Description
Understand the important role of international marketing and brand management in Multinational Retail Enterprises (MNREs)
David F. Miller Center For Retailing Education and Research
International Retailing Education and Training (IRET )
Retail Marketing
Management
page 2 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Understand the important role of international marketing and
brand management in Multinational Retail Enterprises
(MNREs)
? Understand the differences in macro-market environment
such as culture, politics, and economy between U.S. market
and the transitional economy of China and its implications
for marketing strategy development of MNREs
? Understand the specific challenges and opportunities for
MNREs in marketing in China
? Analyze strategic perspectives and key issues in building a
sustainable competitive advantage in China for MNREs
? Develop problem-solving and analytical skills regarding
developing retail strategies in China by analyzing examples
and cases
page 3 Marketing Module David F. Miller Center for Retailing Education and Research
Outline
?Merchandising Management
?Pricing Management
?Retail Communication
?Store Atmospherics and Visual Merchandising
?Customer Service
page 4 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Marketing Management
1. Merchandising Management
page 5 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Understand the role of merchandising
management in international retailers’ success
? Identify merchandising management strategies
used by international retailers in China
? Discuss how to build up competitive advantages
for MNREs through merchandising management
page 6 Marketing Module David F. Miller Center for Retailing Education and Research
Fundamentals in Merchandise
Management
? Merchandising Management
? Planning, developing, and presenting product lines
for identified target market with regard to pricing,
assortments, styling, and timing while meeting the
company’s financial goals
?The right mix or assortment
?The right quality
?The right quantity
?The right price
?The right time
?The right place
c) image100/PunchStock
page 7 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandise Assortment in China
?Using merchandise assortment to differentiate from
competitors in China
? Best Buy China has the exclusive right to sell Apple
products
? Lawson (convenience store) carries specific products
imported from Japan.
? Wal-mart ?if you can not find it in Walmart, you may not
need it at all.?
? Chaoshifa convenience stores carry fresh vegetables,
fruit, and sea food.
page 8 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandise Assortment in China
(Cont.)
? Using merchandise assortment to adapt to local market
?Merchandise assortment in Carrefour
?Bakery section
– Carrefour’s way at the beginning: croissants, baguettes,
Taiwanese bread, cheesecake, etc.
– Later, the best suppliers of Chinese baked goods were invited
to set up stands on consignment.
– Now the sales of Chinese desserts is roughly the same as the
western bakery.
page 9 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandise Assortment in China
(Cont.)
?Shanghai Hongqiao store has a higher percentage of
foreign products than other stores.
– 40% customers are foreigners.
page 10 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandise Assortment in China
(Cont.)
?Traditional Chinese food in Wal-Mart
page 11 Marketing Module David F. Miller Center for Retailing Education and Research
? The process of managing a
retail business with the
objective of maximizing the
sales and profits of a category.
? 20/80 principle
?80% sales come from
20% products.
Category Management
page 12 Marketing Module David F. Miller Center for Retailing Education and Research
Category Management in Ito
Yokato
?Ito Yokado’s category management
? Entered China at 1996
? It is famous for category management.
?By using sophisticated computer software, it incorporated
different factors including season, week, weather, time,
holidays, etc. into its category management.
?It tested its result and maximized its predictive utility on
consumers’ needs.
?It uses the software to predict sales, modify product
assortment, place orders, and plan store layout and
merchandise assortment etc.
?It accurately manages merchandise at the SKU level
page 13 Marketing Module David F. Miller Center for Retailing Education and Research
Category Management in Ito Yokato
(Cont.)
? Advantages
?Evaluates different brands and products and provides the
best product assortment.
?Better usage of shelves and capital.
?Decrease the chance of becoming out of stock
?Increase the sales and profits of categories
?Better capture market changes and quicker responses to
consumers’ needs
page 14 Marketing Module David F. Miller Center for Retailing Education and Research
Category Management Survey
1
?Subjects
? 40 retailers in 18 provinces and cities
? 6/2007
?32 out of 40 retailers conducted category management
? Category assortments became more reasonable
? Out-of-stock decreased
? Inventory level decreased, and sales increased
? Customer loyalty increased
? Gross margin increased
•
1
: Information source: China Chain Store & Franchising Association
(2007), Survey Results on Category Management in China Retail
Industry in 2007
page 15 Marketing Module David F. Miller Center for Retailing Education and Research
Category Management Implementation
Fully implement,
8, 20%
Partially
implement, 24,
60%
Know it, but have
not implemented,
8, 20%
Don't know, 0,
0%
page 16 Marketing Module David F. Miller Center for Retailing Education and Research
Category Management Survey
?Eight retailers had not
conducted category
management
? 4 retailers did not have
the capability
? 1 retailer thought it was
not necessary
? 3 retailers understood
its importance and
would like to try it in the
future.
page 17 Marketing Module David F. Miller Center for Retailing Education and Research
Top 3 Challenges in Implementing
Category Management
?Software does not
function well
?Difficult to identify
consumer needs
?Too much work to do
and do not have time
and energy to
implement category
management
page 18 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Locus
(Wang, 2007)
?Background
? Country of origin: Thailand
? 1997 entered China
? Headquarter in Shanghai
? Format: hypermarket
? Each store around 12,000-20,000 square meter.
? Daily traffic: 8,000-10,000 consumers week day;
12,000-15,000 weekend.
? Sales/day=1,000,000 RMB
? SKU#=30,000
page 19 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Locus
(Cont.)
?Merchandising Assortment
? Objective: get into consumers’ daily life
? Customizes its merchandise assortment according to the
needs of consumers in 5 kilometers.
? Its merchandise assortment is characterized by fresh
foods.
?Compared to other hypermarkets, it provides a broader
variety of fresh food.
– Fresh food counts for 20-30% square feet of the store, and 10-
15% sales.
?It uses fresh food as a profit center.
?It has a unique assortment of tropical fruits from Thailand.
?It uses centralized buying for fresh foods and has strong
negotiation power.
page 20 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Locus
(Cont.)
?Category Management
? It divides merchandise into A, B, C three groups
?Ranks products according to their sales% and
assortment%.
?A: sales 70-80%, categories 5%-10%; B: 10-20%, 10-20%;
C: 5-10%, 70-80%.
? Use different management method.
?Pay more attention to A category
?Simplify its control and minimize purchase time for C
category
page 21 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Hualian
Supermarket
?Background
? Located in Huhehaote, Inter Mongolia
? Annual sales:150 Million RMB
? Store: 8,000 square meter, 20,000 SKUs
? Problem: Too many unproductive products in stores.
page 22 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Hualian
Supermarket (Cont.)
?Original standards
? Based on three month sales, the last 3% or 100 SKUs
were got rid of.
? Products that have less than 2,000 RMB or 5 boxes sales
for 3 months were identified as not selling well and were
considered for elimination.
? Eliminate the 50 SKUs with the smallest sales each
month. It also considered shelves space the products
took.
? Problem products that were forbidden by government
were got rid of immediately.
page 23 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Hualian
Supermarket (Cont.)
?Problems
? The well-organized product assortment or price structure
might be broken.
?Some categories may have only one or two kinds of
products left.
? Seasonal products
? New products
?Some value hasn’t been recognized by consumers.
? Some categories have low sales but are necessary.
? It is not flexible.
?Some time eliminating 50 SKUs is enough; but some time
eliminating 200 SKUs may be not enough.
? Some products that were not sold well may be caused by
out of stock or inappropriate presentation.
page 24 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Hualian
Supermarket (Cont.)
?Category management
? Form category management group
? Make merchandising management plan
?Data collection; data analysis; implementation
? Classify categories
? Category analysis
?Based on sales information
? Market research
?Competitors and suppliers
? Develop proposal
? Develop electronic pictures of shelves presentation
? Rearrange shelves
? Follow-up
page 25 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Hualian
Supermarket (Cont.)
?Outcome
? Better sales based on fewer SKUs
?The sales in the next month increased 11%.
?SKU # was reduced to 1/3 of the original.
? Better sales by using less space and shelves.
?The length of shelves was reduced 13%.
?sales/square meter increased 27%.
page 26 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label
?Private label has
taken significant
market share in
developed markets
? 2/5 in U.S; 1/3 in U.K;
¼ in France
? J.C. Penny’ private
label apparel, 40%;
Sears, 55%; Kohl,
20%; target, 80%
page 27 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label (Cont.)
?Advantages
? helps to build up brand loyalty and competitive
advantages.
? Higher profit
?Disadvantages
? Need to compete with national manufacturer brands.
page 28 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label in China
?Private labels have small market share and are
growing fast
1
? For top 100 retailers in china in 2006, private label took
.5% market share.
? The sales of private labels in China increased 52% in
2006 while the total retail sales increased 25% at the
same time.
? 93.3% of top 100 retailers has private label
1
Information source: Chin China Store & Franchising Association’s (2010) survey on private brands
(based on 30 retailers)
page 29 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label in China (Cont.)
? Store manager recommended label
? Although it is not a private label, this label shows that the
product has been strictly selected and inspected.
? Store supervised label
? E.g., ?Carrefour supervised?
page 30 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label in China (Cont.)
?Private label is increasingly becoming a common
practice of the retailers in China.
? Walmart China
?Its private label covers 12 categories including apparel,
tissue, food, toy, battery, and drinks etc.
? Shanghai Hualian
??Qiniian? brand covers 15 categories and 1000 kinds of
products with 0.2 billion yuan sales per year.
? Nonggongshang
??Nonggonshang? brand rice, oil, and meats.
? Chaoshifa
?uses its private labels to differentiate the market and attain
the higher profits.
page 31 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label in Dashang (Wang, 2009)
?Background
? Sales is increased from .5 billion to 30 billion during1991-
2005.
? No.3 Chinese retailer.
? It has department store, shopping mall, hypermarket, and
specialty store (home electronic and furniture)
? Northeast China
?7 provinces, 26 cities, 130 stores.
? 2001 opened Xin Mart supermarket.
page 32 Marketing Module David F. Miller Center for Retailing Education and Research
Dashang (Cont.)
?1999 started its private label
? Managed by distribution center.
?2004 formed private label company
? Responsible for the private label product development
and sales.
? It has new product development department, sales
department, planning department, and corporate finance
department.
?Position of the private label (Xin Mart)
? High quality and low price
page 33 Marketing Module David F. Miller Center for Retailing Education and Research
Dashang (Cont.)
?Private brand products
? necessary products with high sales volume,
frequent buying, low cost, and high gross margin.
? 4 general categories and 40 SKUs
?Toilet paper, detergent, hand soap, soap, wet
tissues, underwear, cleaners, and socks etc.
?Price Strategies
? 10-15% lower than manufacturer brands.
?Promotions
? Special presentation and sales people
? In big events, stores used the private label products
as prizes and gifts to customers.
page 34 Marketing Module David F. Miller Center for Retailing Education and Research
Dashang (Cont.)
?Achievement
?Private label soap ranked N0.1 in sales.
?Sold 5,000 ?Xin Mart? underwear in the
first month.
?In 2005 private label’s sales was 10
million RMB.
page 35 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Marketing Management
2. Pricing Management
page 36 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Understand the Importance of Pricing
? Analyze Pricing Strategies and Factors Influencing
Price-setting in China
? Discuss How to Develop Strategic Advantages
through Pricing in China for MNREs.
page 37 Marketing Module David F. Miller Center for Retailing Education and Research
Fundamentals in Pricing Management
?Why pricing is important?
? It determines customers’ perceived value
Value = Perceived benefits
Price
? It determines sales.
? It influences market share.
? It determines retailers’ profit.
? It determines store image.
