MKGT 1020 Macomb Community College Costco Retail Paper Considering your retailer that you have been reporting on throughout the semester, please discuss th

MKGT 1020 Macomb Community College Costco Retail Paper Considering your retailer that you have been reporting on throughout the semester, please discuss the following in a 250-word minimum submission:( Costco Retail )What is your retailer’s primary sustainable competitive advantage? Support your answer by providing examples of this advantage “in action” (HINT: Pages 124-131 of your text provide GREAT examples of sustainable competitive advantages… your choice should be one of the headings and/or subheadings in this section).What growth strategy is your retailer using (or has recently used)? Again, provide support with an example (use pages 131-135 of your text for guidance).Conduct a mini SWOT Analysis, detailing one internal strength, one internal weakness, one external opportunity and one external threat to your retailer. Be sure to give more than just a couple of words, really describe what you see happening. (Use pages 144-148 of your text for some thought-starters).I realize you may not have all the answers since you are not necessarily employed by these companies or in these industries. Still, as a student and a consumer, you should be able effectively complete this. Also, our MCC LibraryLinks to an external site. has a GREAT NUMBER of business databases that can be very helpful to you. BE SURE TO CITE ANY INFORMATION THAT YOU FIND!!! L
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Fernando Leon/Wirelmage/Getty Images
Target Market and Retail Format
A retail market segment is a group of consumers with similar needs and a group of retailers that satisfy those needs using similar retail channels and format. The matrix
in Exhibit 5-10 describes the battlefields on which women’s apparel retailers compete—that is, the set of retail market segments for women’s clothing. It lists various retail formats in
the left-hand column. Each format offers a different retail mix to its customers. Market segments are listed in the exhibit’s top row. As mentioned in Chapter 4 Q. these
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segments could be defined in terms of the customers’ geographic location, demographics, lifestyle, buying situation, or benefits sought. In the exhibit we divide the market into
three fashion-related segments: (1) conservative consumers who place little importance on fashion; (2) traditional—those who want classic styles; and (3) fashion-forward—those who
want the latest fashions.
EXHIBIT 5-1 Retail Market Segments for Women’s Apparel
Fashion Segments
Conservative
Traditional
Fashion-forward
Specialty
store
Fashion Bug
The Gap
The Limited
Talbots
Bebe
Urban Outfitters
H&M
JCPenney
Kohl’s
Macy’s
Department
store
Saks Fifth Ave.
Bloomingdale’s
Neiman Marcus
Retail Formats
Target
Discount
store
Family Dollar
Dollar General
Kmart
Walmart
Off-price
store
Ross Stores
TJ Maxx
Stein Mart
Bluefly.com
Images of retailers.
EXHIBIT 5-3 Hypothetical Perceptual Map of Women’s Apparel Market
FASHION-FORWARD
X Zara
X
Forever 21
6
Bebe X
Neiman Marcus X
Saks Fifth Ave. X
X Bloomingdale’s
Nordstrom X
X Macy’s
Marshalls X
TJ Maxx X
3
Banana Republic X
5
X JCPenney
Target X
The Limited X
2
X Abercrombie and Fitch
The Gap X
X American Eagle Outfitters
X Old Navy
LIMITED SERVICE
EXTENSIVE SERVICE
X Talbots
X Chico’s
7
X Sears
X Walmart
X Kmart
TRADITIONAL
Perceptual maps are developed such that the distance between two retailers’ positions on the map indicates how similar those stores appear, according to consumers. For example, Neiman Marcus and Saks Fifth Avenue are very close to each other on the map,
because consumers in this illustration anticipate that they offer similar services and fashion. In contrast, Nordstrom and Marshalls are far apart, indicating that consumers believe they are quite different. Note that stores close to each other compete vigorously
because consumers feel they provide similar benefits and have similar images. In this example, Macy’s has an image of offering moderately priced, fashionable women’s clothing with good service. TJ Maxx offers slightly less fashionable clothing with
considerably less service. Sears is viewed as a retailer offering women’s clothing that is not very fashionable and that provides moderate customer service.
The ideal points (marked by red dots on the map) indicate the characteristics of an ideal retailer for consumers in different market segments. For example, consumers in segment 3 prefer a retailer that offers high-fashion merchandise with low service, while
consumers in segment I want more traditional apparel and are less concerned about service. The ideal points are located so that the distance between a retailer’s position, or image (marked with a blue X), and the ideal point indicates how consumers in
the segment will evaluate the retailer. Retailers that are closer to an ideal point are evaluated more favorably by the consumers in the segment than are retailers located farther away.
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Thus, consumers in segment 6 prefer Forever 21 and Bebe to Neiman Marcus because these retailers are more fashion-forward and their target customers do not require such high service levels. Retailers strive to develop an image desired by customers in their
target segment and thus develop loyalty among those customers.
