CHAPTER 7: ANSWERS TO QUESTIONS FOR DISCUSSION
for the sale  1.    Comment on this statement: “A competitive retail sector, facing an uncertain economic future, is being challenged by consumers to compete for their business. In this environment, only the fittest and those really listening to what their customers really want are likely to survive.”
In hard times, marginal retailers will have a very difficult time surviving. Reduced customer spending, high unemployment, falling values of retirement plans, and lowering real estate values pose special challenges to retailers. Successful strategies need to be based on low overall costs, a focus on a highly targeted audience, distinctive merchandise, and on high levels of customer service.
  2.    Analyze the global population data in Table 7-1 from a retailing perspective.
    Table 7-1 provides a wealth of information that is very useful for retailers. Many uses of the data are as follows: The age distribution data allow retailers to gauge their approach to a con
sumer base of a particular country. A retailer that sells products geared for the elderly may not want to enter a country where a low percentage of the population is 65 and older. A retailer selling children’s clothing may wish to invest in business in a country with a rapidly growing population and a high population distribution of newborns to 14-year-olds. The literacy rate data are useful in determining how a retailer’s promotional messages are conveyed to the market. For example, in countries with low literacy rates, consumers may be better reached through using symbolic language rather than written words. Population growth rate can also give a retailer insight into growth prospects.
  3.    How could a self-service frozen yogurt chain use the U.S. population data presented in Table 7-2?
A self-service frozen yogurt chain can use the U.S. population demographics to help determine its potential market in each region. Important data include each area’s percent of U.S. household income, percent of U.S. population, population by broad age groupings and population density, and areas with greater population density.
The frozen yogurt chain can focus on areas with high population density (this may attract more customers per store) and areas with younger populations (these may include more do-it-yourselfers).
  4.    Explain how a retailer selling expensive bicycles could reduce the six types of perceived risk.
Functional—Provide a three-year, “no excuses” warranty against breakage, and rust.
Physical—All attached rear view mirrors are backed using superior fastening devices.
Financial—Compare competitors’ prices and products, meet competitors’ prices, and offer refund/exchange privileges.
Social—Emphasize the store’s name, the reputation of brands sold, and product endorsements.
Psychological—Focus on customers’ need for new full-featured bicycles as an extension of one’s personality.
Time—Offer fast delivery, provide broad selection, and one-stop shopping appeals; provide free assembly on all bicycle sold.
  5.    Why is it important for retailers to know the difference between needs and desires?
In marketing products to customers, retailers must know in which category their product falls so that they may understand the connection between the attributes of their product and the expectations of their buyers. Retailers must understand that consumers who perceive they need certain products will likely purchase them. They must understand that products that are desired but not needed might be promoted in such a manner that consumers are coaxed into buying them anyway. Retailers must understand that the behavior at the point of sale of a “need” may be tied to attributes such as price or value. However, consumer behavior at the point of sale of a “desired” product might be a function of the “trendy” attributes of a product rather than the price. Retailers need to learn what motivates consumers to buy or not buy their product and react to this by positioning the product appropriately.
  6.    Why do some consumers engage in outshopping? What could be done to encourage them to shop closer to home?
Outshopping involves patronizing out-of-town shopping areas.
Retailers should encourage customers to shop closer to home by maintaining wide selections (including special sizes), exclusive merchandise, attractive prices (even matching prices by out-of-town retailers), and free delivery, installation, and alterations.
  7.    Is cross-shopping good or bad for a retailer? Explain your answer.
Cross-shopping has some advantages to retailers who carry items that other types of retailers specialize in. Cross-shoppers may elect to always buy milk at the closest possible store that is convenient at the time of need. This means that the 7-Eleven may get the sale on days between full grocery shopping trips, but the grocery store may get the sale on shopping days.

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