Week 1 Lecture The Nature of Business Research Business research covers a wide range of phenomena. For managers, the purpose of research is to provide knowledge regarding the organization, the market, the economy, or another area of uncertainty. A financial manager may ask, “Will the environment for long-term financing be better two years from now?” A personnel manager may ask, “What kind of training is necessary for production employees?” or “What is the reason for the company’s high employee turnover?” A marketing manager may ask, “How can I monitor my retail sales and retail trade activities?” Each of these questions requires information about how the environment, employees, customers, or the economy will respond to executives’ decisions. Research is one of the principal tools for answering these practical questions. Business research is the application of the scientific method in searching for the truth about business phenomena. These activities include defining business opportunities and problems, generating and evaluating alternative courses of action, and monitoring employee and organizational performance. Business research is more than conducting surveys.6 This process includes idea and theory development, problem definition, searching for and collecting information, analyzing data, and communicating the findings and their implications. Applied business research is conducted to address a specific business decision for a specific firm or organization. The opening vignette describes a situation in which ESPN used applied research to decide how to best create knowledge of its sports fans and their preferences. Basic business research (sometimes referred to as pure research) is conducted without a specific decision in mind, and it usually does not address the needs of a specific organization. All research, whether basic or applied, involves the scientific method. The scientific method is the way researchers go about using knowledge and evidence to reach objective conclusions about the real world. The scientific method is the same in social sciences, such as business, as in physical sciences, such as physics. In this case, it is the way we come to understand business phenomena. A firm can be production-oriented. A production-oriented firm prioritizes the efficiency and effectiveness of production processes in making decisions. Here, research providing input from workers, engineers, finance, and accounting becomes important as the firm seeks to drive costs down. Production-oriented firms are usually very large firms manufacturing products in very large quantities. The third orientation is marketing- oriented, which focuses more on how the firm provides value to customers than on the physical product or production process. With a marketing-oriented organization the majority of research focuses on the customer. Research addressing consumer desires, beliefs, and attitudes becomes essential. Diagnosing Opportunities: After a.

1. Week 1 Lecture
The Nature of Business Research
Business research covers a wide range of phenomena. For managers, the purpose of research is
to provide knowledge regarding the organization, the market, the economy, or another area of
uncertainty. A financial manager may ask, “Will the environment for long-term financing be
better two years from now?” A personnel manager may ask, “What kind of training is
necessary for production employees?” or “What is the reason for the company’s high
employee turnover?” A marketing manager may ask, “How can I monitor my retail sales
and retail trade activities?― Each of these questions requires information about how the
environment, employees, customers, or the economy will respond to executives’ decisions.
Research is one of the principal tools for answering these practical questions.
Business research is the application of the scientific method in searching for the truth about
business phenomena. These activities include defining business opportunities and problems,
generating and evaluating alternative courses of action, and monitoring employee and
organizational performance. Business research is more than conducting surveys.6 This process
includes idea and theory development, problem definition, searching for and collecting
information, analyzing data, and communicating the findings and their implications.
Applied business research is conducted to address a specific business decision for a specific
firm or organization. The opening vignette describes a situation in which ESPN used applied
research to decide how to best create knowledge of its sports fans and their preferences. Basic
business research (sometimes referred to as pure research) is conducted without a specific
decision in mind, and it usually does not address the needs of a specific organization.
All research, whether basic or applied, involves the scientific method. The scientific method is
the way researchers go about using knowledge and evidence to reach objective conclusions about
the real world. The scientific method is the same in social sciences, such as business, as in
physical sciences, such as physics. In this case, it is the way we come to understand business
phenomena.
A firm can be production-oriented. A production-oriented firm prioritizes the efficiency and
effectiveness of production processes in making decisions. Here, research providing input from
workers, engineers, finance, and accounting becomes important as the firm seeks to drive costs
down. Production-oriented firms are usually very large firms manufacturing products in very
large quantities. The third orientation is marketing- oriented, which focuses more on how the
firm provides value to customers than on the physical product or production process. With a
marketing-oriented organization the majority of research focuses on the customer. Research
addressing consumer desires, beliefs, and attitudes becomes essential.
Diagnosing Opportunities: After an organization recognizes a problem or identifies a potential
opportunity, business research can help clarify the situation. Managers need to gain insight about
the underlying factors causing the situation. If there is a problem, they need to specify what