? It differentiates a retailer from its competitors.
page 38 Marketing Module David F. Miller Center for Retailing Education and Research
Fundamentals in Pricing Management
(Cont.)
page 39 Marketing Module David F. Miller Center for Retailing Education and Research
EDLP
? Guaranteed low prices
to customers
? Lower advertising costs
? Better supply chain
management
?Fewer stockouts
Higher inventory
turns
Hi-Lo
? Higher profits – price
discrimination
? More excitement
? Build short-term sales and
generates traffic
Fundamentals in Pricing Management
(Cont.)
page 40 Marketing Module David F. Miller Center for Retailing Education and Research
Fundamentals in Pricing Management
(Cont.)
?Approaches for Setting Prices
? Cost-oriented
? Demand-oriented
? Competition-oriented
page 41 Marketing Module David F. Miller Center for Retailing Education and Research
Pricing in China (Cont.)
? Carrefour: high-low price
? Carrefour applies a composition of different pricing
strategies and made profit from different compositions.
?Sensitive product (high price elasticity): very low price
?Non-sensitive product: constitutional price
?Carrefour brand: elastic price
?Foreign product: very high price
page 42 Marketing Module David F. Miller Center for Retailing Education and Research
Pricing in China (Cont.)
?Wumart: Everyday Low Price
? Promise its customers a price lower than its
competitors.
? Wumart stores monitored its competitors’ prices every
day.
page 43 Marketing Module David F. Miller Center for Retailing Education and Research
Pricing in China (Cont.)
? Different pricing practices in China
? Prefer lucky number 8
? e.g., 888.888, 18.88
page 44 Marketing Module David F. Miller Center for Retailing Education and Research
Price management of Carrefour
in China (Deng, 2006)
?Background
?The second largest Retailer in the world
?Ranking 22 in Fortune 500 (2005)
?1995 entered China
?79 stores in China (by 2006/8)
page 45 Marketing Module David F. Miller Center for Retailing Education and Research
Pricing in Carrefour
? Pricing department: collect product-related data in the
market, study the merchandise to be sold in Carrefour,
perform competition analyses, and determine appropriate
prices for each product.
? Headquarter pricing department is responsible for the
negations with national and foreign brand.
? Regional pricing departments (four regions in China) are
responsible for the negations with regional brands and
prepare posters and flyers.
? Prices were entered into the company’s electronic retail
price system and were applicable to all Carrefour outlets
in the same market.
? In order to enhance quick responses to the market, store
managers were given the power to make real-time price
adjustments—something other retailers did not do.
? Decentralized management: store managers have power
in price adjustment, merchandise management,
promotion negotiation, and human resources etc.
page 46 Marketing Module David F. Miller Center for Retailing Education and Research
Old Price Management System
Suppliers
Store operation
Department
National and Regional
Pricing Department
National and Regional
Pricing Department
Promotion Price
Competitors
Store
Pricing Department
Initial Price
Enter Negotiation
Market
Research
Promotion Negotiation
Supervising
Set up Initial Price
page 47 Marketing Module David F. Miller Center for Retailing Education and Research
High sensitive SKU Sensitive SKU Non- Sensitive SJU
Categorizing Criteria Biggest sales in term of
volume or money
Daily necessaries
Consumers know the price.
At least 80% competitors
carry the product.
Good Sales in term of
volume and money
Seasonal product
Frequently purchased
products
Highly promoted by
suppliers
Others
Grocery department 350 3500 Around 10000
Fresh food department 120 N/A N/A
Home appliance
department
30 250 N/A
Household merchandise
department
50 250 N/A
Textile department N/A 300 N/A
Frequency of market
research
Twice/week Once/week Once/3 month for grocery
Once/6 month for home
appliance and household
merchandise
Frequency for updating the
pricing list
Update once/ three months for grocery and household merchandise
Update once/ one month for home appliance
Old Market Research Policies
page 48 Marketing Module David F. Miller Center for Retailing Education and Research
Old Pricing Policies
Pricing Policies Reference Price Restrictions Competitor
Promotion
High Sensitive Competitor’s price *
.95
The cheapest price
of the competitors
Non sensitive
products should not
have a negative
profit;
Do not lower the
price if the
competitor out of
stock for its lower
price products;
Price increasing
should not be more
than 10%
Follow the
competitor for
promotion
Sensitive Competitor’s price *
.98
The cheapest price
of the competitors
Non-Sensitive Competitor’s price *
1.00
One competitor
page 49 Marketing Module David F. Miller Center for Retailing Education and Research
Question
?What are the advantages and disadvantages of
Carrefour’s pricing management system and
pricing strategies?
page 50 Marketing Module David F. Miller Center for Retailing Education and Research
#1 #2 #3 #4 #5 #6 #7 #8 #9 #10
Beijing Huapu Meilian Carrefour
Dalian Hualian Carrefour
Haerbin Darunfa Haoyoud
uo
Carrefo
ur
Hangzhou Wumei Legou Carrefour
Nanjing Darunfa Hualian Carrefo
ur
Shanghai Ouchan Locus Carrefour
Chengdu Ouchan Haoyoud
uo
Carrefo
ur
Wuhan Darunfa Hualian Carrefour
Guangzhou Carrefour Haoyoud
uo
Shenzhen Renrenle Carrefour
Price Image
page 51 Marketing Module David F. Miller Center for Retailing Education and Research
Problems of the Old Pricing System
? Price changes were too frequent, which caused a lot of
human and operating cost.
? Because prices were changed for hundreds and thousands of
products each day, employee often forgot to change the price
labels, causing that the label prices were different from
checking-out prices.
? Customer were unsatisfied with the frequent price changes.
Its perceived honesty on prices was decreasing.
? The update period of product list for market research was too
long, leading to unclear target and low quality of market
research.
? Product prices on flyers and posters were often inconsistent
with real prices
page 52 Marketing Module David F. Miller Center for Retailing Education and Research
Problems of the Old Pricing System
? There were too many SKUs and too much market research,
which were not necessary.
? The market research, price adjustment, and feedback based
on stores were not efficient.
? Different stores in one city investigated the same competitors.
? Price adjustment by stores was influenced by store situation
and the price policies might not be well implemented.
? The price image of Carrefour was damaged and its profit
decreased.
page 53 Marketing Module David F. Miller Center for Retailing Education and Research
New Pricing Management System
? Building up city-level commission unit
?Negotiate new brand entry and promotions for stores in the city.
?Design and produce posters and flyers
?Responsible for the profit of the stores in the city
? Advantages
?Flyer and poster promotion has better targets and is more
powerful
?Greater negotiation power with local suppliers
?Better control over merchandising and prevention of corruption
?Better cooperate with local brands to optimize merchandising
assortment
?Better customized according to local needs
?Better high sensitive product list and better managed prices
?Better profit control
page 54 Marketing Module David F. Miller Center for Retailing Education and Research
New Pricing Management System
? Building up city-level pricing department
?Conducting market research and adjusting prices according to
price policies and competitors’ prices
?Inform the negotiation department about the SKUs with negative
profits
?Manage stores’ promotion prices
?Learn about competitors’ pricing policies and recent strategies,
and manage stores’ price image in the city
?Checking tags, labels, posters, and ads in order to provide an
image of price honesty.
page 55 Marketing Module David F. Miller Center for Retailing Education and Research
New Pricing Policies
High sensitive Sensitive Non-sensitive
Market Research Frequency Twice/week
(Every day for fresh
food)
Once/Two weeks Once/Two months
Lowest price from competitors Competitor’s price * 100%
Following competitors’
price
Flyer or poster
promotion (or
newspaper)
Follow price Follow price Do not follow price
In store promotion Follow price Do not follow Do not follow
page 56 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Marketing Management
3. Retail Communication
page 57 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Understanding the importance of retail
communication strategies in the success of
MNREs in China
? Identify different types of retail promotion
strategies
? Understand different channels of retail
communication and the relative advantages and
disadvantages of each channel
? Discuss the culture differences between China
and U.S. and its influence on MNREs’ choice of
retail compunction strategies
page 58 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication Mix
page 59 Marketing Module David F. Miller Center for Retailing Education and Research
Steps in Developing a
Retail Communication Program
page 60 Marketing Module David F. Miller Center for Retailing Education and Research
Posters in Wal-mart
page 61 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication in China
?TV advertising
? In China, TV advertising is very important. But it is a
threshold, and far from enough.
?More than half Chinese consumers indicated that they
would not buy instant noodles or beers if they are not
advertised on TV.
?In contrast, the percentage is 18% in England.
page 62 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication in China (cont.)
?Point-of-sale communication
? Many Chinese consumers changes their minds at the
last minute.
?65% percent of Chinese consumers indicate that they leave
a store with a different brand than the one that they
intended to purchase.
? Information inside stores and coming from sales people
may be more important than TV advertising.
? Chinese consumers are used to bargaining.
page 63 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication in China (cont.)
?Public Relations
? McDonald’s and Olympics
?Used the Chinese slogan ?wo jiu xihuan zhongguo ying?
(?I’m loving’ it when China wins?) as part of its localization
strategy during 2008 Olympic Games.
?Demonstrated the company’s ?deep-seated commitment to
the people of China, the Chinese government? (Jeff
Schwartz, CEO of McDonald, China)
.
page 64 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication in China (cont.)
? Blogs and Online Forums
? The influence of blogs and online forums is significantly
increasing in China.
? The credibility of consumer blogs and online forums is higher
than TV advertising.
? WOM is more important in China than in Western Countries.
? Relative or good friends’ recommendation play a major role for 2/3
Chinese consumers vs. 38% in U.S. and England.
? Wang Lao Ji (A Chinese soft drink brand) and Charity
? Wang Lao Ji donated 100 Million RMB after Wenchuan Earthquake
in 2008.
? This news was quickly spread through WOM and Internet.
? 19000 blogs talked about it, and consumers even created online
advertisements and made videos to promote Wang Lao Ji brand.
page 65 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication of Gome (Song, 2005)
?Promotion and Communication of Xi’an Gome
? Background
?Gome was the No. 1 consumer electronic retailer in China
?Xi’an Gome was established in 2001 and responsible for
the sales in Shanxi province
?1 billion Yuan Sales in 2004
?8 store in Xi’an
?51.3% market share (25.7% for Suning, Kaiyuan, and
Minsheng)
?Flagship store opened in the end of September, 2004
page 66 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication of Gome
?Retail communication Plan for the Golden Week of
National Day (10/1-10/7, 2004) by Xi’an Gome
? National Day is one of the most important holiday in
Mainland China
? People have one week break (three days’ break plus two
weekends)
? It is a golden time for retailers.
page 67 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Marketing plan for the Golden Week of National Day
? Period: 10/1-10/7, 2004
? Budget: 950,000 RMB promotion fee
? Target: 128.5 million RMB Sales
Beidajie Xianyang Nanerhuan Xinqing Xidajie Xierhuan Flag sheet
store
Total
Month
sales
1700 1200 2500 1750 500 1500 3700 12850
Sale
percentage
13% 9% 20% 14% 4% 12% 28% 100%
page 68 Marketing Module David F. Miller Center for Retailing Education and Research
Budget
? Budget
?Gome: .3% of sales =380,000 RMB
?Manufacturers: 570,000 RMB (1.5:1)
?Total: 950,000 RMB
High end Middle Low end Total
Square feet 25% 45% 30% 100%
Budget % 37% 43% 20% 100%
Gome Budget 141000 163000 76000 380000
Total budget 352000 408000 190000 950000
page 69 Marketing Module David F. Miller Center for Retailing Education and Research
Marketing Strategies
?Marketing strategies
?Promotion
?Public media
?Advertising
page 70 Marketing Module David F. Miller Center for Retailing Education and Research
Promotion
? Promotions
?Lower price
?1% lower price than any other retailers.
