RFM analysis.pptx ARFM analysis is part of service and retail marketing

marketing

1. RFM analysis A method often used in catalog and Internet channels to determine customer segments that a retailer should target for a promotion or catalog mailing. ‹#›

2. The method uses three factors to evaluate the potential contribution of each customer segment: how recently the customers in the segment made a purchase, how frequently they make purchases, and how much money they have spent. ‹#›

3. The classification of customers into these segments is based on the profitability of the customers, not sales. ‹#›

4. For example Customers who pay full price and buy the same amount of merchandise have a higher CLV than customers who only buy items on sales. ‹#›

5. Example Customers who return 30 percent of the merchandise they purchase have a lower CLV than customers who rarely return merchandise. ‹#›

6. DEVELOPING CRM THROUGH FREQUENT-SHOPPER PROGRAMS ‹#›

7. Offer Tiered Rewards Many frequent-shopper programs contain cascading tier levels, such as silver, gold, and platinum. The higher the tier, the better the rewards. ‹#›

8. Treat High CLVs as VIPs Consumers respond to being treated as if they are someone special. Effective programs, therefore, go beyond discounts on purchases to offer unique rewards. For example, in its PowerUp Rewards program, GameStop encouraged its target customers to spend more on racing and fantasy video games by offering tickets to NASCAR races ‹#›

9. IMPLEMENTING CRM PROGRAMS ‹#›

10. Customer Pyramid For most retailers, a relatively small number of customers account for the majority of their profits. This condition is often called the 80-20 rule —80 percent of the sales or profits come from 20 percent of the customers. ‹#›

11. Source: Michael Levy, Barton A. Weitz, Dhruv Grewal, Retailing Management, McGraw Hill (2023). ‹#›

12. Customer Retention Personalization Community ‹#›

13. Example The Nike stores create a sense of community by hosting running groups that meet weekly at the store for refreshments. ‹#›

14. Web and other Forms of Nontraditional Retailing Retail channel is the way a retailer sells and delivers merchandise and services to its customers. ‹#›

15. The most common channel used by retailers is a store. Retailers also use a variety of nonstore channels, including the Internet, mobile, catalogs and direct mail, direct selling, television home shop ping, direct-response TV, and automated retailing (vending machines) to make sales to customers. ‹#›

16. Internet Retailing Channels—Electronic and Mobile Retailing ‹#›

17. Catalog Channel The catalog channel is a nonstore retail channel in which the retail offering is communicated to customers through a catalog mailed to customers. ‹#›

18. The merchandise categories with the greatest catalog sales are drugs, beauty aids, computers, software, clothing, accesso ries, furniture, and housewares. ‹#›

19. Direct-Response TV Channel The direct-response TV (DRTV) channel is a retail channel in which customers watch a TV advertisement that demonstrates merchandise and then place orders for that merchandise. ‹#›

20. Direct Selling Channel Direct selling is a retail channel in which salespeople interact with customers face- to face in a convenient location, either at the cus tomer’s home or at work. ‹#›

21. Automated Retailing (Vending Machines) Channel Automated retailing is a retail channel in which merchandise or services are stored in a machine and dispensed to customers when they deposit cash or use a credit card. Automated retailing machines, also known as vending machines , are typically placed at convenient, high-traffic locations. ‹#›

22. Benefits Provided by Different Channels Source: Michael Levy, Barton A. Weitz, Dhruv Grewal, Retailing Management, McGraw Hill (2023). ‹#›

23. The Internet Channel Deeper and Broader Selection More Information for Evaluating Merchandise Personalization ‹#›

24. Apps Apps are software applications designed to improve the consumers’ shopping experi ences when using smartphones and tablets. Apps developed by retailers are typically used to easily perform some specific functions available on the retailer’s website but do not provide access to all of the functions available on the website. ‹#›

25. Amazon vs. Alibaba: The Race to Dominate Fast Global Shipping | WSJ https://www.youtube.com/watch?v=r6jGTdQc-Ms ‹#›

26. Web and other Forms of Nontraditional Retailing ‹#›

27. Multichannel retailing Multichannel retailing involves using more than one channel to sell and de liver merchandise and services to consumers ‹#›

28. Omniretailing The term omniretailing is frequently used when discussing multichannel retailing; it refers to a coordinated multichannel retail offering that provides a seamless customer experience when using all of the retailer’s shopping channels. ‹#›

29. Internet Retailing Channels—Electronic and Mobile Retailing Internet retailing involves retailers interacting with consumers via the Internet, whether they use a traditional computer or a laptop, a variety of sizes of tablets or a smartphone. ‹#›

30. Mobile commerce The mobile channel (also called mobile retailing, mobile commerce, or m-commerce), involves accessing the Internet using a smartphone. ‹#›

31. From a retailing perspective, smartphones differ from traditional computers in that they are more portable, have a smaller display, are location-aware, use different touch screen technology to access the Internet, and as a result of these factors produce a different interface experience with the user. ‹#›

32. Catalog Channel The catalog channel is a nonstore retail channel in which the retail offering is com municated to customers through a catalog mailed to customers. ‹#›

33. Direct-Response TV Channel The direct-response TV (DRTV) channel is a retail channel in which customers watch a TV advertisement that demonstrates merchandise and then place orders for that merchandise. ‹#›

34. Television Home Shopping Channel Television home shopping is a retail channel in which customers watch a TV net work with programs that demonstrate merchandise and then place orders for that merchandise, usually by telephone or via the Internet. ‹#›

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36. Automated Retailing (Vending Machines) Channel Automated retailing is a retail channel in which merchandise or services are stored in a machine and dispensed to customers when they deposit cash or use a credit card. ‹#›

37. Developing Merchandise Plans Merchandise management is the process by which a retailer attempts to offer the appropriate quantity of the right merchandise, in the right place and at the right time, so that it can meet the company’s financial goals. ‹#›

38. Merchandise Category A merchandise category is an assortment of items that customers see as substitutes for one another. ‹#›

39. Example A department store might offer a wide variety of girls’ dresses sizes 4 to 6 in different colors, styles, and brand names. ‹#›

40. A mother buying a dress for her daughter might consider the entire set of dresses when making her purchase decision. ‹#›

41. Lowering the price on one dress may increase the sales of that dress but also decrease the sales of other dresses. ‹#›

42. Developing Merchandise Plans ‹#›

43. Types of Merchandise Management Planning Systems Staple merchandise categories Fashion merchandise categories ‹#›

44. Staple merchandise categories Staple merchandise categories, also called basic merchandise categories, are those categories that are in continuous demand over an extended time period. ‹#›

45. While consumer packaged goods companies introduce many “new products” each year, the number of “new to the world” product introductions each year in staple categories is limited. ‹#›

46. Example Some examples of staple merchandise categories include most categories sold in super markets, white paint, copy paper, and basic casual apparel such as T-shirts ‹#›

47. Fashion merchandise categories Fashion merchandise categories are in demand only for a relatively short period of time. ‹#›

48. New products are continually introduced into these categories, making the existing products obsolete. ‹#›

49. In some cases, the basic product does not change, but the colors and styles change to reflect what is “hot” that season. ‹#›

50. Example Some examples of fashion merchandise categories are athletic shoes, tablets, smart phones, and women’s apparel. ‹#›

51. Forecasting the sales for fashion merchandise categories is much more challenging than doing so for staple categories. ‹#›