2. happened and why. If an opportunity exists, they may need to explore, refine, and quantify the
opportunity. If multiple opportunities exist, research may be conducted to set priorities.
Evaluation research is the formal, objective measurement and appraisal of the extent to which a
given activity, project, or program has achieved its objectives or whether continuing programs
are presently performing as projected. Evaluation research may also provide information about
the major factors influencing the observed performance levels. In addition to business
organizations, nonprofit organizations and governmental agencies frequently conduct evaluation
research. Every year thousands of federal evaluation studies are undertaken to systematically
assess the effects of public programs. For example, the U.S. General Accounting Office has been
responsible for measuring outcomes of the Employment Opportunity Act, the Job Corps
program, and Occupational and Safety and Health Administration (OSHA) programs.
Performance-monitoring research is a specific type of evaluation research that regularly, per-
haps routinely, provides feedback for the evaluation and control of recurring business activity.
For example, most firms continuously monitor wholesale and retail activity to ensure early
detection of sales declines and other anomalies. In the grocery and retail drug industries, sales
research may use the Universal Product Code (UPC) for packages, together with computerized
cash registers and electronic scanners at checkout counters, to provide valuable market-share
information to store and brand managers interested in the retail sales volume of specific
products.
Keep in mind the following:
1. Understand how research contributes to business success. While many business decisions are
made “by the seat of the pants― or based on a manager’s intuition, this type of decision
making carries with it a large amount of risk. By first researching an issue and gathering the
appropriate information (from employees, customers, competitors, and the market) managers can
make a more informed decision. The result is less risky decision making.Research is the
intelligence-gathering function in business. The intelligence includes infor-mation about
customers, competitors, economic trends, employees, and other factors that affect business
success. This intelligence assists in decisions ranging from long-range planning to near-term
tactical decisions.
2. Know how to define business research. Business research is the application of the scientific
method in searching for truth about business phenomena. The research must be conducted
systematically, not haphazardly. It must be objective to avoid the distorting effects of personal
bias. Business research should be rigorous, but the rigor is always traded off against the resource
and time constraints that go with a particular business decision.
3. Understand the difference between basic and applied business research. Applied business
research seeks to facilitate managerial decision making. It is directed toward a specific
managerial decision in a particular organization. Basic or pure research seeks to increase
knowledge of theories and concepts. Both are important, but applied research is more often the
topic in this text.

3. 4. Understand how research activities can be used to address business decisions. Businesses can
make more accurate decisions about dealing with problems and/or the opportunities to pursue
and how to best pursue them. The chapter provides examples of studies involving several
dimensions of managerial decision making. Thus, business research is useful both in a strategic
and in a tactical sense.
Chapter 1
Perspectives on Retailing
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Learning Objectives
Explain what retailing is and why it is undergoing so much change today
Describe the five methods used to categorize retailers
Understand what is involved in a retail career and be able to list the prerequisites necessary for
success in retailing
Explain the different methods for the study and practice of retailing
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
What is Retailing, and Why is it Undergoing so Much Change Today? (1 of 2)
Retailing: Consists of the final activities and steps needed to place merchandise made elsewhere
into the hands of the consumer or to provide services to the consumer
Any firm that sells a product or provides a service to the final consumer is said to be performing
the act of retailing
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
What is Retailing, and Why is it Undergoing so Much Change Today? (2 of 2)
Anything that affects how consumers choose to spend money affects the retailing industry

4. Retailers must consider the changes in the external environment
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
E-Tailing (1 of 4)
The great unknown for retail managers will be the ultimate role of the Internet
Bricks-and-mortar retailers: Operate out of a physical building
M-tailing - Shoppers use their smartphones to purchase merchandise and services
Apps - Digital services that can be downloaded
Fastest growing form of e-tailing
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
E-Tailing (2 of 4)
Growth of the Web 2.0 has important implications for retailers with the Internet becoming
interactive
To combat e-tailing, bricks-and-mortar retailers must give their customers more control over the
shopping experience
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
E-Tailing (3 of 4)
Has caused a shift in power between retailers and consumers
Traditionally, the retailers’ control over pricing information provided them the upper hand in
most transactions
Today, the information dissemination capabilities of the Internet are making consumers better
informed