?Free gift
?Buy a high end TV and get a free DVD player with DVDs of 30
classic movies
?Transportation fee
?Give 10 Yuan transportation fee to the first 300 customers who buy
a product with a price higher than 500 Yuan
?Flagship store opening promotion
?Buy a TV with a price higher than 2500 Yuan and get a free
microwave
page 71 Marketing Module David F. Miller Center for Retailing Education and Research
Public media
?Newspapers
? Target
?9/15-10/1: at least 25 articles on newspaper; 30,000 words
? Sanqin Dushi Newspaper: article series about the home
appliance market in Xi’an, including three articles and
4,000 words/article.
? Xi’an Wanbao Newspaper: article series about Gome
including 4 articles and 2,500 words/article
? Huashangbao Newspaper: 8 full sections about TV
market and TV promotion
page 72 Marketing Module David F. Miller Center for Retailing Education and Research
Public media (Cont.)
Date Media Activities Notes
Newspaper:
Huashang
Sanqin Dushi
Xian Wanbao
Yangguang
Article about Gome flagship store; “Gome
Cup” writing competition on “The story
between me and TV”
Article about flagship store: high quality and
low price
Prepare the articles
by 9/13
9/15
(Wednesday)
Broadcasting
Station:
Shanxi Broadcast
News 9/14-22: trial
opening of the
flagship store
The trial opening of flagship store; Report on
high-end TV market competition; writing
competing articles
9/17
(Friday)
Newspaper:
Huashang
Sanqin Dushi
Xian Wanbao
Yangguang
Meibao
Broadcasting
Station:
Shanxi
Xi’an
Prepare the articles
by 9/15
TV Station:
Shanxi TV
Xi’an TV
Flagship: good location, huge store,
comfortable environment, various products,
and convenient location.
Cooperate with TV
station
9/20
(Monday)
Newspaper:
Sanqin Dushi
Xi’an Wanbao
Article series about Xi’an home appliance
market
Article series about Gome
2,000 words
2,000 words
9/21
(Tuesday)
Newspaper:
Huashang
Sanqin Dushi
News about the trial opening of flagship sheet
store;
Article series about Xi’an home appliance
market
2,000 words
page 73 Marketing Module David F. Miller Center for Retailing Education and Research
Public media (Cont.)
Newspaper:
Sanqin Dushi
Xi’an Wanbao
Article series about Xi’an home appliance
market
Article series about Gome
2,000 words
2,500 words
9/23
(Thursday)
TV Station:
Shanxi TV
Opening of flagship store 9/23-10/10
Flagship store
opening
9/24
(Friday)
Newspaper:
Huashang
Sanqin Dushi
Xi’an Wanbao
Yangguang
Meibao
Specially issue on home appliance; articles
from writing competition
Article series about Gome
Article about home appliance (especially, high
end TV)
Article about high end TV
News about the opening of flagship store
(emphasize high end TV)
9/25
(Saturday)
Newspaper:
Sanqin Dushi
Article series about Gome
2,000 words
Newspaper:
Huashang
Sanqin Dushi
Xi’an Wanbao
Yangguang
TV Station:
Shanxi TV
Xi’an TV
9/29
(Wednesday)
Broadcasting
Station:
Shanxi
The opening of flagship store: high quality and
low price, big promotions; winners of writing
competition
The opening of flagship store: high quality and
low price, big promotions
Prepare the articles
by 9/27
9/30
(Thursday)
Newspaper:
Huashang
Sanqin Dushi
Xi’an Wanbao
Protecting consumers from four traps when
shopping in the week of “the October First”
Headquarter
prepares the article
page 74 Marketing Module David F. Miller Center for Retailing Education and Research
Public media (Cont.)
?Other Media Strategies
? Public Media should provide a quantitative measure for
their activities to Gome.
?E.g., Sanqin Dushi needs to publish 2 articles about Gome
(600 words each).
? Media should not publish any negative news about
Gome.
? Their articles on Suning should be no more than 1/3 of
the articles on Gome.
? When mentioning Suning and Gome, the order should be
Gome and Suning.
? Gome articles should not be near any trash ads, such as
medical advertising.
page 75 Marketing Module David F. Miller Center for Retailing Education and Research
Advertising
?Advertising
? Newspapers (Gome)
?Time: 9/28,29, 30 and 10/4
?9/28,29: Huashang, Sanqin Dushi, and Yangguang; plan for
the week of ?the October 1
st
?
?9/30: Huashang, Xi’an Wanbao, and Sanqin Dushi; price
promotion
?10/4: price information
page 76 Marketing Module David F. Miller Center for Retailing Education and Research
Advertising (Cont.)
? Newspapers (Gome and manufacturers)
? Period: 9/28-30
? 36 ¼ Sections
? 9/30: Huashang, Xi’an Wanbao, Sanqin Dushi, and
Yangguang;
? 9/28 and 9/29: could be on other newspaper
? Requirements: Must be on the section of news or home
appliance; Try to be on up-right of the section; try to be on
pages of 1,3,4,7…, so that readers can read about Gome
every time when they turn to a new page.
page 77 Marketing Module David F. Miller Center for Retailing Education and Research
Advertising (Cont.)
?Broadcasting
? Period: 9/22-10/7
? Channels: transportation and music.
? Target: consumers on transportation vehicles
? Requirements: on the sections of road information,
popular music ranking, and time report etc
page 78 Marketing Module David F. Miller Center for Retailing Education and Research
Advertising (Cont.)
?TV
? Period: 9/22-10/6
? Channels: Shanxi TV, channel 2,4,8, and Xi’an TV
channel 2
? Sections: News and TV shows with high rating
? MV: Made by headquarter.
? Frequency:
?more than 4 times/day, 5 seconds three times; 15 seconds
one time;
?Fore 9/30 -10/6, more than 6 times/day; 5 seconds four
times; 15 seconds 2 times.
page 79 Marketing Module David F. Miller Center for Retailing Education and Research
Advertising (Cont.)
?In store promotion and communication
? Creating an exciting environment
?Banners, ribbons, posters, balloons, and signs
? Clear price labels
? Manufacturer demonstration and promotions
? Lucky draw
page 80 Marketing Module David F. Miller Center for Retailing Education and Research
Outcomes
Beidajie Xianyang Nanerhuan Xinqing Xidajie Xierhuan Flag sheet
store
Total
Planned Sales 1700 1200 2500 1750 500 1500 3700 12850
Actual Sales 1442.9 957.6 2057.5 1408.7 425.0 1216.5 2993.4 104.82
Percentage 83.7% 79.8% 82.3% 80.5% 85.0% 81.1% 80.9% 81.6%
page 81 Marketing Module David F. Miller Center for Retailing Education and Research
Discussion Question
?What do you think about the promotion and
communication plan of Gome?
page 82 Marketing Module David F. Miller Center for Retailing Education and Research
Outcomes
?Complete 81.5% of the planned sales
?Drawbacks
? Put too many resources on high end products
? Lack of variety and innovativeness in promotions
? Some activities did not directly transfer into sales
? Promotions didn’t have a clear target (e.g., certain
product or certain customers)
? The public communication was not enough for the middle
and late sections of the period
page 83 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Marketing Management
4. Store Atmospherics and Visual
Merchandising
page 84 Marketing Module David F. Miller Center for Retailing Education and Research
Objective
? Understating the importance of store environment
? Learn the key dimensions of store environment
(e.g., store layout, design and visual
merchandising)
? Identify the major difference in terms of store
environment between Chinese retail stores and
U.S. retail stores
page 85 Marketing Module David F. Miller Center for Retailing Education and Research
Store Design Objectives
?Implement retailers’ strategy
?Influence customer buying behavior
?Control design and maintenance costs
?Provide flexibility
?Meet legal requirements
page 86 Marketing Module David F. Miller Center for Retailing Education and Research
Types of Store Layouts
?Grid
?Racetrack
?Free Form
page 87 Marketing Module David F. Miller Center for Retailing Education and Research
Gird Store Layout
Fruit
Vegetables
Office &
customer
service
Books, magazines, seasonal
display
R
e
c
e
i
v
i
n
g
&
s
t
o
r
a
g
e
Exit
Entrance
Cart
area
Checkouts
page 88 Marketing Module David F. Miller Center for Retailing Education and Research
Racetrack Layout
page 89 Marketing Module David F. Miller Center for Retailing Education and Research
Free-form Layout
Storage, Receiving, Marketing
Underwear
Dressing Rooms
Checkout counter
Clearance Items
Feature Feature
J
e
a
n
s
C
a
s
u
a
l
W
e
a
r
S
t
o
c
k
i
n
g
s
A
c
c
e
s
s
o
r
i
e
s
P
a
n
t
s
T
o
p
s
T
o
p
s
S
k
i
r
t
s
a
n
d
D
r
e
s
s
e
s
H
a
t
s
a
n
d
H
a
n
d
b
a
g
s
Open Display Window Open Display Window
page 90 Marketing Module David F. Miller Center for Retailing Education and Research
Store Design
?Effectively Using Signage
?Coordinate signage to store’s image
?Print and digital
?Feature areas
?e.g. Promotion areas, End caps; Windows
?Space Planning
?Productivity of allocated space
?Merchandise inventory turnover
?Impact on store sales
?Display needs for the merchandise
page 91 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandise Presentation
page 92 Marketing Module David F. Miller Center for Retailing Education and Research
Creating a Store Environment
Color
Scent
Music
Lighting
Store Atmosphere
page 93 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual Merchandising
in China
?Traditional Chinese decorated styles
?Traditional Chinese colors for holidays-yellow and red
?Traditional Chinese icons- dragon, phenix animal of year
?Traditional Chinese decorates- Chinese knots, lantern,
and paper art etc.
page 94 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual Merchandising
in China (cont.)
? McDonald
? During major Chinese festivals such as the Chinese Lunar New
Year and mid-autumn celebration, it decorates store interiors
with traditional Chinese paper art—red paper cut-outs of
Chinese characters and pictures of auspicious symbols—like
many local Chinese restaurants.
page 95 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual Merchandising
in China (cont.)
?Carrefour
? Carrefour’s Chinese name ????”means ?family,
happiness, and luck? in Chinese. The 3 characters are all
very important to Chinese culture. ?is always used to
decorate room in traditional Chinese new year.
? As Chinese like to compare different products in the
same catalog, Carrefour specially made its shelves
longer than the usual to show more brands.
? Carrefour adopted a fresh-market style (e.g. live fish).
page 96 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual Merchandising
in China (Cont.)
?Best Buy
? The aisles are wider than those of competitors
? Products were assorted by categories, not brands
? Special customer experience - Product demonstration
area
? Different positioning – CE innovators
page 97 Marketing Module David F. Miller Center for Retailing Education and Research
?Environment of supermarkets in China
? A survey was conducted on top 10 supermarkets in
Beijing (Zhu, 2007)
? Transportation
?50% walk, 25.6% used public transportation, 15.2% by bike
and 9.1 used cars (68.5% thinks supermarket parking is
inconvenient; 5.4% convenient)
? Attractiveness of supermarkets
?Convenient location (44.7%), low price (23.0%),
environment (22.7%), product variety (15.5%), and service
(7.3%)
? Overall evaluation of environment
?Excellent (19.4%), Good (55.3%), middle (14.8%), pass
(3.6%), failed (.9%)
? Store image is clear and impressive (5.9%)
Store Environment and Visual
Merchandising in China (cont.)
page 98 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual
Merchandising in China (cont.)
?Store entrance
? 51.5% think the entrance of the supermarket is clean and
organized. 36.8% think it is clean but unorganized.
11.7% think it is not clean and unorganized.
?Signs
? 60% consumer think the signs for shopping, restroom,
safety exit, and smoking area are not clear.
?Temperature
? 23.7% conformable; 67.9% ok; 7.7% uncomfortable.
?Air
? Fresh 18.0%, 69.1% OK, and bad12.2%.
