prevent mould, dust, and allergens from building up.

Watch out for hidden toxins in unexpected places: some receipt paper is actually given a powdered BPA coating! BPA easily rubs off of these thermal receipt papers and leaves residues on skin or even in the air, so check with your supplier to make sure your receipts are BPA-free.

When you take steps to improve indoor air quality, your employees and customers may not be able to pinpoint what’s different about the store, but they’ll certainly be able to breathe easier. 7. Attract and Retain High Quality Customers Aside from financial savings, health benefits, and environmental improvements there’s another big advantage to going green: attracting eco-minded consumers!

Green customers are a growing segment of the consumer market, and they are also among the least sensitive to premium prices. When surveyed, 80% of such consumers said that they would pay a premium of 20% for green products and services, and 76% would switch brands or retailers to one associated with a good cause when price and quality are equal.

An eco-friendly store will help develop an emotional connection between you and your green customers. Your existing customers will feel even better about shopping with you, and new customers will appreciate your store’s commitment to responsible environmental citizenship.

As you build your green brand, highlight the ways in which your store prioritizes what really matters: healthy people, a healthy environment, and a strong community. You won’t redefine your brand or attract a better class of customer overnight. But by taking small steps, and celebrating your successes, you’ll help protect both your profits and the planet.

8. Going Green Gives You Something to "Crow" about Going green is a great opportunity to reduce your environmental footprint, build a green retail business, and turn your store into a safer, more welcoming space. Yet your eco-friendly changes won’t build your brand unless consumers know about them!

Publicize your eco-friendly measures with a press release, a sign at your register, in your email newsletters, or on your product labels.

When it comes to eco-labels on products you stock, be careful of “greenwashing” schemes. Some manufacturers will market their products as “natural,” "fair-trade" or “eco-friendly” without any actual substance to those claims. Research your products carefully, and make sure any green claims or eco-labels are genuine.

Many green consumers actively look for stores that have received some sort of green certification. The certification logo, once earned, can serve as a valuable branding tool for your green retail business; display it in your store window, on your website, or as part of general promotional materials.

http://www.greenirene.com/product-p/g00498.htm

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A Guide for Retailers: Engaging Employees in Going “Green” This guide presents 10 proven ways to engage employees in your company’s environmental and social goals. It is based on 30 years of academic and industry research and is designed for HR managers, trainers and employees responsible for health and safety and the environment. Why Go Green? Companies have at least four reasons to improve their impacts on the environment and the community:

Cut Costs. Replacing lighting fixtures alone can reduce a company’s energy use 25 to 30 per cent.

Increase Revenues. Customers will pay up to 10 per cent more for products that are green (e.g. made from recycled materials) or ethical (e.g. fair trade).

Find and Keep Great Employees. Employees look for social responsibility and environmental commitment when selecting employers. Because finding qualified workers is a top priority for small business owners, being good to people and the planet is no longer just “nice to do.”

It’s Good Business. Governments, suppliers, customers and employees are talking about the role companies play in the environment and society. Smart business leaders want to be part of that conversation.

What Success Looks Like: Signs of environmentally Engaged Employees Engaged employees: 1) understand that financial, environmental and social issues are connected; and 2) believe their organization is addressing all three. These are signs employees are engaged in environmental and social goals:

The HR manager hires people who are committed to customers, employees and the environment.

Employees are rewarded for reaching environmental targets, such as reducing waste or energy use.

Employees build the company’s sustainability values into their personal lives – choosing to carpool or bike to work, volunteer in the community, pack lunches from home, etc.

Salespeople know the environmental and social impacts of the company’s products or services (e.g. their carbon footprint or energy consumption, whether they were produced locally or are fair trade). They use these qualities to distinguish their company’s products or services from competitors’.

Front-line staff regularly identifies ways to reduce energy or water use.

Staff make business decisions based not just on profit potential but on what is “the right thing to do.”

Employees engage in community initiatives such as park beautification projects and fundraisers.

When considering products from new suppliers, purchasing managers automatically screen the products to see if they meet the company’s environmental or ethical criteria.

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The senior employees drive industry-wide efforts to improve the environmental or social impact of the entire sector.

