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Ziwei Zhang

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April 2017

Retail Blog Entry #11

Publicity is defined as “nonpaid news or editorial comment about ideas, products, services, or stores,” according to the textbook. Because it is the public view towards an object, it is not controllable, but powerful to affect the image of the object. In my point of view, negative publicity does have an impact on the purchasing habits of customers in the retail industry.

There are four disadvantages of the impact of negative publicity based on the article, “The Disadvantages of Bad Publicity.” They are loss of trust, effects on sales, damage brand equity, and damage brand association. All of the disadvantages described relate directly to daily operating activities – what consumers think about the brand and if they would change their purchasing habits due to the negative publicity.

Since publicity would influence company image, consumers would be hesitating or even decide not to buy the company’s products or services due to negative publicity. There is an example that perfect shows the immediate reaction taken by consumers due to a scandal of a retailer. A very recent news about how the United Airlines dealt with its passenger in an overbooked flight has grabbed public attention nationwide and also worldwide. The situation was not handled ethically and properly, which disappointed a large amount of people. Some people photoshopped pictures depicting their disagreement and ager while some consumers voluntarily chose not to take the United Airlines any more. There was one consumer cut off his United Card and posted on social media stating that he refused to fly with the United Airlines in the future any more. It is a good example of how negative publicity would affect the purchasing habits of customers of an airline company.

Therefore, I believe that negative publicity does affect a retailer, especially its consumers in terms of purchasing habits.

External Resources:

New United Airlines Mottos: Flyers Drag The Company With Memes After Assault Of Passenger

http://www.cnn.com/2017/04/11/travel/united-customer-dragged-off-overbooked-flight/

 

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Retail Blog Entry #10

The important differences between passive and aggressive methods of pricing are the different company’s image the retailer choose to convey to consumers. According to the text book, Passive Pricing is “based on a retailer’s differential advantage rather than on beating competitors’ prices” while Aggressive Pricing is “based on undercutting competitors’ prices rather than concentrating on the company’s strengths.” These two methods are opposite to each other that should be applied accordingly due to the structure of the retailer.

Passive pricing methods include skimming, differential pricing, and blind-item pricing. It is normally used by companies that try to differentiate themselves from competitors on price. Retailers who want to develop a prestige image and set a high initial price on a product when there is little competition would use the skimming method. An example of this type of retailers is Apple Inc, which sell relatively high-priced products to consumers to generate sales. Differential pricing indicates that prices are set based on past sales history. Retailers that sells seasonal products would use this method to set up different prices to different consumers at different times. However, it is not applicable on fashion merchandise. Blind-item pricing method is used for products that are rare or not easily found in other stores. It means that prices are set at a price that is not tested in the market, but would be adjusted accordingly later on based on consumers’ reaction to it. Type of retailers using this method could be the ones who have private labeling products.

Aggressive pricing methods include penetration, experience curve pricing, and matching the competition. Penetration is the opposite method of skimming that the retailers set the price low at the beginning, because of the competitive environment and the desire of earning market share. Types of business use penetration could be supermarkets who tend to introduce new food products.  Experience curve pricing is similar as differential pricing that both of them set the price accordingly throughout the time. However, experience curve pricing is normally used by major discount retailers and category killers who try to lower their price to generate sales while differential pricing adjusts the price up and down depends on the situation. Lastly, matching the competition is normally used by many online retailers who are in highly competitive environment that consumers compare prices on different retailers. Examples of these type of retailers are Best Buy, Walmart, and Target.

 

External sources:

https://mpk732t12016clusterb.wordpress.com/2016/05/01/apple-skimming-pricing-strategy/

http://yourbusiness.azcentral.com/examples-products-differential-pricing-25721.html

 

Retail Blog Entry #9

In the textbook, private label merchandise are defined as “Goods that are manufactured to a retailer’s specifications and bear the retailer’s name or other brand names created by the retailer.” Private labeling takes advantages of company’s image of the retailer. It can help the company increase revenues and sales and maintain company’s image. For either a convenient store as pharmacy or a luxury department store retailer, their private label lines would help both of them sell similar industry leader’s products at a lower price. It is even better for a luxury department store retailer, because their private label would still be expansive as luxury products comparing to other fast fashion products.

For instance, I often shop at CVS pharmacy for bandages. I used to buy the brand Band-Aid until one day I saw CVS had exactly the same item but much cheaper price. A package of flexible regular-sized bandages costs $5.49 for 20 counts under Band-Aid whereas a CVS package only costs $3.99 for 30 counts! (See sources for the prices.) I would definitely go for CVS, since their quality is the same and I do not have a preference while using a bandage only for prevent external contact from cuts.

