20 Jan Buffalo Wild Wings: Competing for the Future: After carefully reading the case details, answer the following questions: If there is a BWW near you, visit the restaurant or if not take
Buffalo Wild Wings: Competing for the Future:
After carefully reading the case details, answer the following questions:
- If there is a BWW near you, visit the restaurant or if not take a look at them online (www.buffalowildwings.com). Identify what you see as competitors to BWW.
- What do you see as the competitive advantage of BWW? Be sure to discuss its value proposition.
- Where would you place BWW and restaurants it competes with in terms of the retail life cycle?
Write a minimum 2-page paper answering the above questions
Use APA 7 Format guidelines and list all your references.
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
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
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
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)
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)
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.
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.
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.
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Chapter 4
Evaluating the Competition in 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 the various models of retail competition
Distinguish between various types of retail competition
Describe the four theories used to explain the evolution of retail competition
Describe the changes that could effect retail competition
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
Models of Retail Competition
The competitive marketplace
Market structure
The demand side of retailing
Nonprice decisions
Competitive actions
Suppliers as partners and competitors
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.
The Competitive Marketplace
Helps identify primary and secondary competitors
Retailers compete for target customers on five major fronts:
The price for the benefits offered
Service level
Product selection
Location or access
Customer 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.
Market Structure (1 of 5)
Pure competition
Occurs when a market has:
Homogenous products
Many buyers and sellers, having perfect knowledge of the market
Ease of entry for both buyers and sellers
Each retailer:
Faces a horizontal demand curve
Must sell its products at the going ‘‘market’’ or equilibrium price
It is rare in 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.
Market Structure (2 of 5)
Pure monopoly: Occurs when there is only one seller for a product or service
Law of diminishing returns or declining marginal utility
As the retailer seeks to sell more units, it must lower the selling price
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 Structure (3 of 5)
Monopolistic competition
Products offered are different, yet viewed as substitutable for each other
Sellers recognize that they compete with sellers of these different products
Retailers attempt to differentiate themselves with the products or services they offer
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 Structure (4 of 5)
Oligopolistic competition
Essentially homogeneous products are sold
Relatively few sellers or many small firms who follow the lead of the few large firms
Any action by one seller is expected to be noticed and reacted to by the other sellers
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 Structure (5 of 5)
Sellers end up selling at a similar price
Is rare in retailing
Is more common at a local level, especially in smaller communities
Outshopping: Occurs when a household:
Travels outside their community of residence or uses the Internet to shop in another community
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.
The Demand Side of Retailing (1 of 2)
Negatively sloping demand curve
Consumers will demand a higher quantity as price is lowered
The true price (or cost) the customer pays actually includes:
The retailer charges
Sales tax on the purchase
Delivery or transportation cost
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 4.1- Demand as a Function of Price
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.
The Demand Side of Retailing (2 of 2)
Retailers will need to recognize when:
A drop in a competitor’s prices is temporary and inconsequential to long-term competition
The competitor has set a new permanent pricing standard
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.
Nonprice Decisions (1 of 2)
Nonprice variables are directed at:
Enlarging the retailer’s demand by offering customers benefits beyond the lowest price
Price is the easiest variable for competitors to copy
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.
Nonprice Decisions (2 of 2)
Using nonprice variables
Store positioning: Identifying a well-defined market segment using:
Demographic or lifestyle variables and appealing to this segment with a clearly differentiated approach
Offering private-label merchandise that has unique features or offers better value than competitors
Providing additional benefits for the customer
Mastering stock keeping with basic merchandise assortment
Becoming a destination store for certain 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.
How to Implement a Store Positioning Program
Assess how shoppers and even competitors view the retailer
Determine the best position for the retailer
Analyze the retailer’s current target customers
Factor in current environmental trends
Implement the new positioning strategy
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.
Competitive Actions (1 of 2)
Overstored
Condition in a community where the number of stores in relation to households is so large:
That to engage in retailing is usually unprofitable or marginally profitable
Understored
Condition in a community where the number of stores in relation to households is relatively low:
So that engaging in retailing is an attractive economic endeavor
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 4.5- Economics of Overstoring
Source: U.S. Census Bureau, "E-Stats, 2009 E-commerce Multi-sector Report," May 2011. For more information: http://www.census.gov/eos/www/ebusiness614.htm http://www.census.gov/econ/estats/ Internet release date 9/30/2011; Data after 2009 is projections by authors.
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.
Competitive Actions (2 of 2)
Competition is most intense in overstored markets
Many retailers are achieving an inadequate return on investment
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.
Suppliers as Partners and Competitors
Retailers must:
Develop a loyal group of patrons that encourages the supplier to accommodate their needs
Determine how they can be most productive for their suppliers yet still maintain profitability
Unique product or promotion by suppliers:
Can provide critical competitive advantage to 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.
Types of Competition (1 of 2)
Intratype competition
Two or more retailers of same type compete directly with each other for the same households
Intertype competition
Two or more retailers of different type compete directly by:
Attempting to sell the same merchandise lines to the same households
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.
Types of Competition (2 of 2)
Divertive competition: Retailers intercept or divert customers from competing retailers
Can be intertype or intratype
Retailers operate very close to their breakeven point
Pop-up stores
Temporary small scale stores
Set up for a relatively short period of time
Explicitly intercept shoppers
Has escalated due to the Internet
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.
Evolution of Retail Competition
The wheel of retailing
The retail accordion
Retail life cycle
Resource-advantage theory
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.
Wheel of Retailing Theory
New types of retailers:
Enter the market as low-status, low-margin, and low-price operators
Gradually, enter a trading-up phase and acquire more sophisticated and elaborate facilities thus:
Become vulnerable to new types of low-margin retail competitors who progress through the same pattern
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.
Exhibit 4.6 – Wheel of Retailing
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 Retail Accordion
Describes how retail institutions evolve from:
Outlets that offer wide assortments to specialized stores
Is vague about the competitive importance of providing wide assortments to customers
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.
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