?Light
? Too light 18.7%, comfortable 74.7%, too dim 4.9%
page 99 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual
Merchandising in China (cont.)
?Shelf presentation
? Reasonable 16.2%,72.6% ok; 9.4% not good.
?Restroom
? 50% ok; 21.3% dirty.
?Bag storage
? coded box (45%), human service (29.5%), don’t need
store (17.6%), and use coin (4.7%).
page 100 Marketing Module David F. Miller Center for Retailing Education and Research
Locus (Wang, 2007)
? Locus store in Shanghai
? Store environment
? Intend to create a ?hot? and
?crowed? selling environment.
– Warm Color (yellow)
– High light
– Noisy music
? Major aisles are 6-7 meters
wide; other aisles are 3-4
meters wide
? Shelves are 1.8 meters high.
– Average height of Chinese
women is 1.60.
? Put its private labels on the
second and third levels of
shelves.
– They are around 100-150 cm
high
page 101 Marketing Module David F. Miller Center for Retailing Education and Research
Locus (cont.)
page 102 Marketing Module David F. Miller Center for Retailing Education and Research
Locus (Cont.)
Promoted
products
Bakery
Prepared
Food
Vegetables
Frozen Food
Sea Food
Meat Packed Food Drinks
Alcohol
Fruits
Grains and Oil
Detergents
Toiletries
The First Floor
page 103 Marketing Module David F. Miller Center for Retailing Education and Research
Locus (Cont.)
Cell Phone
TV
DVD/CD
Stationery
Toy
Shoes
Apparel
Apparel
Apparel
Shoes
Furniture
Home Electronic
Home Electronic Fitting room
Household Chemical
The Second Floor
page 104 Marketing Module David F. Miller Center for Retailing Education and Research
category Square feet (%)
Fruit and vegetable 10
Meat 8
Seafood 7
Frozen food 12
Other food 12
Cigarette and alcohol 6
Seasoning 5
Grain and Oil 3
Detergent 5
Apparel 10
Shoe 5
Home electronic 3
Household chemical 3
Stationery 3
Toy 3
Others 5
page 105 Marketing Module David F. Miller Center for Retailing Education and Research
Vedios
? Videos of Chaoshifa Supermarket
? Video of Yonghong Street market
page 106 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Marketing Management
5. Customer Service
page 107 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Learn the evolution of customer service in China during the
transition from a planned economy to a market economy.
? Analyze differences between Chinese consumers and U.S.
consumers in terms of their expectations and quality
evaluation criteria of customer services
? Learn differences in customer service strategies in China
and U.S. (e.g., after-sale service, service recovery, and
return policies.)
? Discuss how to develop competitive advantages through
customer service in China for MNREs.
page 108 Marketing Module David F. Miller Center for Retailing Education and Research
Customer service
? The set of activities and programs undertaken by retailers to
make the shopping experience more rewarding for their
customers.
? It is also about treating customers with respect, individuality,
and personal attention.
? Services increase customer value.
? High-quality service helps retailers to built competitive
advantages
page 109 Marketing Module David F. Miller Center for Retailing Education and Research
Customer Service-Items
? Acceptance of credit cards
? Alteration of merchandise
? Assembly of merchandise
? Check cashing
? ATM terminals
? Delivery to home or work
? Demonstration of
merchandise
? Display of merchandise
? Dressing rooms
? Extended store hours
? Facilities for shoppers with
special needs
? Gift wrapping
? Warranties
? Parking
? Personal assistance in
selecting merchandise
? Personal shoppers
? Play areas for children
? Presentations on how to
use merchandise
? Repair service
? Rest rooms,
? Return privileges
? Rooms for checking costs
and packages
? Shopping carts
? Special orders
? Etc.
page 110 Marketing Module David F. Miller Center for Retailing Education and Research
Customer Service in China
?Customer service in a planned economy
? Retailers were not free market players but state-owned
distribution channel.
? Retailers and salespeople had no incentive to provide
better customer service.
? Customer service had low quality.
page 111 Marketing Module David F. Miller Center for Retailing Education and Research
Customer service in China
? Customer service in the
transitional market
economy
? Customers are kings.
? Customer service is
increasingly becoming
important to the success
of a retailer.
? Salespeople
? Rude ? polite
? Unprofessional ?
professional
page 112 Marketing Module David F. Miller Center for Retailing Education and Research
Customer Service in China
?Customer service is
cheap
? Free delivery
?Most deliveries in
China are free and
efficient (For CEs,
24 hour delivery is
guaranteed in the
same city)
? Free assembly
?Chinese consumers
do not get used to
?DIY? and free
assembly is
common in China
Pizza hut free delivery bike in Guangzhou
page 113 Marketing Module David F. Miller Center for Retailing Education and Research
Best Buy in China
?Best Buy’s high quality service/ warranty was a
great success in US. However, it was not
successful in China.
page 114 Marketing Module David F. Miller Center for Retailing Education and Research
Best Buy in China
?Best Buy assumed that Chinese people enjoy high-
quality service, and then used customer service to
differentiate itself from other domestic competitors.
?Best Buy brought the ?extend warranty? policy to
china and hoped that the revenue from warranty
could help Best Buy earn more profit and get the
competitive advantage over its competitors in
China CE market.
?GOME and Suning copied this warranty policy. But
according to the data from GOME, this part of
revenue is very small.
page 115 Marketing Module David F. Miller Center for Retailing Education and Research
Best Buy in China
?Chinese consumers are used to free services.
?Any value-added service is free in China.
?Chinese consumers mainly focus on products and
prices.
page 116 Marketing Module David F. Miller Center for Retailing Education and Research
Customer Service in China
?Return policy
? It is harder to return purchased products in China.
? ?Three guarantees?:
Refund (within 7 days)
Replace (within 15 days)
Repair (after 15 days but within the effective warranty period)
page 117 Marketing Module David F. Miller Center for Retailing Education and Research
Customer Service in China
? Membership card from every retailers
?reinforce loyalty through point system
? Gift card is very popular
?Government and organizations provide gift cards as
benefits to their employees
page 118 Marketing Module David F. Miller Center for Retailing Education and Research
Chaoshifa
?Chaoshifa
?Morning market
?Many elder people
will exercise in the
early morning and
most of them would
prefer to go to an
open market to buy
some fresh food.
?Chaoshifa opens its
food section as
early as 6am.
page 119 Marketing Module David F. Miller Center for Retailing Education and Research
Chaoshifa
?Chaoshifa
?Community service for disabled people and
elders
?Employees of Chaoshifa help disabled people and
elders with free delivery.
?In some traditional holidays, employees of
Chaoshifa will distribute gifts to communities.
page 120 Marketing Module David F. Miller Center for Retailing Education and Research
Chaoshifa
?Space for elder people’s leisure time
? Many neighbors like sitting in Chaoshifa and chatting.
?Free cooking classes
? Chaoshifa provides free cooking classes periodically.
?Free health advisory
? Professional advisors are available at Chaoshifa to
answer questions about nutrition and other health related
questions.
page 121 Marketing Module David F. Miller Center for Retailing Education and Research
VIP Service in Dangdai Plaza
page 122 Marketing Module David F. Miller Center for Retailing Education and Research
VIP Service in Dangdai Plaza
page 123 Marketing Module David F. Miller Center for Retailing Education and Research
Summary
page 124 Marketing Module David F. Miller Center for Retailing Education and Research
Build up competitive advantages through
retail strategies (Li, Wang, and Li, 2006)
Convenience Environment Facility Service Merchandising Price Check-out
Process
Policies After-sale
Service
Wal-Mart 5 1 3 3 2 7 3 4 7
Locus 9 7 12 14 11 6 17 11 10
Auchon 1 7 5 9 7 1 14 8 3
Baijia 17 14 13 13 15 14 16 12 10
Rt-Mart 2 6 4 6 5 2 6 1 6
Metro 2 2 6 4 1 5 2 2 2
Tesco 4 4 7 11 5 3 11 5 5
Ito-Yokado 11 5 2 2 6 12 1 4 6
Beijing Hualian 13 12 14 15 14 13 12 16 14
Sugo 6 17 17 8 9 12 5 13 9
Nonggongshang 16 19 20 16 14 13 15 14 11
Wu-Mart 8 13 18 12 13 11 14 11 12
Haoyoudou 7 10 8 10 10 9 13 9 8
Huarun 14 15 15 7 16 17 7 10 10
Wankelong 11 8 11 5 4 4 4 6 6
Jizhidao 3 3 1 1 3 16 1 3 1
Shanghai Hualian 12 16 19 10 12 15 8 13 12
Shanghi Lianhua 10 18 16 11 17 18 10 14 8
Carrefour 15 9 9 9 8 8 9 7 4
Xinyijia 11 11 10 13 16 10 11 15 13
page 125 Marketing Module David F. Miller Center for Retailing Education and Research
Build up competitive advantages through
retail strategies (Li, Wang, and Li, 2006)
Retailers Positioning Point Primary Strategy Secondary
Strategy
Non –focused
strategies
Auchan Low price Price Parking and bag
storage
5 items > average
Rt-Mart Easy product return Service Promotion 6 items > average
Wal-Mart Confortable
environment
Environment Product quality 7 items > average
Metro Varity of products Merchandising Unclear 8 items > average
Jizhidao Super service Service Facility 6 items > average
Ito Yokato Super Service Service Facility 5 items > average
Tesco, Carrefour Unclear Unclear Unclear 7 items > average
page 126 Marketing Module David F. Miller Center for Retailing Education and Research
Standardization vs. Localization
? Discussion question: Are concepts and practices developed
in the West directly applicable to China?
? “The initial assumption was that China was so different from
US (20% same, 80% different) because it’s too far from US
and has the different language and culture and completely
different business model. However, when Best Buy came in
China, we realized that it went too far local and needed to get
back to basic operating basic principles around what it works
in any retail environments(80% same, 20% different). Finally,
Best Buy found it moved too far to the other side. Today, the
proportion is close to 50% (understand the market and
customers) -50% (take Best Buy principles)”
-Kal Patel, the executive vice president of emerging business of
Best Buy
page 127 Marketing Module David F. Miller Center for Retailing Education and Research
Standardization vs. Localization
?Standardization vs. Localization
? Standardization
?uniform, efficient, low-cost, easy to remember
?neglect local conditions, may not be effective
?Language and cultural barriers
?Sometimes more costly
? Localization
?Closer to the local knowledge
?Consumers and market more responsive
?More effective
?Lower cost
page 128 Marketing Module David F. Miller Center for Retailing Education and Research
References
? Zheng, Zhigao and Xueling Yi (2006), ?A Comparative Study of Sino-Foreign
China Retail Inustry?, Journal of Guangdong Institute of Business
Administration, 21(4), 66-69
? Zhu, Qunfang (2007), ?Shopping Environment in Beijing’s Supermarket?,
China Business and Market, 7, 33-35
? Wang, Zhi (2007). The Research of the Shanghai Yichuanlianhua
Supermarket for the Exhibition and Layout of Products. Master Thesis.
Shanghai Jiaotong University.
? Deng, Xu (2006). The Establishment of Pricing Management System
Illustrated With Practice of Carrefour China. Master Thesis. Shanghai
Jiaotong University.
? Li, Fei, Gao Want, and Xiang Li (2006), An Empirical Study on the
Positioning Point of Successful Retailers in China. Nankai Business Review,
9(4), 24-28
? Wang, Yan (2009). Private Brand Strategies of Chinese Retailers. Master
Thesis. Huaqiao University.