Ten Ways to Engage Employees in “Going Green” Jump in! Begin where you can and continue to add activities. More tactics will help you make environmental and social concerns a central part of your workplace and help you find and keep great employees.

Be a Role Model. Don’t just say it, do it. Be the first to ride your bike to work. Sort your lunch waste into garbage, compost and recyclables.

Start at the Top. Signal the importance of environmental and social commitments by putting senior people in charge of projects. Ensure company-wide environmental committees include senior staff members. Assign major projects, like going carbon neutral or environmental auditing, to the most senior operations person.

Put Your Money Where Your Mouth Is. Allocate time and money to environmental and social initiatives. Give employees company time to participate in volunteer projects. Buy energy efficient equipment or lights. Buy carbon credits to offset the greenhouse gases your company produces. Offer employees flexible work hours or mobile work options.

Put It into Writing. Policies make your corporate values explicit, clarifying expectations and helping employees make better decisions. Update your corporate values to include social and environmental goals. Publish “green” goals on your website. Create policies and codes of conduct that support your goals. Include “green” successes in your annual report.

Build Sustainability into Day-To-Day Operations. Set thermostats one degree closer to the outside temperature. Reduce paper use by printing less. Turn off lights and electronics when not in use. Conduct life cycle assessments on key products and work with consultants or industry peers to reduce their impacts.

Make It Someone’s Job. Ensure employees are responsible for environmental and social performance. Create a new role dedicated to sustainability or build the duties into an existing position (e.g. in health and safety or human resources).

Provide Training. At new employee orientation, teach employees about the company’s environmental goals and why they matter. Train employees on issues specific to their jobs, such as waste management, health and safety, and sustainable procurement.

Explain How It Affects Them. Employees may view environmental or social programs as unwelcome additions to an already-full workload. Explain how the programs relate to their roles. For the financial officers: show the dollar savings you expect to get from investments in energy-efficient equipment. For the sales reps: explain how volunteering with a local community group will improve customer loyalty.

Assemble Champions. Engage employees of varying seniority throughout the company. Programs that are not just “top-down” get more employee buy-in. Find employees who are already passionate about your environmental or social goals and encourage them to build a “Green Team” that reports to you or senior staff.

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Let Employees Experiment. Encourage employees to figure out how they can make a difference and let them try out new ideas. Let them organize zero-waste lunches or toy/food drives, sponsor local sports teams, raise money for disaster relief, serve meals to homeless or at-risk youth, or participate in a fundraising walk. Encourage employees to suggest ways of saving energy or reducing waste in their day-to-day work.

Source: http://nbs.net/knowledge/a-guide-for-retailers-engaging-employees-in-going-green/. [Accessed: 20 February 2014].

QUESTION 2 [15]

See Levy and Weitz (2012, Chapter 2, pp.35-42). Students had to identify whether Pick n Pay Northmead is a conventional supermarket, a limited assortment supermarket, a convenience store, or a department store. They had to motivate their answers by referring to the characteristics of the four types of retailers identified in the question and the information given in the case study. It was absolutely essential that they build strong arguments in their answers. They were advised to conduct some more research on Pick n Pay and the types of stores in its portfolio to gain greater insight into its operations. If they simply rewrote what is given in the prescribed book they should not obtain a pass mark – practical application was essential. Allocate approximately 4 marks per identified retailer type and the motivation of why or why it is not applicable to Pick n Pay Northmead.

Total = 15 marks

Pick n Pay Northmead is primarily a food retailer. Most students will either classify them as a conventional supermarket or a limited assortment supermarket. The outline of each of the four types of retailers identified in the question that the students had to address is given below.

FOOD RETAILERS:

1. CONVENTIONAL SUPERMARKETS

o 30,000 SKUs o Pick n Pay supermarkets o Checkers o 70% - 80% food o Average assortment with average variety o Self-service o Offers groceries, meat bakery, fruit and vegetables, as well as some

non-food items like personal health and hygiene products.

http://nbs.net/knowledge/a-guide-for-retailers-engaging-employees-in-going-green/

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Limited assortment supermarkets (extreme value food retailers) o 2000 SKUs o Offer one or two brands and sizes o Have store brands as well o Designed to maximise efficiency and reduce costs o Offer merchandise at 40-60% lower prices than conventional

supermarkets o A full range of services that are available in conventional supermarkets

might not be available o Are not always located in the prime locations in order to take advantage

of lower rentals o Prices tend to be lower than those of conventional supermarkets o Spar.

