TITLE:
Out of stocks disappoint customers and cost retailers money
INTRODUTION:
Out-of-stock (OOS) is an unavailability of stock keeping unit on the retail store shelf temporarily (i.e., the customer expects to find the item but it is not available). Managerial researchers measure five primary responses that consumers will make when they encounter an OOS for a stock keeping unit that they had intended to purchase. These are:
1. Buy item at another store (Switch store)
2. Delay purchase
3. Substitute same brand (Switch size)
4. Substitute different brand (Switch brand)
5. Do not purchase the item
All five of the responses include negative consequences and result in losses to retailers. OOS cause loss to retailers, manufacturer and as
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If consumers do not purchase the item will cause a loss to the retailers.
Manufacturers:
1. If consumers buy item at another store because of OOS situation consumers will switch the store that will not cause loss to manufacturers.
2. If consumers delay the purchase manufacturer bear negative affects to cash flows and exaggerate demand fluctuation.
3. If consumers substitute same brand there is a partial loss when consumers substitute to smaller or cheaper brand.
4. If consumers substitute with different brand there is a partial loss when consumers substitute to smaller or cheaper brand. This is the most problematic situation for manufacturers.
5. If consumers do not purchase the item will cause a loss to the
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1. Sales loss risk
2. Shopper loss risk
Sales loss risk:
When consumers not find the desired item because of OOS will switch the store. This will also increase the competition when consumers move to another store.
Shopper loss risk:
Consumers switch the shopping to another retail store because of frequent OOS. This will also increase the competition when consumers move to another store.
According to National Association of Convenience Stores study ( 1999. U.S.) shopper loss risk occurs when consumers face OOS higher in planned purchase items while sales loss risk occurs when consumer face OOS lower in planned purchase items. Planned purchase items are those which consumer planned to buy from retail store.
Causes of
In addition, the bargaining power of the sources of inputs is high. The switching costs from one supplier to another are high because there are not many substitutes for the particular input for metal products. Besides, the number of suppliers who produce raw metals is small. The threat of substitute is high. There are many different kinds of substitutes for metal product company. These companies may also produce a large variety of product like Slade Company. Therefore, the substitute is low for this market. Only companies that produce high quality are able to not be substituted by the others.
of product with the rest of the retailers may not be good idea. This kind of business most likely
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The stores usually raise there prices and then causes more shoplifting, but the people that don't shoplift just end up having to pay more for the product or else go somewhere else to shop. If the customer goes to a different store because of the rising prices the store will also lose business therefore could cause them to go out of business if enough customers leave.From ...
A substitute performs the same or a similar function as a product by a different mean. They belong to a completely different industry. High threat of substitutes impacts industry profitability negatively.
...nal supermarket retailers will reinvent themselves over a period of time, in order to attract and maintain a loyal customer base. New concepts, neighborhood marketing, and innovation will be the key to success over the next decade.” (Imlay, 2006) What is propose is that a smart mix of products, perhaps catering to demographic tastes and needs, may tempt the shopper not drive out to the big box store, but instead loyal to their local market.
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Department stores do not manufacture products nor create their own brands of merchandise, their products are not differentiated. As a result, consumers have low switching costs, customer loyalty is low, as they can easily purchase similar products elsewhere. These lower the barriers to entry, allowing new entrants a chance to gain customers.
For instance, convenience offerings are low-priced goods that consumers can effortlessly acquire because they are relatively ubiquitous while shopping offering requires the consumers’ effort in comparing and contrasting various brands and retail outlet to find the best product at a good price. Besides, while convenience products are needed on a daily basis, shopping goods may not be required on a daily basis and it has a higher price compared to convenience goods. (Tanner & Raymond, 2010). Furthermore, specialty products are different from convenience and shopping offering because it is more expensive from the previous offerings and it is also not commonly sold in retail outlets. The consumers are few and the products are purchased less frequently, which give it a high margin profit. Finally, unsought offerings are different from all because they could be acquired even when it may be unnecessary at the moment. It is a product of circumstance by any
This is the business strategy the draws people to the physical store. Online-to-offline commerce, or O2O, identifies customers in the online space through various strategies and then try to direct them to the shops. This activity is to bring the potential customers from online channels to physical stores. This is done through email marketing and internet advertising and many more things are done in order to entice the potential customers. This is a pure combination of online marketing as well as offline marketing. O2O is termed when the deal is done online and the transaction is done offline. The best part of this model is that instant gratification is acquired unlike e-commerce model. The model is best suited for the perishable goods that can be instantly
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For example, when McDonald’s was exploring to add Fish-O-Fillet to the menu, the creator of this menu item wanted to use halibut for fish but to use halibut would mean that Fish-O-Fillet could not be sold for less than 25 cents (Clark, 2007). McDonald’s ended up substituting the fish with cheaper type of fish than halibut and over time, to fit the cost of fish under the price point, McDonald’s would change the type of fish to be the most cost effective.
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consumers will buy impulsively when they see them in the store. It is with this strategy