? Song, Guangle (2005). Xi’an Gome Promotion Mode Research. Master
Thesis. Xibei University.
doc_797745717.pdf
Understand the important role of international marketing and brand management in Multinational Retail Enterprises (MNREs)
David F. Miller Center For Retailing Education and Research
International Retailing Education and Training (IRET )
Retail Marketing
Management
page 2 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Understand the important role of international marketing and
brand management in Multinational Retail Enterprises
(MNREs)
? Understand the differences in macro-market environment
such as culture, politics, and economy between U.S. market
and the transitional economy of China and its implications
for marketing strategy development of MNREs
? Understand the specific challenges and opportunities for
MNREs in marketing in China
? Analyze strategic perspectives and key issues in building a
sustainable competitive advantage in China for MNREs
? Develop problem-solving and analytical skills regarding
developing retail strategies in China by analyzing examples
and cases
page 3 Marketing Module David F. Miller Center for Retailing Education and Research
Outline
?Merchandising Management
?Pricing Management
?Retail Communication
?Store Atmospherics and Visual Merchandising
?Customer Service
page 4 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Marketing Management
1. Merchandising Management
page 5 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Understand the role of merchandising
management in international retailers’ success
? Identify merchandising management strategies
used by international retailers in China
? Discuss how to build up competitive advantages
for MNREs through merchandising management
page 6 Marketing Module David F. Miller Center for Retailing Education and Research
Fundamentals in Merchandise
Management
? Merchandising Management
? Planning, developing, and presenting product lines
for identified target market with regard to pricing,
assortments, styling, and timing while meeting the
company’s financial goals
?The right mix or assortment
?The right quality
?The right quantity
?The right price
?The right time
?The right place
c) image100/PunchStock
page 7 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandise Assortment in China
?Using merchandise assortment to differentiate from
competitors in China
? Best Buy China has the exclusive right to sell Apple
products
? Lawson (convenience store) carries specific products
imported from Japan.
? Wal-mart ?if you can not find it in Walmart, you may not
need it at all.?
? Chaoshifa convenience stores carry fresh vegetables,
fruit, and sea food.
page 8 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandise Assortment in China
(Cont.)
? Using merchandise assortment to adapt to local market
?Merchandise assortment in Carrefour
?Bakery section
– Carrefour’s way at the beginning: croissants, baguettes,
Taiwanese bread, cheesecake, etc.
– Later, the best suppliers of Chinese baked goods were invited
to set up stands on consignment.
– Now the sales of Chinese desserts is roughly the same as the
western bakery.
page 9 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandise Assortment in China
(Cont.)
?Shanghai Hongqiao store has a higher percentage of
foreign products than other stores.
– 40% customers are foreigners.
page 10 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandise Assortment in China
(Cont.)
?Traditional Chinese food in Wal-Mart
page 11 Marketing Module David F. Miller Center for Retailing Education and Research
? The process of managing a
retail business with the
objective of maximizing the
sales and profits of a category.
? 20/80 principle
?80% sales come from
20% products.
Category Management
page 12 Marketing Module David F. Miller Center for Retailing Education and Research
Category Management in Ito
Yokato
?Ito Yokado’s category management
? Entered China at 1996
? It is famous for category management.
?By using sophisticated computer software, it incorporated
different factors including season, week, weather, time,
holidays, etc. into its category management.
?It tested its result and maximized its predictive utility on
consumers’ needs.
?It uses the software to predict sales, modify product
assortment, place orders, and plan store layout and
merchandise assortment etc.
?It accurately manages merchandise at the SKU level
page 13 Marketing Module David F. Miller Center for Retailing Education and Research
Category Management in Ito Yokato
(Cont.)
? Advantages
?Evaluates different brands and products and provides the
best product assortment.
?Better usage of shelves and capital.
?Decrease the chance of becoming out of stock
?Increase the sales and profits of categories
?Better capture market changes and quicker responses to
consumers’ needs
page 14 Marketing Module David F. Miller Center for Retailing Education and Research
Category Management Survey
1
?Subjects
? 40 retailers in 18 provinces and cities
? 6/2007
?32 out of 40 retailers conducted category management
? Category assortments became more reasonable
? Out-of-stock decreased
? Inventory level decreased, and sales increased
? Customer loyalty increased
? Gross margin increased
•
1
: Information source: China Chain Store & Franchising Association
(2007), Survey Results on Category Management in China Retail
Industry in 2007
page 15 Marketing Module David F. Miller Center for Retailing Education and Research
Category Management Implementation
Fully implement,
8, 20%
Partially
implement, 24,
60%
Know it, but have
not implemented,
8, 20%
Don't know, 0,
0%
page 16 Marketing Module David F. Miller Center for Retailing Education and Research
Category Management Survey
?Eight retailers had not
conducted category
management
? 4 retailers did not have
the capability
? 1 retailer thought it was
not necessary
? 3 retailers understood
its importance and
would like to try it in the
future.
page 17 Marketing Module David F. Miller Center for Retailing Education and Research
Top 3 Challenges in Implementing
Category Management
?Software does not
function well
?Difficult to identify
consumer needs
?Too much work to do
and do not have time
and energy to
implement category
management
page 18 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Locus
(Wang, 2007)
?Background
? Country of origin: Thailand
? 1997 entered China
? Headquarter in Shanghai
? Format: hypermarket
? Each store around 12,000-20,000 square meter.
? Daily traffic: 8,000-10,000 consumers week day;
12,000-15,000 weekend.
? Sales/day=1,000,000 RMB
? SKU#=30,000
page 19 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Locus
(Cont.)
?Merchandising Assortment
? Objective: get into consumers’ daily life
? Customizes its merchandise assortment according to the
needs of consumers in 5 kilometers.
? Its merchandise assortment is characterized by fresh
foods.
?Compared to other hypermarkets, it provides a broader
variety of fresh food.
– Fresh food counts for 20-30% square feet of the store, and 10-
15% sales.
?It uses fresh food as a profit center.
?It has a unique assortment of tropical fruits from Thailand.
?It uses centralized buying for fresh foods and has strong
negotiation power.
page 20 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Locus
(Cont.)
?Category Management
? It divides merchandise into A, B, C three groups
?Ranks products according to their sales% and
assortment%.
?A: sales 70-80%, categories 5%-10%; B: 10-20%, 10-20%;
C: 5-10%, 70-80%.
? Use different management method.
?Pay more attention to A category
?Simplify its control and minimize purchase time for C
category
page 21 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Hualian
Supermarket
?Background
? Located in Huhehaote, Inter Mongolia
? Annual sales:150 Million RMB
? Store: 8,000 square meter, 20,000 SKUs
? Problem: Too many unproductive products in stores.
page 22 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Hualian
Supermarket (Cont.)
?Original standards
? Based on three month sales, the last 3% or 100 SKUs
were got rid of.
? Products that have less than 2,000 RMB or 5 boxes sales
for 3 months were identified as not selling well and were
considered for elimination.
? Eliminate the 50 SKUs with the smallest sales each
month. It also considered shelves space the products
took.
? Problem products that were forbidden by government
were got rid of immediately.
page 23 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Hualian
Supermarket (Cont.)
?Problems
? The well-organized product assortment or price structure
might be broken.
?Some categories may have only one or two kinds of
products left.
? Seasonal products
? New products
?Some value hasn’t been recognized by consumers.
? Some categories have low sales but are necessary.
? It is not flexible.
?Some time eliminating 50 SKUs is enough; but some time
eliminating 200 SKUs may be not enough.
? Some products that were not sold well may be caused by
out of stock or inappropriate presentation.
page 24 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Hualian
Supermarket (Cont.)
?Category management
? Form category management group
? Make merchandising management plan
?Data collection; data analysis; implementation
? Classify categories
? Category analysis
?Based on sales information
? Market research
?Competitors and suppliers
? Develop proposal
? Develop electronic pictures of shelves presentation
? Rearrange shelves
? Follow-up
page 25 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandising Management in Hualian
Supermarket (Cont.)
?Outcome
? Better sales based on fewer SKUs
?The sales in the next month increased 11%.
?SKU # was reduced to 1/3 of the original.
? Better sales by using less space and shelves.
?The length of shelves was reduced 13%.
?sales/square meter increased 27%.
page 26 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label
?Private label has
taken significant
market share in
developed markets
? 2/5 in U.S; 1/3 in U.K;
¼ in France
? J.C. Penny’ private
label apparel, 40%;
Sears, 55%; Kohl,
20%; target, 80%
page 27 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label (Cont.)
?Advantages
? helps to build up brand loyalty and competitive
advantages.
? Higher profit
?Disadvantages
? Need to compete with national manufacturer brands.
page 28 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label in China
?Private labels have small market share and are
growing fast
1
? For top 100 retailers in china in 2006, private label took
.5% market share.
? The sales of private labels in China increased 52% in
2006 while the total retail sales increased 25% at the
same time.
? 93.3% of top 100 retailers has private label
1
Information source: Chin China Store & Franchising Association’s (2010) survey on private brands
(based on 30 retailers)
page 29 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label in China (Cont.)
? Store manager recommended label
? Although it is not a private label, this label shows that the
product has been strictly selected and inspected.
? Store supervised label
? E.g., ?Carrefour supervised?
page 30 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label in China (Cont.)
?Private label is increasingly becoming a common
practice of the retailers in China.
? Walmart China
?Its private label covers 12 categories including apparel,
tissue, food, toy, battery, and drinks etc.
? Shanghai Hualian
??Qiniian? brand covers 15 categories and 1000 kinds of
products with 0.2 billion yuan sales per year.
? Nonggongshang
??Nonggonshang? brand rice, oil, and meats.
? Chaoshifa
?uses its private labels to differentiate the market and attain
the higher profits.
page 31 Marketing Module David F. Miller Center for Retailing Education and Research
Private Label in Dashang (Wang, 2009)
?Background
? Sales is increased from .5 billion to 30 billion during1991-
2005.
? No.3 Chinese retailer.
? It has department store, shopping mall, hypermarket, and
specialty store (home electronic and furniture)
? Northeast China
?7 provinces, 26 cities, 130 stores.
? 2001 opened Xin Mart supermarket.
page 32 Marketing Module David F. Miller Center for Retailing Education and Research
Dashang (Cont.)
?1999 started its private label
? Managed by distribution center.
?2004 formed private label company
? Responsible for the private label product development
and sales.
? It has new product development department, sales
department, planning department, and corporate finance
department.
?Position of the private label (Xin Mart)
? High quality and low price
page 33 Marketing Module David F. Miller Center for Retailing Education and Research
Dashang (Cont.)
?Private brand products
? necessary products with high sales volume,
frequent buying, low cost, and high gross margin.
? 4 general categories and 40 SKUs
?Toilet paper, detergent, hand soap, soap, wet
tissues, underwear, cleaners, and socks etc.
?Price Strategies
? 10-15% lower than manufacturer brands.
?Promotions
? Special presentation and sales people
? In big events, stores used the private label products
as prizes and gifts to customers.
page 34 Marketing Module David F. Miller Center for Retailing Education and Research
Dashang (Cont.)
?Achievement
?Private label soap ranked N0.1 in sales.
?Sold 5,000 ?Xin Mart? underwear in the
first month.
?In 2005 private label’s sales was 10
million RMB.
page 35 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Marketing Management
2. Pricing Management
page 36 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Understand the Importance of Pricing
? Analyze Pricing Strategies and Factors Influencing
Price-setting in China
? Discuss How to Develop Strategic Advantages
through Pricing in China for MNREs.
page 37 Marketing Module David F. Miller Center for Retailing Education and Research
Fundamentals in Pricing Management
?Why pricing is important?
? It determines customers’ perceived value
Value = Perceived benefits
Price
? It determines sales.
? It influences market share.
? It determines retailers’ profit.
? It determines store image.