5. L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
E-Tailing (4 of 4)
Channel surfing: Occurs when the customer gets needed information in the stores and then orders
it online for a lower price
To avoid paying state sales tax
Retailers must keep experimenting with various strategies
Next generation of technology will change the consumers’ expectations of what they demand
from retailers
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Price Competition
Sam Walton forever changed the face of retailing by realizing that most of any product’s cost
gets added after the item is produced
Walton made a major commitment to computerizing WalMart as a means to reduce expenses
Operating efficiency: Operating costs as a percentage of sales
Costco, a retailer, seeks to boost store traffic by lowering prices on key products
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Demographic Shifts (1 of 5)
Significant changes in retailing over the past decade have resulted from changing demographic
factors such as:
The fluctuating birthrate
The growing importance of the 70 million Generation Y consumers

6. The move of Generation X into middle age
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Demographic Shifts (2 of 5)
The beginning movement of the baby boomer generation into retirement
The increasing number of women relative to men graduating from college and concurrent rise in
unemployment among men relative to women
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Demographic Shifts (3 of 5)
Successful retailers must:
Become more service-oriented
Offer better value in price and quality
Have more convenient store hours
Be more promotion-oriented
Be better attuned to their customers’ needs
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Demographic Shifts (4 of 5)
Profit growth must come by either:
Increasing same-store sales at the expense of the competition’s market share
Reducing expenses without reducing services to the point of losing customers

7. L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Demographic Shifts (5 of 5)
Same-store sales: Compares an individual store’s sales to its sales for the same month in the
previous year
Market share: The retailer’s total sales divided by total market sales
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Store Size (1 of 4)
As stores increase in size the retailer often employs a scrambled merchandising strategy
Scrambled merchandising: Exists when a retailer handles many different and unrelated items
It is the result of the pressure being placed on many retailers to increase profits
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Store Size (2 of 4)
Retailers have found that reducing their store size is a pathway to improved profitability
Consumers prefer smaller stores due to the convenience of getting in and out faster
More personalized service
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Store Size (3 of 4)
Retailer needs a smaller geographic area to draw its customers

8. Retailer can easily find a location than if it had a larger store that requires more parking
Retail formats that have seen a significant decrease in average store size and a decrease in
number of stores are:
Department stores
Category killers
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Store Size (4 of 4)
Category killer: Retailer that carries such a large amount of merchandise in a single category at
such good prices that it makes it impossible for the customers to walk out without purchasing
what they need, thus killing the competition
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Experience and Niche Retailing
A trend occurring in shopping malls is to transform them into exciting experience platforms
Eu Yan Sang is a major health-care brand in Asia, and it has created a Chinese medicine clinic
that includes a yoga studio, spa, and health food café
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 1.2 - External Environmental Forces Confronting Retail Firms
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Categorizing Retailers

9. Census bureau
Number of outlets
Margin versus turnover
Location
Size
L O 2
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Census Bureau
The U.S. Bureau of the Census, for purposes of conducting the Census of Retail Trade, classifies
all retailers using three-digit North American Industry Classification System (N A I C S) codes
Shortcoming of using the N A I C S codes:
They do not reflect all retail activity
Comparisons between years may not be accurate
L O 2
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Number of Outlets (1 of 5)
Retailers with several units are a stronger competitive threat because they can:
Spread many fixed costs over a larger number of stores
Achieve economies in purchasing
Advantages of single-unit retailers:
They have harder-working, more motivated employees
They can focus and tailor their efforts and merchandise in one trade area
L O 2

10. Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Number of Outlets (2 of 5)
Standard stock list: All stores in a retail chain stock the same merchandise
Optional stock list: Each store in a retail chain is given the flexibility to adjust its merchandise
mix to local tastes and demands
L O 2
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Number of Outlets (3 of 5)
Channel advisor or channel captain: Institution in the marketing channel who is able to plan for
and get other channel institutions to engage in activities they might not otherwise engage in
Large store retailers are able to perform the role of channel captain
L O 2
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Number of Outlets (4 of 5)
Private label branding: Occurs when a retailer develops own brand name and contracts with a
manufacturer to produce the merchandise with the retailer’s brand on it instead of the
manufacturer’s name
Also called store branding
L O 2
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Number of Outlets (5 of 5)
The major shortcoming of using the number-of-outlets scheme for classifying retailers is that it
addresses only traditional bricks-and-mortar retailers
L O 2

11. Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Margins Versus Turnover (1 of 3)
Gross-margin percentage: Measure of profitability derived by dividing gross margin by net sales
Gross margin: Difference between net sales and cost of goods sold
Operating expenses: Expenses the retailer incurs in running the business other than the cost of
the merchandise
L O 2
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Margins Versus Turnover (2 of 3)
Inventory turnover: The number of times per year, on average, that a retailer sells its inventory
High-performance retailers: Produce financial results substantially superior to the industry
average
Low-margin/low turnover retailer: Operates on a low gross margin percentage and a low rate of
inventory turnover
L O 2
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Margins Versus Turnover (3 of 3)
Low-margin/high turnover retailer: Operates on a low gross margin percentage and a high rate of
inventory turnover
High-margin/low turnover retailer: Operates on a high gross margin percentage and a low rate of
inventory turnover
High-margin/high turnover retailer: Operates on a high gross margin percentage and a high rate
of inventory turnover
L O 2

12. Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Location
The most significant of the new nontraditional shopping locations could be the one which
combines culture with entertainment or shopping
L O 2
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Size
The reason for classifying by size is that the operating performance of retailers tends to vary
according to size
With advances in technology, using classification of size is unclear
L O 2
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 1.5 - Retailing’s Two Career Paths
L O 3
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Career Path (1 of 2)
Store management: The retailing career path that involves responsibility for:
Selecting
Training
Evaluating personnel
In-store promotions
Displays

13. Customer service
Building maintenance
Security
L O 3
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Career Path (2 of 2)
Buying: The retailing career path whereby one uses quantitative tools to develop appropriate
buying plans for the store’s merchandise lines
L O 3
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Common Questions About a Retailing Career (1 of 2)
Salary - Entry-level retail managers or buyers who do exceptionally well can double or triple
their incomes in three to five years
Career progression - Person capable of handling increasing amounts of responsibility can move
up quickly
L O 3
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Common Questions About a Retailing Career (2 of 2)
Geographic mobility - Person must be willing and able to make several moves, even if the
changes may not be attractive in terms of an individual’s lifestyle
Societal perspective - Leading retail executives are well-rounded individuals with a high social
consciousness
L O 3
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

14. Prerequisites for Success
Hard work
Analytical skills
Creativity
Decisiveness
Flexibility
Initiative
Leadership
Organization
Risk taking
Stress tolerance
Perseverance
Enthusiasm
L O 3
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Study and Practice of Retailing
Analytical method
Creative method
A two-pronged approach
A proposed orientation
L O 4
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

15. Analytical Method
The analytical retail manager is a finder and investigator of facts
Analytical perspective can result in a standardized set of procedures, success formulas, and
guidelines
A small retailer can consider watching the Russell 2000 Index
Forecasting tool for future business conditions
L O 4
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Creative Method
The creative retail manager is an idea person
Trader Joe’s has sales higher than leading competitors due to its creative business model of
clerks in Hawaiian shirts giving high-fives and free cookies
L O 4
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Two-Pronged Approach
Involves the synthesis of creativity and analysis
Retailers are duplicators rather than originators
To decide who or what to duplicate requires creativity and an analysis of the strategies that other
retailers are pursuing
Sales and profits = Creativity
Profit and sales statistics = Analysis
L O 4
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

16. A Proposed Orientation
Four major orientations:
Environmental - Allows the retailers to anticipate and adapt continuously to external forces in the
environment
Management planning - Helps the retailers to adapt systematically to a changing environment
Profit - All retail decisions will have an effect on the firm’s financial performance
Decision making - Allows the retailers to focus on the need to collect and analyze data to make
intelligent retail decisions
L O 4
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 1.6 - The Importance of Proactive Planning
A. Standard Performance
B. Reacting to Competitor’s Attack (Old Method)
C. Proactive Planning
L O 4
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
image2.png
image3.emf
image4.png
image5.png
image6.png
image7.png

17. image8.png
image9.png
image10.png
image11.png
image1.png
Chapter 2
Retail Strategic Planning and Operations Management
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Learning Objectives
Explain why strategic planning is important and describe the components of strategic planning
Describe the retail strategic planning and operations management model
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Components of Strategic Planning (1 of 2)
Strategic planning: Adapting the resources of the firm to the opportunities and threats of an ever-
changing retail environment
Through the proper use of strategic planning, retailers hope to achieve and maintain a balance
between resources available and opportunities ahead
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Components of Strategic Planning (2 of 2)
Development of a mission statement for the firm

18. Definition of specific goals and objectives for the firm
S W O T analysis
Development of strategies that will enable the firm to reach its objectives and fulfill its mission
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Mission Statement
Basic description of the fundamental nature, rationale, and direction of the firm
Elements of a mission statement
How the retailer uses or intends to use its resources
How it expects to relate to the ever-changing environment
The kinds of values it intends to provide in order to serve the needs and wants of the consumer
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Statement of Goals and Objectives (1 of 2)
Provide:
Specific direction and guidance to the firm in the formulation of its strategy
A control mechanism by establishing a standard against which the firm can measure and evaluate
its performance
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Statement of Goals and Objectives (2 of 2)
Dimensions