2. CONVENIENCE STORES

Tailors assortments to local market

Makes more convenient to shop

Offers fresh, healthy food

90% of products are foods

Between 2000 and 3000 SKUs

Narrow variety and shallow assortment

Limited services on offer

The convenient placing of the store and longer opening hours usually results in higher prices

Fast, casual restaurants

Financial services available

Opening smaller stores closer to consumers (like airports)

Woolworths food stores

Stores at petrol stations.

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GENERAL MERCHANDISE RETAILERS

3. Department Stores Department stores are retailers that carry a broad variety and deep assortment, offer some customer services, and are organised into separate departments for displaying merchandise. Department store chains are very diverse. There are those that carry relatively inexpensive products and compete closely with discount stores and then chains that sell expensive, exclusive merchandise that compete with high-end specialty store chains. Each department within the store has a specific selling space allocated to it, a POS terminal to transact and record sales, and salespeople to assist customers. The department store often resembles a collection of specialty shops. The major departments are women’s, men’s, and children’s clothing and accessories; home furnishings and furniture; and kitchenware and small appliances. In some situations, departments in a department store or discount store are leased and operated by an independent company. A leased department is an area in a retail store that is leased or rented to an independent organisation. The leaseholder is typically responsible for all retail mix decisions involved in operating the department and pays the store a percentage of its sales as rent. Retailers lease departments when they feel they lack expertise to operate the department efficiently. Department stores are unique in terms of the shopping experience they offer, the services they provide and the atmosphere of the store. They offer a full range of services from altering clothing to home delivery. To create excitement apparel is displayed on mannequins; attention is drawn to displays with theatrical lighting; and sales associates are frequently stationed throughout the store demonstrating products. Department stores also emphasise special promotions; such as elaborate displays during the Christmas season.

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Department stores’ overall sales have stagnated and market share has fallen in recent years due to increased competition from discount stores and specialty stores and a decline in perceived value or merchandise and services. Department stores, which started in the nineteenth century, attracted consumers by offering them ambience, attentive service, and a wide variety of merchandise under one roof. They still account for some of retailing romance. Department stores also offer designer brands that are not available at other retailers. Unfortunately, many consumers believe that department stores are no longer romantic or convenient. Many believe that they are difficult to get to because they are located in large malls, that it is difficult to find specific merchandise because the same category is often located in several designer departments, and that it is difficult to get professional sales assistance because of labour cutbacks. At the same time, they typically charge higher prices than their discount and specialty store competitors. Department store retailers are working closely with their vendors to ensure better in-stock positions for fashion merchandise and still reduce average inventory levels. These initiatives are referred to as quick response (QR). The vendors and retailer will closely monitor initial sales and use this information to knit and dye the sweaters in sizes and colours that will match customer demand for the rest of the season. QUESTION 3 [25]

Refer to Levy and Weitz (2012, Chapter 4, pp.91-96). Students had to assume that Burger King is seeking to understand the nature of the South African Fast Food consumer and is looking to them to provide some insights. Taking the nature of the Burger King offering into account, they then had to write a report where they addressed the following issues:

The social factors influencing the buying process (15 marks)

The type of buying decision involved in the purchase of fast foods (6 marks)

The personal characteristics of the consumer. (4 marks) They had to go beyond the basic elements mentioned in the prescribed book to ensure that they provided an in-depth answer. It was important that they consulted additional books on consumer behaviour and the Internet in this regard – especially regarding the personal characteristics of the consumer. Practical application throughout was essential. It was not enough to just address the theory, they had to specifically identify the social factors and personal characteristics that characterise the South African market. Marker to use discretion when allocating marks based on the overall quality of the answer.

Total = 25 marks

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The following areas need to be considered but not discussed as theory only. They had to be applied to the scenario identified in the case study in order to outline the situation as it exists in the South African market environment. TYPES OF BUYING DECISIONS 1. Extended problem solving

Customers devote considerable time and effort to analysing alternatives.