? It differentiates a retailer from its competitors.
page 38 Marketing Module David F. Miller Center for Retailing Education and Research
Fundamentals in Pricing Management
(Cont.)
page 39 Marketing Module David F. Miller Center for Retailing Education and Research
EDLP
? Guaranteed low prices
to customers
? Lower advertising costs
? Better supply chain
management
?Fewer stockouts
Higher inventory
turns
Hi-Lo
? Higher profits – price
discrimination
? More excitement
? Build short-term sales and
generates traffic
Fundamentals in Pricing Management
(Cont.)
page 40 Marketing Module David F. Miller Center for Retailing Education and Research
Fundamentals in Pricing Management
(Cont.)
?Approaches for Setting Prices
? Cost-oriented
? Demand-oriented
? Competition-oriented
page 41 Marketing Module David F. Miller Center for Retailing Education and Research
Pricing in China (Cont.)
? Carrefour: high-low price
? Carrefour applies a composition of different pricing
strategies and made profit from different compositions.
?Sensitive product (high price elasticity): very low price
?Non-sensitive product: constitutional price
?Carrefour brand: elastic price
?Foreign product: very high price
page 42 Marketing Module David F. Miller Center for Retailing Education and Research
Pricing in China (Cont.)
?Wumart: Everyday Low Price
? Promise its customers a price lower than its
competitors.
? Wumart stores monitored its competitors’ prices every
day.
page 43 Marketing Module David F. Miller Center for Retailing Education and Research
Pricing in China (Cont.)
? Different pricing practices in China
? Prefer lucky number 8
? e.g., 888.888, 18.88
page 44 Marketing Module David F. Miller Center for Retailing Education and Research
Price management of Carrefour
in China (Deng, 2006)
?Background
?The second largest Retailer in the world
?Ranking 22 in Fortune 500 (2005)
?1995 entered China
?79 stores in China (by 2006/8)
page 45 Marketing Module David F. Miller Center for Retailing Education and Research
Pricing in Carrefour
? Pricing department: collect product-related data in the
market, study the merchandise to be sold in Carrefour,
perform competition analyses, and determine appropriate
prices for each product.
? Headquarter pricing department is responsible for the
negations with national and foreign brand.
? Regional pricing departments (four regions in China) are
responsible for the negations with regional brands and
prepare posters and flyers.
? Prices were entered into the company’s electronic retail
price system and were applicable to all Carrefour outlets
in the same market.
? In order to enhance quick responses to the market, store
managers were given the power to make real-time price
adjustments—something other retailers did not do.
? Decentralized management: store managers have power
in price adjustment, merchandise management,
promotion negotiation, and human resources etc.
page 46 Marketing Module David F. Miller Center for Retailing Education and Research
Old Price Management System
Suppliers
Store operation
Department
National and Regional
Pricing Department
National and Regional
Pricing Department
Promotion Price
Competitors
Store
Pricing Department
Initial Price
Enter Negotiation
Market
Research
Promotion Negotiation
Supervising
Set up Initial Price
page 47 Marketing Module David F. Miller Center for Retailing Education and Research
High sensitive SKU Sensitive SKU Non- Sensitive SJU
Categorizing Criteria Biggest sales in term of
volume or money
Daily necessaries
Consumers know the price.
At least 80% competitors
carry the product.
Good Sales in term of
volume and money
Seasonal product
Frequently purchased
products
Highly promoted by
suppliers
Others
Grocery department 350 3500 Around 10000
Fresh food department 120 N/A N/A
Home appliance
department
30 250 N/A
Household merchandise
department
50 250 N/A
Textile department N/A 300 N/A
Frequency of market
research
Twice/week Once/week Once/3 month for grocery
Once/6 month for home
appliance and household
merchandise
Frequency for updating the
pricing list
Update once/ three months for grocery and household merchandise
Update once/ one month for home appliance
Old Market Research Policies
page 48 Marketing Module David F. Miller Center for Retailing Education and Research
Old Pricing Policies
Pricing Policies Reference Price Restrictions Competitor
Promotion
High Sensitive Competitor’s price *
.95
The cheapest price
of the competitors
Non sensitive
products should not
have a negative
profit;
Do not lower the
price if the
competitor out of
stock for its lower
price products;
Price increasing
should not be more
than 10%
Follow the
competitor for
promotion
Sensitive Competitor’s price *
.98
The cheapest price
of the competitors
Non-Sensitive Competitor’s price *
1.00
One competitor
page 49 Marketing Module David F. Miller Center for Retailing Education and Research
Question
?What are the advantages and disadvantages of
Carrefour’s pricing management system and
pricing strategies?
page 50 Marketing Module David F. Miller Center for Retailing Education and Research
#1 #2 #3 #4 #5 #6 #7 #8 #9 #10
Beijing Huapu Meilian Carrefour
Dalian Hualian Carrefour
Haerbin Darunfa Haoyoud
uo
Carrefo
ur
Hangzhou Wumei Legou Carrefour
Nanjing Darunfa Hualian Carrefo
ur
Shanghai Ouchan Locus Carrefour
Chengdu Ouchan Haoyoud
uo
Carrefo
ur
Wuhan Darunfa Hualian Carrefour
Guangzhou Carrefour Haoyoud
uo
Shenzhen Renrenle Carrefour
Price Image
page 51 Marketing Module David F. Miller Center for Retailing Education and Research
Problems of the Old Pricing System
? Price changes were too frequent, which caused a lot of
human and operating cost.
? Because prices were changed for hundreds and thousands of
products each day, employee often forgot to change the price
labels, causing that the label prices were different from
checking-out prices.
? Customer were unsatisfied with the frequent price changes.
Its perceived honesty on prices was decreasing.
? The update period of product list for market research was too
long, leading to unclear target and low quality of market
research.
? Product prices on flyers and posters were often inconsistent
with real prices
page 52 Marketing Module David F. Miller Center for Retailing Education and Research
Problems of the Old Pricing System
? There were too many SKUs and too much market research,
which were not necessary.
? The market research, price adjustment, and feedback based
on stores were not efficient.
? Different stores in one city investigated the same competitors.
? Price adjustment by stores was influenced by store situation
and the price policies might not be well implemented.
? The price image of Carrefour was damaged and its profit
decreased.
page 53 Marketing Module David F. Miller Center for Retailing Education and Research
New Pricing Management System
? Building up city-level commission unit
?Negotiate new brand entry and promotions for stores in the city.
?Design and produce posters and flyers
?Responsible for the profit of the stores in the city
? Advantages
?Flyer and poster promotion has better targets and is more
powerful
?Greater negotiation power with local suppliers
?Better control over merchandising and prevention of corruption
?Better cooperate with local brands to optimize merchandising
assortment
?Better customized according to local needs
?Better high sensitive product list and better managed prices
?Better profit control
page 54 Marketing Module David F. Miller Center for Retailing Education and Research
New Pricing Management System
? Building up city-level pricing department
?Conducting market research and adjusting prices according to
price policies and competitors’ prices
?Inform the negotiation department about the SKUs with negative
profits
?Manage stores’ promotion prices
?Learn about competitors’ pricing policies and recent strategies,
and manage stores’ price image in the city
?Checking tags, labels, posters, and ads in order to provide an
image of price honesty.
page 55 Marketing Module David F. Miller Center for Retailing Education and Research
New Pricing Policies
High sensitive Sensitive Non-sensitive
Market Research Frequency Twice/week
(Every day for fresh
food)
Once/Two weeks Once/Two months
Lowest price from competitors Competitor’s price * 100%
Following competitors’
price
Flyer or poster
promotion (or
newspaper)
Follow price Follow price Do not follow price
In store promotion Follow price Do not follow Do not follow
page 56 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Marketing Management
3. Retail Communication
page 57 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Understanding the importance of retail
communication strategies in the success of
MNREs in China
? Identify different types of retail promotion
strategies
? Understand different channels of retail
communication and the relative advantages and
disadvantages of each channel
? Discuss the culture differences between China
and U.S. and its influence on MNREs’ choice of
retail compunction strategies
page 58 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication Mix
page 59 Marketing Module David F. Miller Center for Retailing Education and Research
Steps in Developing a
Retail Communication Program
page 60 Marketing Module David F. Miller Center for Retailing Education and Research
Posters in Wal-mart
page 61 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication in China
?TV advertising
? In China, TV advertising is very important. But it is a
threshold, and far from enough.
?More than half Chinese consumers indicated that they
would not buy instant noodles or beers if they are not
advertised on TV.
?In contrast, the percentage is 18% in England.
page 62 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication in China (cont.)
?Point-of-sale communication
? Many Chinese consumers changes their minds at the
last minute.
?65% percent of Chinese consumers indicate that they leave
a store with a different brand than the one that they
intended to purchase.
? Information inside stores and coming from sales people
may be more important than TV advertising.
? Chinese consumers are used to bargaining.
page 63 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication in China (cont.)
?Public Relations
? McDonald’s and Olympics
?Used the Chinese slogan ?wo jiu xihuan zhongguo ying?
(?I’m loving’ it when China wins?) as part of its localization
strategy during 2008 Olympic Games.
?Demonstrated the company’s ?deep-seated commitment to
the people of China, the Chinese government? (Jeff
Schwartz, CEO of McDonald, China)
.
page 64 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication in China (cont.)
? Blogs and Online Forums
? The influence of blogs and online forums is significantly
increasing in China.
? The credibility of consumer blogs and online forums is higher
than TV advertising.
? WOM is more important in China than in Western Countries.
? Relative or good friends’ recommendation play a major role for 2/3
Chinese consumers vs. 38% in U.S. and England.
? Wang Lao Ji (A Chinese soft drink brand) and Charity
? Wang Lao Ji donated 100 Million RMB after Wenchuan Earthquake
in 2008.
? This news was quickly spread through WOM and Internet.
? 19000 blogs talked about it, and consumers even created online
advertisements and made videos to promote Wang Lao Ji brand.
page 65 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication of Gome (Song, 2005)
?Promotion and Communication of Xi’an Gome
? Background
?Gome was the No. 1 consumer electronic retailer in China
?Xi’an Gome was established in 2001 and responsible for
the sales in Shanxi province
?1 billion Yuan Sales in 2004
?8 store in Xi’an
?51.3% market share (25.7% for Suning, Kaiyuan, and
Minsheng)
?Flagship store opened in the end of September, 2004
page 66 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Communication of Gome
?Retail communication Plan for the Golden Week of
National Day (10/1-10/7, 2004) by Xi’an Gome
? National Day is one of the most important holiday in
Mainland China
? People have one week break (three days’ break plus two
weekends)
? It is a golden time for retailers.
page 67 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Marketing plan for the Golden Week of National Day
? Period: 10/1-10/7, 2004
? Budget: 950,000 RMB promotion fee
? Target: 128.5 million RMB Sales
Beidajie Xianyang Nanerhuan Xinqing Xidajie Xierhuan Flag sheet
store
Total
Month
sales
1700 1200 2500 1750 500 1500 3700 12850
Sale
percentage
13% 9% 20% 14% 4% 12% 28% 100%
page 68 Marketing Module David F. Miller Center for Retailing Education and Research
Budget
? Budget
?Gome: .3% of sales =380,000 RMB
?Manufacturers: 570,000 RMB (1.5:1)
?Total: 950,000 RMB
High end Middle Low end Total
Square feet 25% 45% 30% 100%
Budget % 37% 43% 20% 100%
Gome Budget 141000 163000 76000 380000
Total budget 352000 408000 190000 950000
page 69 Marketing Module David F. Miller Center for Retailing Education and Research
Marketing Strategies
?Marketing strategies
?Promotion
?Public media
?Advertising
page 70 Marketing Module David F. Miller Center for Retailing Education and Research
Promotion
? Promotions
?Lower price
?1% lower price than any other retailers.
