Retailing homework !!!

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mmoreavr

Business Finance

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Here is the home work, week 4.docx 

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We have 2 big issues to tackle this week from a Retailing perspective: 1) Customers: (we'll do this the 1st half of the week): ... First, we need to be clear about Demographics, which refers to measurable characteristics of a population.... things like how many, where are they, income, ethnicity, age, marital status, stage in life cycle, education level... you know, boring things like that! BUT, it's not boring to retailers... both the BIG GUYS & thelittle mom-&-pops. (By the way... this is why "good" demographics makes no sense! There's no such thing to a retailer, since he chooses his target market to focus on.) ... Second, even more important are such things as Psychographics, which refers to behavioral aspects of consumers... things like brand loyalty, usage patterns, attitudes & opinions, lifestyle (see your Consumer Behavior textbook for more in-depth discussion).... which almost always outweigh Demographics in importance. ....... Let me give you an example: which provides the better "best guess" about which car you'll buy next time... your salary (demographics)................ or your weekend activities/lifestyle (psychographics)? ******* Here's your assignment (Discussion Board #1) : chapter3, page 124. Study questions LO 1-3 (population) and 4-6 (social trends) and 7-9 (economic trends). Pick out a key word in each question (I'll start you off... Q#1 could be "service"). Choose any two (2) of these questions & be prepared to discuss in terms ofDemographics & Psychographics. Please remember to underline key Retailing words/ideas (only 1-2 words per idea)... + page number in textbook that discusses... in your posts to help everyone easily follow what you're saying. ..... Please put your 2 key words in the subject line so we can see what 2 questions you answered at a glance. 315,000,000+ of us, and counting ... due by Wednesday COLLAPSE Explain some of those Demographics & Psychographics trends right here...... using what you've found on the weekly assignments Activity page! Be sure to put those descriptive words (1 word for each idea you've used) in the subject line of your response... to help us see what 2 questions you answered. These are examples from my classmates: #1. Question #4/Education “Educational attainment… is the single most reliable indicator of a person’s income potential and spending habits.” (pg. 108) Retailers need to be aware of this; not only will a customer in a highly educated demographic spend more, they are more focused on price and quality. A better informed staff will be necessary to serve these discerning shoppers. A retailer must create a shopping ‘experience’ with high levels of customer service and extra amenities to appeal to the psychographics (actions) of this group. Nordstrom’s is an example of this, with customer service that is legendary and personal stylists on staff and on line. This kind of differentiation is critical to reach those with a high level of educational attainment. Question #2/Ethnicity One of the challenges in dealing with ethnicity in retailing is assuming homogeneity among a demographic group. (pg. 102) Consumers from different regions, especially in and around Latin America, have different retail needs. Cuba, Puerto Rico, and The Dominican Republic are all Latin American countries and are close geographically, but have vastly different cultures. . Higher income and second-generation Latino/Hispanic Americans are different still. This goes beyond demographics into psychographics; many cultures are intensely brand loyal, and less likely to change brands due to price concerns. Retailers need to be sensitive to their particular market, and responsive to the needs of those markets by having the brands and products they require and prefer. #2. Question 1: Customer service levels While it is understandable that expenses had to be cut to some degree during the recession, cutting way back on customer service is not a good idea. Customer service is very critical to the customer having a positive experience with the retailer and often determines whether or not they will keep using the retailer. Customer satisfaction (pg. 86) occurs when the total shopping experience of the customer has been met or exceeded. Satisfying the customer is the easiest way for retailers to differentiate themselves from the competition. It costs the average retailer five times as much money to get a new customer in the store as it does to make a sale to a customer who has already shopped there before or to retain a current customer who may be unhappy. Therefore, retaining regular customers by good customer satisfaction is essential to keeping a healthy business. Customer services (pg. 91) consists of all those activities performed by the retailer that influence (1) the ease with which a potential customer can shop or learn about the store’s offering, (2) the ease with which a transaction can be completed once the customer attempt o make a purchase, and the customer’s satisfaction, with the transaction. Common customer services that retailers provide include alterations, fitting rooms, delivery, gift registries, check cashing, credit, extended shopping hours, short checkout lines, gift wrapping, parking layaway, and merchandise return privileges, as well as in-home shopping options such as television, catalogs, and Internet. If customers notice that these services are being skimped on, they will likely go to a competitor who still offers these services to make their purchases. In the long run, it will be more cost effective for a retailer to provide quality customer service than it will be for them to cut way back on it and end up losing customers and trying to regain new ones. Question 8: American's average net wealth Due to recent economic decline, many American's wealth has either been growing at a slower rate or declining. Retailers should be concerned about this, because it will greatly affect the spending habits of the affected consumers. People have become more frugal and are spending less on unnecessary purchases. Because of this problem, there has been an increased demand for value-oriented retailers such as Costco, Dollar Tree, TJX Companies, as well as other discounters. Disposable income (pg. 113) is all personal income minus personal taxes. For most consumers, disposable income is their takehome pay. Discretionary income (pg. 113) is disposable income minus the money needed for necessities to sustain life, such as minimal housing, transportation, food, and clothing. Retailers like supermarkets who sell necessities like to see incomes rise and taxes decrease. Retailers who sell luxury items like to see discretionary income increase. The recent recession has had a negative effect on both disposable and discretionary income. Many workers lost their jobs, and many others had to take a pay cut. These factors caused the net worth of Americans, to fall almost 20 percent in 2008. Shoppers have become more focused on value and quality, especially with clothing because it needs to last longer. Consumers are more focused on covering necessities such as food, clothing, and transportation. The decline in American's net wealth has really made retailers pay closer attention to what customers are looking for in terms of value and quality and make a greater effort to provide these things.
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