On the other hand, when consumers know well about the company, including its image, concept, and position, they are most likely willing to purchase products that are under its own label. For example, according to Barneys New York’s website, “the Barneys New York collection includes thoughtful, indispensable pieces highly regarded for their superior construction and timeless design. Featuring men’s and women’s clothing, shoes, and accessories, the line showcases enviable, seasonless wardrobe staples.” Their private label still has fashionable designs, but less expensive prices than the products they are selling in stores. Most importantly, their logo is not obviously shown on the products. Therefore, I would spend $300 for a bag that has a similar design of a $1,000 bag without obvious logos on it.

All in all, private labelling is a good way to generate company’s sales and revenues for merchandise selling and planning. It also maintains its brand image.

External Source:

Band-Aid Bandages

http://www.cvs.com/shop/health-medicine/first-aid/bandages/band-aid-brand-adhesive-bandages-skin-flex-assorted-20ct-prodid-1360017?skuId=187316

CVS Bandages

http://www.cvs.com/shop/health-medicine/first-aid/bandages/cvs-health-flexible-fabric-anti-bacterial-one-size-bandages-prodid-1011825?skuId=875950

Barneys New York Private Labels

http://www.cheatsheet.com/gear-style/what-to-get-at-barneys-new-yorks-private-label-this-season.html/?a=viewall

 

Retail Blog Entry #8

 

I think it is good for retailers to be transparent about their financial performance. Being transparent of the financial performance to customers means anyone is able to view it without a permission. In fact, it is not only good for customers to be able to look at, but also better for their competitors, business analysts, or investors to see and judge.

In my opinion, normally customers do not spend time especially to take a look at a company’s financial statement on its website. They only hear from what is being said in the news or other social media channels when there are significant changes in operation of the company. However, whether customers will look at company’s financial performance or not, it is necessary and important for the company to be financially transparent to the public. It indicates that the company is not hiding anything unethically or illegally. No matter it is decreasing in revenue or suffered from large number of debt or not, customers would like to know how the company actually performs. Therefore, being transparent with customers also means being honest with them.

On the other hand, it is good to let the competitors and business analysts to know the company’s financial performance in order to make prediction and adjustment accordingly. As the article “The Importance Of Corporate Transparency” mentioned, “less information means less certainty for investors.” Decisions would be made if investors not not know the company well enough.

All in all, being transparent about financial performance is important and necessary to both the company and its customers, competitors, business analysts, and investors.

http://www.investopedia.com/articles/fundamental/03/121703.asp

 

Retail Blog Entry #7

Top retailers use internal and external sources to recruit managerial employees, similar to non-managerial trainees, but different in scope and intent.

Internal sources for managerial employees refer to the recruitment inside of a retailer. Methods include cultivating employees and leadership training and coaching. It means that the company finds and trains its current talented employees in order to secure the talent within. It saves time as well to explain from the fundamental thing to new talented trainees recruiting outside of the company. In the textbook, it also described a scenario to emphasize the importance of keeping connection with the good former executives. It is possible to have him/her come back years later.

There are many external sources to use to recruit motivated and talented management trainees, including referrals and networking, advertisements, executive search firms, college and university recruiting, job fairs, trade association web sites, unsolicited applicants, unpaid internships, and so on.

First of all, referrals are those who are referred from business insiders to take the managerial position. Because skills are transferable within the industry, referrals from customers, suppliers, and competitors can be potential manager for the company. Therefore, networking is useful in recruitment process. Secondly, advertisements on metropolitan and trade papers are effective resources to increase public awareness in order to find potential talented employees. Thirdly, professional executive search firm is also useful that their job is to find managers or executives as headhunters. Then college and university recruiting is similar as job fairs that they tend to hire prospective managers in big “conventions” with mass amount of people. Trade association Web sites have job postings on the Web site. Lastly, unsolicited applicants and unpaid internships are from people who take a step back and apply for the managerial position.

With all the methods mentioned above, I believe it is crucial for companies to attract talented managers or executives by promoting the company itself. I found the article “How to Attract Magnetic Leaders to Your Organization” helpful to better explain the ways company could do in order to hire the employees they want. It provided six methods used for increasing public awareness. They are showcase your organization, raise the level of leadership in your organization, spread the news, access your current leaders, review your compensation and benefit package, and be prepared to pay top dollar. I agree with everything that has been said above, especially the last one – be prepared to pay top dollar. It is true that if the company wants to hire a talented employee, the salary is proportional to its value. It is also important to attract the talented employee from competitors by higher benefit package.

External Resource:

https://hiring.monster.com/hr/hr-best-practices/workforce-management/employee-retention-strategies/talent-management-strategies.aspx

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