They engage in extended problem solving when purchase decisions involve a lot of risk and uncertainty.

Risks include financial risks, physical risks, and social risks.

Extended problem solving occurs when the buying decision involves satisfying an important need.

Takes place when there is little knowledge about the product or service being considered.

Many retailers may be visited.

Retailers need to provide the customer with information in an easy format to help the customer through the process.

2. Limited problem solving

A moderate amount of time and effort is required.

Customer generally has prior experience with the product and service.

Risk is moderate.

Customers rely more on personal knowledge than on external information.

Customers keen to use the same retail outlet.

It is important that retailers reinforce these buying patterns.

Impulse buying is where the customer makes a buying decision on the spot after seeing the merchandise.

Impulse buying is encouraged by using prominent displays to attract attention. 3. Habitual decision making

This is a purchase decision process involving little or no conscious effort.

Customer is time conscious.

In this case, the decision-making process is simplified.

Customers tend to react to unsatisfied needs by buying the same product as last time at the same store.

The decision is not very important to the customer and involves familiar merchandise.

Brand loyalty and store loyalty are examples of habitual decision making.

Brand loyalty is where customers like and consistently buy a specific brand in a product category.

Store loyalty means the customer likes and habitually visits the same store to purchase a type of merchandise.

SOCIAL FACTORS INFLUENCING BUYING DECISIONS

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Focus on addressing how these factors will affect/influence the purchase from a new Burger King. 1. FAMILY Many purchase decisions are made for products that the entire family will consume or use. Thus, retailers must understand how families make purchase decisions and how various family members influence these decisions. When families make purchase decisions, they often consider the needs of all family members. In a situation such as choosing a vacation site, all family members may participate in the decision making. In other situations, one member of the family may assume the role of making the purchase decision. For example, the husband might buy the groceries, the wife uses them to prepare their child’s lunch, and the child consumes the lunch in school. In this situation, the store choice decision might be made by the husband, but the brand choice decision might be made by the mother, though greatly influenced by the child. Children play an important role in family buying decisions. Satisfying the needs of children is particularly important for many baby boomers who decide to have children late in life. They often have high disposable income and want to stay in luxury resorts, but they still want to take their children on holidays. Resort hotels now realise they must satisfy children’s needs as well as adults. Retailers can attract consumers who shop with other family members by satisfying the needs of all family members. By accommodating the needs of men and children who might not be interested in shopping, the family stays in the stores longer and buys more merchandise. 2. REFERENCE GROUPS A reference group is one or more people whom a person uses as a basis of comparison for beliefs, feelings, and behaviours. A consumer might have a number of different reference groups, although the most important reference group is the family, as we discussed in the previous section. These reference groups affect buying decisions by (1) offering information, (2) providing rewards for specific purchasing behaviours, and (3) enhancing a consumer’s self-image. Reference groups provide information to consumers directly through conversation or indirectly through observation. Some reference groups influence purchase behaviours by rewarding behaviour that meets with their approval. For example, the reference group of employees in company might define the appropriate dress style and criticise fellow workers who violate this standard. By identifying and affiliating with reference groups, consumers create, enhance, and maintain their self-image. Customers who want to be seen as members of an elite social class may shop at prestige retailers; while others who want create an image of an outdoors person might buy merchandise from an outdoors retailer website.

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Department stores use their teen boards to provide a reference group influence on teenage shoppers. The teen board members are selected because they are a group of teens whom other teens would like to emulate. By buying apparel worn by teen board members, other teens can identify with these teen leaders. 3. CULTURE Culture is the meaning and values shared by most members of a society. For example, core values shared by most Americans include individualism, freedom, mastery and control, self-improvement, achievement and success, material comfort, and health and fitness. Gift giving is another example of how cultural values affect shopping behaviour. Gift giving plays a much more important role in Japanese than American culture. Subcultures are distinctive groups of people within a culture. Members of a subculture share some customs and norms with the overall society but also have unique perspectives. Subcultures can be based on geography (Gautengers), age (baby boomers), ethnicity (Asian Americans), or lifestyle (punks).