Unique Merchandise
It is difficult for a retailer to develop customer loyalty through its merchandise offerings, because most competitors can purchase and sell the same popular national brands. Specialty stores such as Victoria’s Secret, Apple, and Lululemon create loyalty by offering
specific items that customers cannot find anywhere else; they also reinforce that appeal by providing dedicated in-store experiences that match the unique products. Many retailers thus develop private-label brands (also called store brands or own brand
s) that are marketed by and available only from that retailer to keep customers loyal.19 Costco’s highly regarded private-label brand, Kirkland Signature, engenders a strong brand image and generates considerable loyalty toward Costco. The strong quality
image of these private-label products also make significant contributions to enhance the image of Costco. Additional issues pertaining to the development of store brand merchandise are discussed in Chapter 12 Q.
Maps
GE News
M Gmail
Customer Service
Retailers also can develop customer loyalty by offering excellent customer service. 11 Consistently offering good service is difficult because retail employees will always be less consistent than machines. Machines can be
programmed to make every box of Cheerios identical, but employees will never provide a completely consistent level of service, because they vary in their training, motivation, and mood.
Ritz-Carlton’s outstanding service builds customer loyalty.
Oliver Strewe/Lonely Planet Images/Getty Images
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It takes considerable time and effort to build a tradition and reputation for customer service. But once a retailer has earned a service reputation, it can sustain this advantage for a long time because it’s hard for a
competitor to develop a comparable reputation. For example, Ritz-Carlton hotels are renowned for providing outstanding customer service. It is the only hotel chain and the first service company to win the annual
Malcolm Baldrige National Quality Award, and then win it multiple times 12 Employees at the Ritz gather daily for a 15-minute staff meeting, during which they share accounts of how they or their peers have
gone above and beyond the call for conventional customer service, also known as “WOW stories.” A great example involved a chef in a Balinese Ritz-Carlton who learned that a guest had extensive food
allergies and responded by having special eggs and milk flown in from a small grocery store located in another country. Such WOW stories help maintain employees’ focus on customer service and give them recognition
for the efforts they make 13 Chapter 17 discusses how retailers can develop a customer service advantage.
Customer Relationship Management Programs
Catalan
mont CDMarome
also called loyalty
or frequent.shonner programs
.
are activities that focus on identifying and building loyalty with a retailer’s most valued
Customer Relationship Management Programs
Customer relationship management (CRM) programs, also called loyalty or frequent-shopper programs, are activities that focus on identifying and building loyalty with a retailer’s most valued
customers. 14 These programs typically involve offering customers rewards based on the amount of services or merchandise they purchase. For example, airlines offer free tickets to travelers who have flown a prescribed
number of miles, and local sandwich shops might give customers a free sandwich for each 10 they purchase.
The discounts offered by these programs may not create loyalty. Customers may join loyalty programs of competing retailers and continue to patronize multiple retailers. However, the data collected about customer
shopping behavior by these programs can provide insights that enable retailers to build and maintain loyalty. For instance, CVS Caremark’s CRM program gives the drugstore retailer extensive information about each of
its customers, which it uses to increase sales. For example, if customers shop just once a month to fill their prescriptions, CVS Caremark may provide incentives that expire in a week to encourage more frequent visits,
Alternatively, if customers buy frequently but spend less than $20 per visit, CVS Caremark offers incentives to increase each visit’s purchases to, say, $25. It may provide incentives to get customers who are purchasing
only national brands to purchase more private-label merchandise. CVS also uses the loyalty data to determine if a household is purchasing less of a category than it should based on usage in similar households, in which
case it will offer a “buy one, get one free” coupon. Thus, the data developed through the loyalty program enable a retailer to develop a personal relationship with customers that builds loyalty. CRM programs are
discussed in detail in Chapter 10 Q.
Building a Retail Community Using Social Media
SHARE
VOTE.
DISCUSS.
SEE.
PI
Share your ideas, tell us what
you think of other people’s ideas
and join the discussion.
my
STARBUCKS IDEA
http://mystarbucksidea.force.com has created a community of Starbucks customers. It enables customers to make suggestions, vote on ideas, and check out the
results.
Source: Starbucks
Distribution and Information Systems
The use of sophisticated distribution and information systems offers an opportunity for retailers to reduce operating costs—the costs associated with running the business and make sure that the right
merchandise is available at the right time and place. 19 Information flows seamlessly from Walmart to its vendors to facilitate quick and efficient merchandise replenishment and reduce stockouts. Walmart’s
distribution and information systems have enabled it to have a cost advantage that its competitors cannot overcome. This component of competitive advantage is discussed in Chapter 99.
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In addition to using information systems to improve supply chain efficiency, purchase data collected by information systems provide an opportunity for retailers to tailor store merchandise assortments to the market
served by each of its stores and to tailor promotions to the specific needs of individual customers. These data about its customers’ buying behavior are valuable assets, offering an advantage that is not easily duplicated
by competitors. These information systems applications are discussed in more detail in Chapter 90
Location
Committed relationships with customers and vendors and efficient internal operations are important sources of advantage, but location is perhaps the most pervasive form of advantage in retailing. The classic response to
the question “What are the three most important things in retailing?” is “Location, location, location.” Location is a critical opportunity for developing competitive advantage for two reasons: First, location is the most
important factor determining which store a consumer patronizes. For example, most people shop at the supermarket closest to where they live. Second, location is a sustainable competitive advantage because it is not
easily duplicated. Once Walgreens has put a store at the best location at an intersection, CVS is relegated to the second-best location.
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