19. Market performance
Financial performance
Societal objectives
Personal objectives
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Market Performance Objectives
Establish the amount of dominance the retailer seeks in the marketplace
Market share: Retailer’s total sales divided by total market sales
High sales growth retailing is directly linked to expanding the size of the retail stores
Disney
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 2.1 - The Market Share-Profitability Relationship
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Financial Objectives (1 of 2)
Profit-based objectives: Deal directly with the monetary return a retailer desires from its business
Profit - Aggregate total of net profit after taxes
Profit can be expressed as a percentage of net sales
It can also be defined in terms of return on investment (R O I)
Stockouts: Products that are out of stock and unavailable to customers when required

20. L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 2.2 - Elements of Strategic Profit Model
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Financial Objectives (2 of 2)
Productivity objectives: State the sales objectives that the retailer desires for each unit of
resource input
Space productivity - Net sales divided by the total square feet of retail floor space
Labor productivity - Net sales divided by the number of full time-equivalent employees
Merchandise productivity - Net sales divided by the average dollar investment in inventory
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Societal Objectives (1 of 2)
Reflect the retailer’s desire to help society fulfill some of its needs
Employment objectives - Provision of employment opportunities for the members of the
retailer’s community
Payment of taxes - Helping finance societal needs that the government deems appropriate
Consumer choice - Provide the consumer with choices that previously were not available in the
trade area
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Societal Objectives (2 of 2)

21. Equity - Retailer’s desire to treat the consumer and suppliers fairly
Being a benefactor - Retailer may desire to underwrite certain community activities
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Personal Objectives
Reflect the retailers’ desire to help individuals employed in retailing fulfill some of their
needs
Self-gratification - Focuses on the needs and desires of the owners, managers, or employees of
the enterprise
Status and respect - Recognizes that the owners, managers, and employees need status and
respect in their community
Power and authority - Need of managers and other employees to be in positions of influence
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategies (1 of 3)
Carefully designed plan for achieving the retailer’s goals and objectives
Retailers can operate with three strategies
Get shoppers into the store
Convert these shoppers into customers by having them purchase merchandise
Implement the above two strategies at the lowest operating cost possible that is consistent with
the level of service that customers expect
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategies (2 of 3)

22. Forms of differentiation for a retailer
Outstanding design of the market offering
The selling process
After-purchase satisfaction
Location
Never being out of stock
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
S W O T Analysis (1 of 4)
Strengths:
What major competitive advantage(s) do we have?
What are we good at?
What do customers perceive as our strong points?
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
S W O T Analysis (2 of 4)
Weaknesses
What major competitive advantage(s) do competitors have over us?
What are competitors better at than we are?
What are our major internal weaknesses?
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

23. S W O T Analysis (3 of 4)
Opportunities
What favorable environmental trends may benefit our firm?
What is the competition doing in our market?
What areas of business that are closely related to ours are undeveloped?
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
S W O T Analysis (4 of 4)
Threats
What unfortunate environmental trends may hurt our future performance?
What technology is on the horizon that may soon have an impact on our firm?
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategies (3 of 3)
A fully developed marketing strategy should address the following considerations
Target market: Groups of customers that the retailer is seeking to serve
Location
Retail mix: Combination of merchandise, price, advertising and promotion, location, customer
service and selling, and store layout and design
Value proposition: Statement of the tangible and intangible results a customer receives from
shopping
L O 1
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

24. Exhibit 2.8 - Retail Strategic Planning and Operations Management Model
Competitive Environment: Behavior of Consumers, Competition, Supply Chain Members
Social and Legal Environment: Socioeconomic Environment, State of Technology, Legal
System, Ethical Behavior
L O 2
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Retail Strategic Planning and Operations Management Model
Operations management: Deals with activities directed at maximizing the efficiency of the
retailer’s use of resources
Referred to as day-to-day management
The need to strive for a high profit is tied to the extremely competitive nature of retailing
L O 2
Dunne/Lusch/Carver, Retailing, 8th Edition. © 2018 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
image2.png
image3.emf
image4.png
image5.png
image6.png
image7.png
image8.png
image9.png

25. image10.png
image1.png