?Free gift
?Buy a high end TV and get a free DVD player with DVDs of 30
classic movies
?Transportation fee
?Give 10 Yuan transportation fee to the first 300 customers who buy
a product with a price higher than 500 Yuan
?Flagship store opening promotion
?Buy a TV with a price higher than 2500 Yuan and get a free
microwave
page 71 Marketing Module David F. Miller Center for Retailing Education and Research
Public media
?Newspapers
? Target
?9/15-10/1: at least 25 articles on newspaper; 30,000 words
? Sanqin Dushi Newspaper: article series about the home
appliance market in Xi’an, including three articles and
4,000 words/article.
? Xi’an Wanbao Newspaper: article series about Gome
including 4 articles and 2,500 words/article
? Huashangbao Newspaper: 8 full sections about TV
market and TV promotion
page 72 Marketing Module David F. Miller Center for Retailing Education and Research
Public media (Cont.)
Date Media Activities Notes
Newspaper:
Huashang
Sanqin Dushi
Xian Wanbao
Yangguang
Article about Gome flagship store; “Gome
Cup” writing competition on “The story
between me and TV”
Article about flagship store: high quality and
low price
Prepare the articles
by 9/13
9/15
(Wednesday)
Broadcasting
Station:
Shanxi Broadcast
News 9/14-22: trial
opening of the
flagship store
The trial opening of flagship store; Report on
high-end TV market competition; writing
competing articles
9/17
(Friday)
Newspaper:
Huashang
Sanqin Dushi
Xian Wanbao
Yangguang
Meibao
Broadcasting
Station:
Shanxi
Xi’an
Prepare the articles
by 9/15
TV Station:
Shanxi TV
Xi’an TV
Flagship: good location, huge store,
comfortable environment, various products,
and convenient location.
Cooperate with TV
station
9/20
(Monday)
Newspaper:
Sanqin Dushi
Xi’an Wanbao
Article series about Xi’an home appliance
market
Article series about Gome
2,000 words
2,000 words
9/21
(Tuesday)
Newspaper:
Huashang
Sanqin Dushi
News about the trial opening of flagship sheet
store;
Article series about Xi’an home appliance
market
2,000 words
page 73 Marketing Module David F. Miller Center for Retailing Education and Research
Public media (Cont.)
Newspaper:
Sanqin Dushi
Xi’an Wanbao
Article series about Xi’an home appliance
market
Article series about Gome
2,000 words
2,500 words
9/23
(Thursday)
TV Station:
Shanxi TV
Opening of flagship store 9/23-10/10
Flagship store
opening
9/24
(Friday)
Newspaper:
Huashang
Sanqin Dushi
Xi’an Wanbao
Yangguang
Meibao
Specially issue on home appliance; articles
from writing competition
Article series about Gome
Article about home appliance (especially, high
end TV)
Article about high end TV
News about the opening of flagship store
(emphasize high end TV)
9/25
(Saturday)
Newspaper:
Sanqin Dushi
Article series about Gome
2,000 words
Newspaper:
Huashang
Sanqin Dushi
Xi’an Wanbao
Yangguang
TV Station:
Shanxi TV
Xi’an TV
9/29
(Wednesday)
Broadcasting
Station:
Shanxi
The opening of flagship store: high quality and
low price, big promotions; winners of writing
competition
The opening of flagship store: high quality and
low price, big promotions
Prepare the articles
by 9/27
9/30
(Thursday)
Newspaper:
Huashang
Sanqin Dushi
Xi’an Wanbao
Protecting consumers from four traps when
shopping in the week of “the October First”
Headquarter
prepares the article
page 74 Marketing Module David F. Miller Center for Retailing Education and Research
Public media (Cont.)
?Other Media Strategies
? Public Media should provide a quantitative measure for
their activities to Gome.
?E.g., Sanqin Dushi needs to publish 2 articles about Gome
(600 words each).
? Media should not publish any negative news about
Gome.
? Their articles on Suning should be no more than 1/3 of
the articles on Gome.
? When mentioning Suning and Gome, the order should be
Gome and Suning.
? Gome articles should not be near any trash ads, such as
medical advertising.
page 75 Marketing Module David F. Miller Center for Retailing Education and Research
Advertising
?Advertising
? Newspapers (Gome)
?Time: 9/28,29, 30 and 10/4
?9/28,29: Huashang, Sanqin Dushi, and Yangguang; plan for
the week of ?the October 1
st
?
?9/30: Huashang, Xi’an Wanbao, and Sanqin Dushi; price
promotion
?10/4: price information
page 76 Marketing Module David F. Miller Center for Retailing Education and Research
Advertising (Cont.)
? Newspapers (Gome and manufacturers)
? Period: 9/28-30
? 36 ¼ Sections
? 9/30: Huashang, Xi’an Wanbao, Sanqin Dushi, and
Yangguang;
? 9/28 and 9/29: could be on other newspaper
? Requirements: Must be on the section of news or home
appliance; Try to be on up-right of the section; try to be on
pages of 1,3,4,7…, so that readers can read about Gome
every time when they turn to a new page.
page 77 Marketing Module David F. Miller Center for Retailing Education and Research
Advertising (Cont.)
?Broadcasting
? Period: 9/22-10/7
? Channels: transportation and music.
? Target: consumers on transportation vehicles
? Requirements: on the sections of road information,
popular music ranking, and time report etc
page 78 Marketing Module David F. Miller Center for Retailing Education and Research
Advertising (Cont.)
?TV
? Period: 9/22-10/6
? Channels: Shanxi TV, channel 2,4,8, and Xi’an TV
channel 2
? Sections: News and TV shows with high rating
? MV: Made by headquarter.
? Frequency:
?more than 4 times/day, 5 seconds three times; 15 seconds
one time;
?Fore 9/30 -10/6, more than 6 times/day; 5 seconds four
times; 15 seconds 2 times.
page 79 Marketing Module David F. Miller Center for Retailing Education and Research
Advertising (Cont.)
?In store promotion and communication
? Creating an exciting environment
?Banners, ribbons, posters, balloons, and signs
? Clear price labels
? Manufacturer demonstration and promotions
? Lucky draw
page 80 Marketing Module David F. Miller Center for Retailing Education and Research
Outcomes
Beidajie Xianyang Nanerhuan Xinqing Xidajie Xierhuan Flag sheet
store
Total
Planned Sales 1700 1200 2500 1750 500 1500 3700 12850
Actual Sales 1442.9 957.6 2057.5 1408.7 425.0 1216.5 2993.4 104.82
Percentage 83.7% 79.8% 82.3% 80.5% 85.0% 81.1% 80.9% 81.6%
page 81 Marketing Module David F. Miller Center for Retailing Education and Research
Discussion Question
?What do you think about the promotion and
communication plan of Gome?
page 82 Marketing Module David F. Miller Center for Retailing Education and Research
Outcomes
?Complete 81.5% of the planned sales
?Drawbacks
? Put too many resources on high end products
? Lack of variety and innovativeness in promotions
? Some activities did not directly transfer into sales
? Promotions didn’t have a clear target (e.g., certain
product or certain customers)
? The public communication was not enough for the middle
and late sections of the period
page 83 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Marketing Management
4. Store Atmospherics and Visual
Merchandising
page 84 Marketing Module David F. Miller Center for Retailing Education and Research
Objective
? Understating the importance of store environment
? Learn the key dimensions of store environment
(e.g., store layout, design and visual
merchandising)
? Identify the major difference in terms of store
environment between Chinese retail stores and
U.S. retail stores
page 85 Marketing Module David F. Miller Center for Retailing Education and Research
Store Design Objectives
?Implement retailers’ strategy
?Influence customer buying behavior
?Control design and maintenance costs
?Provide flexibility
?Meet legal requirements
page 86 Marketing Module David F. Miller Center for Retailing Education and Research
Types of Store Layouts
?Grid
?Racetrack
?Free Form
page 87 Marketing Module David F. Miller Center for Retailing Education and Research
Gird Store Layout
Fruit
Vegetables
Office &
customer
service
Books, magazines, seasonal
display
R
e
c
e
i
v
i
n
g
&
s
t
o
r
a
g
e
Exit
Entrance
Cart
area
Checkouts
page 88 Marketing Module David F. Miller Center for Retailing Education and Research
Racetrack Layout
page 89 Marketing Module David F. Miller Center for Retailing Education and Research
Free-form Layout
Storage, Receiving, Marketing
Underwear
Dressing Rooms
Checkout counter
Clearance Items
Feature Feature
J
e
a
n
s
C
a
s
u
a
l
W
e
a
r
S
t
o
c
k
i
n
g
s
A
c
c
e
s
s
o
r
i
e
s
P
a
n
t
s
T
o
p
s
T
o
p
s
S
k
i
r
t
s
a
n
d
D
r
e
s
s
e
s
H
a
t
s
a
n
d
H
a
n
d
b
a
g
s
Open Display Window Open Display Window
page 90 Marketing Module David F. Miller Center for Retailing Education and Research
Store Design
?Effectively Using Signage
?Coordinate signage to store’s image
?Print and digital
?Feature areas
?e.g. Promotion areas, End caps; Windows
?Space Planning
?Productivity of allocated space
?Merchandise inventory turnover
?Impact on store sales
?Display needs for the merchandise
page 91 Marketing Module David F. Miller Center for Retailing Education and Research
Merchandise Presentation
page 92 Marketing Module David F. Miller Center for Retailing Education and Research
Creating a Store Environment
Color
Scent
Music
Lighting
Store Atmosphere
page 93 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual Merchandising
in China
?Traditional Chinese decorated styles
?Traditional Chinese colors for holidays-yellow and red
?Traditional Chinese icons- dragon, phenix animal of year
?Traditional Chinese decorates- Chinese knots, lantern,
and paper art etc.
page 94 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual Merchandising
in China (cont.)
? McDonald
? During major Chinese festivals such as the Chinese Lunar New
Year and mid-autumn celebration, it decorates store interiors
with traditional Chinese paper art—red paper cut-outs of
Chinese characters and pictures of auspicious symbols—like
many local Chinese restaurants.
page 95 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual Merchandising
in China (cont.)
?Carrefour
? Carrefour’s Chinese name ????”means ?family,
happiness, and luck? in Chinese. The 3 characters are all
very important to Chinese culture. ?is always used to
decorate room in traditional Chinese new year.
? As Chinese like to compare different products in the
same catalog, Carrefour specially made its shelves
longer than the usual to show more brands.
? Carrefour adopted a fresh-market style (e.g. live fish).
page 96 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual Merchandising
in China (Cont.)
?Best Buy
? The aisles are wider than those of competitors
? Products were assorted by categories, not brands
? Special customer experience - Product demonstration
area
? Different positioning – CE innovators
page 97 Marketing Module David F. Miller Center for Retailing Education and Research
?Environment of supermarkets in China
? A survey was conducted on top 10 supermarkets in
Beijing (Zhu, 2007)
? Transportation
?50% walk, 25.6% used public transportation, 15.2% by bike
and 9.1 used cars (68.5% thinks supermarket parking is
inconvenient; 5.4% convenient)
? Attractiveness of supermarkets
?Convenient location (44.7%), low price (23.0%),
environment (22.7%), product variety (15.5%), and service
(7.3%)
? Overall evaluation of environment
?Excellent (19.4%), Good (55.3%), middle (14.8%), pass
(3.6%), failed (.9%)
? Store image is clear and impressive (5.9%)
Store Environment and Visual
Merchandising in China (cont.)
page 98 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual
Merchandising in China (cont.)
?Store entrance
? 51.5% think the entrance of the supermarket is clean and
organized. 36.8% think it is clean but unorganized.
11.7% think it is not clean and unorganized.
?Signs
? 60% consumer think the signs for shopping, restroom,
safety exit, and smoking area are not clear.
?Temperature
? 23.7% conformable; 67.9% ok; 7.7% uncomfortable.
?Air
? Fresh 18.0%, 69.1% OK, and bad12.2%.
