RETAIL-MNGT-CHAPTER-23 Business (1).pptx

retail management

1. THE ECONOMIC ENVIRONMENT OF RETAILING

2. RETAILING IS VITAL TO THE ECONOMY Retailing is a major force in the economy. Over and above the products and services they provide to individual consumers and businesses, retailers also give employment to a lot of people, facilitate the efficient and effective flow of products and services from the producers to the ultimate users, and help other industries and businesses as well, along the supply chain channels. Specifically, retailing is vital to the economy for the following reasons:

3. RETAILING IS VITAL TO THE ECONOMY 1. Most of our disposable income is spent in retail businesses. 2. Retailing provides employment to millions of individuals. 3. Retailing adds value to products, creating the utilities of place, time, possession, and information. 4. Retailing accounts for a significant portion of the total marketing costs of products. 5. Retailing holds many opportunities for enterprising individuals in all types of retail businesses.

4. RETAILING is vital to the economy 5. Retailing holds many opportunities for enterprising individuals in all types of retail businesses. 6. Retail establishments improve and enhance the economic activities of the immediate community where they are located, and indirectly, of the communities where their suppliers are located. 7. Retailing, through its attendant marketing activities like aggressive promotions, distribution, and logistics management create awareness, consumer information, and education

5. Economic INDICATORS Strategically, the focus is principally or the economic environment because empirically, economic power begets political power, and vice versa. Leaders of the economy are usually the king-makers (or members of the ruling class themselves), and have clout or influence over the body politics especially in poor countries of the globe found in rural Asia and Africa. Likewise, the economy influences the technological environment. Thus, instead of treating separately these three important components of retailing-economic, political, are technological environments-the book deems it wise to just focus on the economy. Following are some economic indicators about the Philippines, one of Asia's emerging markets:

6. Economic INDICATORS Gross Domestic Products OFW remittances Unemployment Rate Exchange Rate Budget Deficit Competitiveness Rating

7. RETAIL CUSTOMERS’ BUYING BEHAVIOR

8. CHANGING DEMOGRAPHICS: BABY BOOMERS, GENERATION X AND Y. Market demographics pertains to the population characteristics, such as age, sex, ethnicity, income, occupation, and other people-related information. Baby boomers are the generation of children born between 1946 and 1964. As in other places of the world, this group accounts for 56 to 58 percent of the purchases in most consumer product and service categories. Generations X and Y. They are the young leaders of today, the yuppies, the NOW generation, the turbulent and impatient sector, who would like to assume early on crucial roles normally left to the adult sector of society, now assumed by the baby boomers.

9. CHANGING DEMOGRAPHICS: BABY BOOMERS, GENERATION X AND Y. Generation Z. Let me add Generation Z to pertain those born in 2005 and beyond, the demarcation line set by Thomas Friedman for Globalization 3.0., the author of the Retailing in a Dynamic World "flat-world" theory. According to Friedman, the years beginning in 2005 constitute Globalization 3.0, which will be marked by the empowerment of individuals and eventually the emergence of completely new social, political, and business models. These are the people who will witness Al Gore's "An Inconvenient Truth," and the "redrawing" of a new global map. Generally, the members of each generation are distinctive in their attitudes, values, and consumer behavior.

10. TYPES OF BUYING DECISION Buying decision though is not only a need-satisfying activity but also a problem-solving event. The type of buying decisions is affected by the following: 1) demographics-age, 45sex, economic status, cultural background; 2) customer needs functional, social, emotional or psychological); 3) the type of goods involved, Customer goods (convenience, shopping, or specialty), and industrial of business goods (capital, production, and operational); and 4) nature of the problem to be solved.

11. TYPES OF BUYING DECISION Levy and Weitz (2004) listed the following types of buying decision under problem-solving: extended problem-solving, limited problem-solving, and habitual decision-making. Extended problem-solving is a buying decision in which customers spend considerable time and effort to analyze the financial risks (the amount involved), physical risks (about the health or safety of the product), and social risks (how other people would view the product).

12. TYPES OF BUYING DECISION Levy and Weitz (2004) listed the following types of buying decision under problem-solving: extended problem-solving, limited problem-solving, and habitual decision-making. Limited problem-solving is a buying decision involving a moderate amount of time and effort. Customers engage in this type of buying process when they have had some prior experience with the product or service, and the risk involved is moderate. Impulse buying or buying on the spot upon seeing the product, is an example of this type. Habitual decision-making is a buying decision involving little or no conscious effort, principally due to the fact that today's consumers have many demands on their time. Customers would generally buy the same thing they bought the last time from the same store.

13. Customer's buying behavior- ADOPTION PROCESS . Research suggests that the consumer of "new products" goes through five stages-awareness, interest, evaluation, trial, and finally, adoption. The stages follow a curve, which is more or less similar to an ogive, or one-half of a bell-shaped curve, growing from awareness to adoption,

14. Customer's buying behavior- ADOPTION PROCESS . CONSUMER ADOPTION PROCESS/MARKETING STRATEGY Awareness: Communicate the availability of new product Interest: Communicate benefits of new product Evaluation : Emphasize advantages of new product over other alternatives in the market Trial: Motivate consumers to try the new product Adoption: Ensure consumers are satisfied with the use of the new product

15. SOCIAL FACTORS INFLUENCING BUYING DECISIONS There are a number of factors in the customer's social environment that would influence his/her purchase decisions, outside of his/her own personal needs. The basic influencing factors are his/her family, reference groups (e.g., community, church organization, professional group, etc.), and culture. It has been said that among the three motivational factors-functional, social, and emotional-the influence of the social factor especially among Asians is quite intense.

16. SOCIAL FACTORS INFLUENCING BUYING DECISIONS FAMILY KARTAJAYA ’S SQ ( SPIRITUAL QUOTIENT). COVEY’S SEVEN HABITS OR PRINCIPLES MASLOW’S HIERARCHY OF NEEDS FREUD’S TWO MOTIVES HOFSTEDE’S CULTURAL TYPOLOGY F.LANDA-JOCANO’S PINOY VALUES

17. SOCIAL FACTORS INFLUENCING BUYING DECISIONS FAMILY Many purchase decisions are made for products that the entire family will consume or use. In view of this, retailers must understand how families make purchase decisions and how various family members influence these decisions.

18. SOCIAL FACTORS INFLUENCING BUYING DECISIONS Kartajaya's SQ. Hermawan Kartajaya talked about IQ (Intelligence Quotient), EQ (Emotional Quotient), and SQ (Spiritual Quotient), in relation to marketing. In effect, he was saying that behaviors of people may be driven by his rational, emotional, and spiritual self; i.e., rational decisions are made with the use of one's intellect (such as shopping for low priced items that satisfy value-for-money); emotional decisions, with the use of one's heart, which is difficult to explain (such as impulse-buying of a premium-priced consumer goods); and spiritual decisions, with the use of one's faith (such as regarding a specialty goods like a priceless treasure).

19. SOCIAL FACTORS INFLUENCING BUYING DECISIONS Covey's seven habits or principles. Stephen Covey's (1989) seven habits or principles have virtually smothered the classical stimulus-response theory of Ivan Pavlov. He maintains that between stimulus and response is man's freedom to choose which is supported by his God-given endowments such as awareness, imagination, conscience and independent will. These four endowments can be related to the IQ (awareness, independent will), EQ (imagination) and SQ (conscience) of Kartajaya .