PERSONAL CHARACTERISTICS INFLUENCING BUYING BEHAVIOUR

1. RACE Race can be defined as the genetic heritage group into which a person is born. For many years marketers segmented on this basis as they believed that different racial groups would exhibit different buying behaviour. With hindsight, these differences were mostly due to the financial situation of certain population groups and arose from unfair discrimination. Nowadays, the validity of this type of segmentation is starting to decrease as more and more South Africans find themselves on an equal footing in relation to other racial groups. The dispersion of disposable income and globalisation have led many South African customers (whether black, white, Indian/Asian or coloured) to consume products and services in very similar ways. In cases where a specific product can cater for or is tailored to the needs of a specific group of individuals, racial profiling is product specific. Examples are a BEE shareholding scheme that targets historically disadvantaged individuals and ‘Black Like Me’ products manufactured specifically for Black population groups. 2. GENDER Over and above the fact that men and women consume products that are specific to their individual genders, there are also unique behavioural patterns that are intrinsic to each gender. The thought processes that persuade a man to purchase an item may be dramatically different from those of a woman. These thought processes may include a person’s perception of crowdedness, price sensitivity, product function or operational use, convenience and perhaps trade-offs of all these. These gender traits are known as ‘gender identities’ and express certain masculine and feminine characteristics.

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3. AGE Age is one of the most important variables that affect a customer’s buying behaviour. For that reason, it has been the subject of many analyses and research studies. People of different ages have different needs and therefore give different weights to the importance of certain attributes. A life insurance policy is not as heavily weighted by a twenty-year-old as the need for vehicle financing. The reverse is true for people in their late thirties. In research, various cross-tabulations relating to age can be developed to analyse trends across different age groups. This provides information to marketers that is extremely useful when trying to sell a product across a spectrum of age categories. By analysing how each age group answers a specific research statement, marketers can position communications or target their offerings accordingly. Important aspects to note relating to age are the following:

The importance of age to marketers

Age subcultures (including baby boomers, generation X and generation Y)

The ethics of marketing to children directly. QUESTION 4 [30]

See Levy and Weitz (2012, Chapter 5, pp.131-135). Students had to firstly develop an original mission statement for Burger King and its operations in the South African market and then secondly, conduct a comprehensive and practical situation audit for Burger King in anticipation of its market entry into South Africa.

It is acknowledged that in some cases, assumptions may be necessary although this should not be an excuse for a lack of research. For this question, no theoretical discussion was required at all – only practical application! Students who only discussed the theory should be heavily penalised. It was important that students cover all the relevant elements in their audit and relate it to the relevant market and competitive situation.

Additionally, it was stated that students should not simply copy the Burger King mission statement from its website. They should receive 0 marks if they did copy it directly.

Mark allocation:

Allocate 5 marks for a well conceived mission statement (5 marks)

Allocate approximately 5 marks per component of the situation audit – depending on the quality of the student’s discussion. (5 x 5 = 25)

Students should have used a variety of sources. This includes the information given in the case study, Internet searches, interviews with knowledgeable persons and any other resources at the student’s disposal.

30 marks

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The following steps outline the components of the mission statement and the situation audit that should have been covered in the student’s answer (NB – practical application only): Step one: Define the business mission

Mission statement gives a broad description of a retailer’s objectives and the scope of activities it plans to undertake.

The mission statement defines the general nature of the target segments.

Five key questions need to be answered when developing the mission statement.

o What business are we in? o What should our business be in the future? o Who are our customers? o What are our capabilities? o What do we want to accomplish?

A sample of one of Burger King’s mission statements:

“We will prepare and sell quick service food to fulfil our guest’s needs more accurately, quickly, courteously, and in a cleaner environment than our competitors. We will conduct all our business affairs ethically, and with the best employees in the mid-south. We will continue to grow profitably and responsibly, and provide career advancement opportunities for every willing member of our organization.”

Step two: Conduct a situation audit

Analyse market factors o Size o Growth o Seasonality o Business cycles

Analyse competitive factors o Barriers to entry o Bargaining power of offenders o Competitive rivalry

Analyse environmental factors o Technology o Economic o Regulatory o Social

Conduct a strengths and weaknesses analysis o Management capabilities o Financial resources o Locations o Operations

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o Merchandise o Store management o Customer loyalty.

PRESENTATION [10]

assignment guidelines module : retail...

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