?Light
? Too light 18.7%, comfortable 74.7%, too dim 4.9%
page 99 Marketing Module David F. Miller Center for Retailing Education and Research
Store Environment and Visual
Merchandising in China (cont.)
?Shelf presentation
? Reasonable 16.2%,72.6% ok; 9.4% not good.
?Restroom
? 50% ok; 21.3% dirty.
?Bag storage
? coded box (45%), human service (29.5%), don’t need
store (17.6%), and use coin (4.7%).
page 100 Marketing Module David F. Miller Center for Retailing Education and Research
Locus (Wang, 2007)
? Locus store in Shanghai
? Store environment
? Intend to create a ?hot? and
?crowed? selling environment.
– Warm Color (yellow)
– High light
– Noisy music
? Major aisles are 6-7 meters
wide; other aisles are 3-4
meters wide
? Shelves are 1.8 meters high.
– Average height of Chinese
women is 1.60.
? Put its private labels on the
second and third levels of
shelves.
– They are around 100-150 cm
high
page 101 Marketing Module David F. Miller Center for Retailing Education and Research
Locus (cont.)
page 102 Marketing Module David F. Miller Center for Retailing Education and Research
Locus (Cont.)
Promoted
products
Bakery
Prepared
Food
Vegetables
Frozen Food
Sea Food
Meat Packed Food Drinks
Alcohol
Fruits
Grains and Oil
Detergents
Toiletries
The First Floor
page 103 Marketing Module David F. Miller Center for Retailing Education and Research
Locus (Cont.)
Cell Phone
TV
DVD/CD
Stationery
Toy
Shoes
Apparel
Apparel
Apparel
Shoes
Furniture
Home Electronic
Home Electronic Fitting room
Household Chemical
The Second Floor
page 104 Marketing Module David F. Miller Center for Retailing Education and Research
category Square feet (%)
Fruit and vegetable 10
Meat 8
Seafood 7
Frozen food 12
Other food 12
Cigarette and alcohol 6
Seasoning 5
Grain and Oil 3
Detergent 5
Apparel 10
Shoe 5
Home electronic 3
Household chemical 3
Stationery 3
Toy 3
Others 5
page 105 Marketing Module David F. Miller Center for Retailing Education and Research
Vedios
? Videos of Chaoshifa Supermarket
? Video of Yonghong Street market
page 106 Marketing Module David F. Miller Center for Retailing Education and Research
Retail Marketing Management
5. Customer Service
page 107 Marketing Module David F. Miller Center for Retailing Education and Research
Objectives
? Learn the evolution of customer service in China during the
transition from a planned economy to a market economy.
? Analyze differences between Chinese consumers and U.S.
consumers in terms of their expectations and quality
evaluation criteria of customer services
? Learn differences in customer service strategies in China
and U.S. (e.g., after-sale service, service recovery, and
return policies.)
? Discuss how to develop competitive advantages through
customer service in China for MNREs.
page 108 Marketing Module David F. Miller Center for Retailing Education and Research
Customer service
? The set of activities and programs undertaken by retailers to
make the shopping experience more rewarding for their
customers.
? It is also about treating customers with respect, individuality,
and personal attention.
? Services increase customer value.
? High-quality service helps retailers to built competitive
advantages
page 109 Marketing Module David F. Miller Center for Retailing Education and Research
Customer Service-Items
? Acceptance of credit cards
? Alteration of merchandise
? Assembly of merchandise
? Check cashing
? ATM terminals
? Delivery to home or work
? Demonstration of
merchandise
? Display of merchandise
? Dressing rooms
? Extended store hours
? Facilities for shoppers with
special needs
? Gift wrapping
? Warranties
? Parking
? Personal assistance in
selecting merchandise
? Personal shoppers
? Play areas for children
? Presentations on how to
use merchandise
? Repair service
? Rest rooms,
? Return privileges
? Rooms for checking costs
and packages
? Shopping carts
? Special orders
? Etc.
page 110 Marketing Module David F. Miller Center for Retailing Education and Research
Customer Service in China
?Customer service in a planned economy
? Retailers were not free market players but state-owned
distribution channel.
? Retailers and salespeople had no incentive to provide
better customer service.
? Customer service had low quality.
page 111 Marketing Module David F. Miller Center for Retailing Education and Research
Customer service in China
? Customer service in the
transitional market
economy
? Customers are kings.
? Customer service is
increasingly becoming
important to the success
of a retailer.
? Salespeople
? Rude ? polite
? Unprofessional ?
professional
page 112 Marketing Module David F. Miller Center for Retailing Education and Research
Customer Service in China
?Customer service is
cheap
? Free delivery
?Most deliveries in
China are free and
efficient (For CEs,
24 hour delivery is
guaranteed in the
same city)
? Free assembly
?Chinese consumers
do not get used to
?DIY? and free
assembly is
common in China
Pizza hut free delivery bike in Guangzhou
page 113 Marketing Module David F. Miller Center for Retailing Education and Research
Best Buy in China
?Best Buy’s high quality service/ warranty was a
great success in US. However, it was not
successful in China.
page 114 Marketing Module David F. Miller Center for Retailing Education and Research
Best Buy in China
?Best Buy assumed that Chinese people enjoy high-
quality service, and then used customer service to
differentiate itself from other domestic competitors.
?Best Buy brought the ?extend warranty? policy to
china and hoped that the revenue from warranty
could help Best Buy earn more profit and get the
competitive advantage over its competitors in
China CE market.
?GOME and Suning copied this warranty policy. But
according to the data from GOME, this part of
revenue is very small.
page 115 Marketing Module David F. Miller Center for Retailing Education and Research
Best Buy in China
?Chinese consumers are used to free services.
?Any value-added service is free in China.
?Chinese consumers mainly focus on products and
prices.
page 116 Marketing Module David F. Miller Center for Retailing Education and Research
Customer Service in China
?Return policy
? It is harder to return purchased products in China.
? ?Three guarantees?:
Refund (within 7 days)
Replace (within 15 days)
Repair (after 15 days but within the effective warranty period)
page 117 Marketing Module David F. Miller Center for Retailing Education and Research
Customer Service in China
? Membership card from every retailers
?reinforce loyalty through point system
? Gift card is very popular
?Government and organizations provide gift cards as
benefits to their employees
page 118 Marketing Module David F. Miller Center for Retailing Education and Research
Chaoshifa
?Chaoshifa
?Morning market
?Many elder people
will exercise in the
early morning and
most of them would
prefer to go to an
open market to buy
some fresh food.
?Chaoshifa opens its
food section as
early as 6am.
page 119 Marketing Module David F. Miller Center for Retailing Education and Research
Chaoshifa
?Chaoshifa
?Community service for disabled people and
elders
?Employees of Chaoshifa help disabled people and
elders with free delivery.
?In some traditional holidays, employees of
Chaoshifa will distribute gifts to communities.
page 120 Marketing Module David F. Miller Center for Retailing Education and Research
Chaoshifa
?Space for elder people’s leisure time
? Many neighbors like sitting in Chaoshifa and chatting.
?Free cooking classes
? Chaoshifa provides free cooking classes periodically.
?Free health advisory
? Professional advisors are available at Chaoshifa to
answer questions about nutrition and other health related
questions.
page 121 Marketing Module David F. Miller Center for Retailing Education and Research
VIP Service in Dangdai Plaza
page 122 Marketing Module David F. Miller Center for Retailing Education and Research
VIP Service in Dangdai Plaza
page 123 Marketing Module David F. Miller Center for Retailing Education and Research
Summary
page 124 Marketing Module David F. Miller Center for Retailing Education and Research
Build up competitive advantages through
retail strategies (Li, Wang, and Li, 2006)
Convenience Environment Facility Service Merchandising Price Check-out
Process
Policies After-sale
Service
Wal-Mart 5 1 3 3 2 7 3 4 7
Locus 9 7 12 14 11 6 17 11 10
Auchon 1 7 5 9 7 1 14 8 3
Baijia 17 14 13 13 15 14 16 12 10
Rt-Mart 2 6 4 6 5 2 6 1 6
Metro 2 2 6 4 1 5 2 2 2
Tesco 4 4 7 11 5 3 11 5 5
Ito-Yokado 11 5 2 2 6 12 1 4 6
Beijing Hualian 13 12 14 15 14 13 12 16 14
Sugo 6 17 17 8 9 12 5 13 9
Nonggongshang 16 19 20 16 14 13 15 14 11
Wu-Mart 8 13 18 12 13 11 14 11 12
Haoyoudou 7 10 8 10 10 9 13 9 8
Huarun 14 15 15 7 16 17 7 10 10
Wankelong 11 8 11 5 4 4 4 6 6
Jizhidao 3 3 1 1 3 16 1 3 1
Shanghai Hualian 12 16 19 10 12 15 8 13 12
Shanghi Lianhua 10 18 16 11 17 18 10 14 8
Carrefour 15 9 9 9 8 8 9 7 4
Xinyijia 11 11 10 13 16 10 11 15 13
page 125 Marketing Module David F. Miller Center for Retailing Education and Research
Build up competitive advantages through
retail strategies (Li, Wang, and Li, 2006)
Retailers Positioning Point Primary Strategy Secondary
Strategy
Non –focused
strategies
Auchan Low price Price Parking and bag
storage
5 items > average
Rt-Mart Easy product return Service Promotion 6 items > average
Wal-Mart Confortable
environment
Environment Product quality 7 items > average
Metro Varity of products Merchandising Unclear 8 items > average
Jizhidao Super service Service Facility 6 items > average
Ito Yokato Super Service Service Facility 5 items > average
Tesco, Carrefour Unclear Unclear Unclear 7 items > average
page 126 Marketing Module David F. Miller Center for Retailing Education and Research
Standardization vs. Localization
? Discussion question: Are concepts and practices developed
in the West directly applicable to China?
? “The initial assumption was that China was so different from
US (20% same, 80% different) because it’s too far from US
and has the different language and culture and completely
different business model. However, when Best Buy came in
China, we realized that it went too far local and needed to get
back to basic operating basic principles around what it works
in any retail environments(80% same, 20% different). Finally,
Best Buy found it moved too far to the other side. Today, the
proportion is close to 50% (understand the market and
customers) -50% (take Best Buy principles)”
-Kal Patel, the executive vice president of emerging business of
Best Buy
page 127 Marketing Module David F. Miller Center for Retailing Education and Research
Standardization vs. Localization
?Standardization vs. Localization
? Standardization
?uniform, efficient, low-cost, easy to remember
?neglect local conditions, may not be effective
?Language and cultural barriers
?Sometimes more costly
? Localization
?Closer to the local knowledge
?Consumers and market more responsive
?More effective
?Lower cost
page 128 Marketing Module David F. Miller Center for Retailing Education and Research
References
? Zheng, Zhigao and Xueling Yi (2006), ?A Comparative Study of Sino-Foreign
China Retail Inustry?, Journal of Guangdong Institute of Business
Administration, 21(4), 66-69
? Zhu, Qunfang (2007), ?Shopping Environment in Beijing’s Supermarket?,
China Business and Market, 7, 33-35
? Wang, Zhi (2007). The Research of the Shanghai Yichuanlianhua
Supermarket for the Exhibition and Layout of Products. Master Thesis.
Shanghai Jiaotong University.
? Deng, Xu (2006). The Establishment of Pricing Management System
Illustrated With Practice of Carrefour China. Master Thesis. Shanghai
Jiaotong University.
? Li, Fei, Gao Want, and Xiang Li (2006), An Empirical Study on the
Positioning Point of Successful Retailers in China. Nankai Business Review,
9(4), 24-28
? Wang, Yan (2009). Private Brand Strategies of Chinese Retailers. Master
Thesis. Huaqiao University.
? Song, Guangle (2005). Xi’an Gome Promotion Mode Research. Master
Thesis. Xibei University.
doc_797745717.pdf