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Ancillary Cases and Teaching Notes
1
Uses of Ancillary Cases
Chapter
#
Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
1
Wedding Channel.com
S
P
S
2
Dollar General and Family Dollar:
Value Retailers
S
S
P
3
Abercrombie & Fitch: Hiring for
Looks
P
9
Blue Sky Surf Shop
P
S
S
10
Cleveland Clinic
P
P
P
S
11
Niketown
P
P
S
S
S
12
Simon and Smith
P
P
P
13
Marquette Army/Navy Surplus
P
S
S
14
Bloomingdale's
P
S
C
Ancillary Cases and Teaching Notes
2
Uses of Ancillary Cases (cont’d)
Chapter
#
Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
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23
Stan's Shirts
P
24
Pricing Problems
P
25
Dexter Brown
P
30
Negotiating with a Vendor
31
Stockwork
P
32
Check this System Out
33
Closing a Sale
P
34
Fuller's
S
P
Ancillary Cases and Teaching Notes
3
Case A1: Wedding Channel.com
Anne is sitting at her desk eating her lunch and surfing the Internet. For a few months, she has been
preparing for her wedding, which will take place in less than a month. She found many helpful articles
that gave her some good ideas. These articles also helped her face reality and change her childhood
dreams of a white carriage pulled by a team of white horses to a stretch limo. She gave up the Snow
White wedding gown with a 15-foot train and has now settled on a sleek sheath gown.
Every year, $72 billion is spent on weddings in the United States. The average American wedding
ceremony costs $22,000. The average age of brides is 24.5, while the average groom is 26.5 years of age.
patented registry system searches 1.5 million registries from its many retail partners including Macy’s,
Tiffany&Co., Crate and Barrel, Neiman Marcus, Williams-Sonoma, Pottery Barn, REI, JCPenney and
others.
our targeted marketing tactics have resulted in five times the Internet response rate, providing the most
effective platform for companies to build their brand messages during a significant life stage when brand
both designer brands and less expensive brands. It also provides a great way to sort through the many
different styles by offering different buttons to select sleeve length, silhouette, length, and neckline. It
even has a virtual model so the bride-to-be can see how she would look in a particular style of gown. The
site also provides many interactive tools that help couples make a budget, guest list, wedding page, and
registry. There are also many articles that range from finding a reception site to planning a dream
honeymoon.
Ancillary Cases and Teaching Notes
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wedding. This interactive Web page allows for couples to make a customized Internet page describing
how they met, how they became engaged, their wedding party, and the theme/colors for the big day.
conveniently purchase exactly what the couple needs for their future together.
Discussion Questions
Source: This case was written by Teresa Scott, University of Florida
Ancillary Cases and Teaching Notes
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Teaching Notes
Case A1: Wedding Channel.com
Use: Chapter 2 Illustrates how traditional retailers benefit from partnering in an online venture.
Chapter 3 Identifies the business model, strategies, and sources of consumer value for a
specialty Internet retailer.
Chapter 4 Describes the consumer behavior issues in planning a wedding and how
consumers could obtain information and planning tools from the Internet.
Discussion Questions
1. What are the keys to making WeddingChannel.com a success from the perspective of the
companies investing in it?
WeddingChannel.com provides an excellent opportunity for firms, such as Federated department
Stores, Inc., Neiman Marcus Group, Tiffany & Company, Crate & Barrel, and Williams-Sonoma to
gain additional sales and revenue associated with wedding registries and gifts. The site provides
2. Why would a retailer want to invest in a virtual community like WeddingChannel.com?
A virtual community like WeddingChannel.com only grows through word-of-mouth as well as word-
of-mouse. Not only do would-be brides and guests referring the site to their own wedding page to
Ancillary Cases and Teaching Notes
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their stores. Increases in information, participation, and positive word-of-mouth through the
expansion of the virtual community would only benefit retailers even more over time.
3. Can you think of other retailers that might benefit from developing a virtual community?
A virtual community could be formed for any occasion where shoppers may need specific and expert
information and tools not readily or conveniently available through physical stores. Virtual
Ancillary Cases and Teaching Notes
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Case A2: Value Retailers: Dollar General and Family Dollar Cater to an Underserved
Market Segment
Dollar General, headquartered in Goodlettsville, Tennessee, and Family Dollar, based in Mathews, North
Carolina, are the two leading retailers in the fastest growing segment of the industry, referred to as
extreme value retailing. In 2005, Dollar General had over 7,500 stores in 30 states with sales surpassing
$7 billion. Its annual growth in sales has been above 20 percent for the last six years. Family Dollar, with
5, 600 stores in 44 states, generated over $5 billion in sales in 2004. Both retailers are opening new stores
at rates exceeding a store a day.
Sometimes these firms are grouped under the category of dollar retailers – retailers that sell merchandise
priced under one dollar. While Dollar General and Family Dollar keep their prices typically under $15,
most of their merchandise is priced over a dollar. Family Dollar has multiple price points whereas Dollar
General prices its merchandise at even-dollar price points.
Most of their locations are in the Southeast, where the companies are headquartered. The stores are small,
6,000 to 8,000 square feet, primarily located in small towns with populations under 40,000 and in
suburban strip shopping centers. Because the stores are relatively small, it is easy to find good locations in
almost any market the retailers choose to enter.
Ancillary Cases and Teaching Notes
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At one time, these extreme value retailers advertised sales using circulars. But both Dollar General and
Family Dollar reduced their advertising expenses when they converted to an everyday low-pricing
strategy. This cost saving allowed the retailer to pass even more savings on to their customers.
Discussion Questions
1. What is the target market for extreme value retailers like Dollar General and Family Dollar?
2. Why are customers increasingly patronizing these extreme value retail stores?
Source: This case was written by Valerie Bryan, University of Florida
Ancillary Cases and Teaching Notes
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Teaching Notes
Case A2: Value Retailers: Dollar General and Family Dollar Cater to an Underserved
Market Segment
Synopsis: Dollar General and Family Dollar are exemplars of the retail category known as extreme
value retailers. The case describes the target market, location, merchandising, buying and
operations strategies of extreme value retailers and also identifies some trends.
Discussion Questions
1. What is the target market for extreme value retailers like Dollar General and Family Dollar?
Initially, the target market for extreme value retailers like Dollar General and Family Dollar were
low-income communities too poor and unattractive for large discount stores such as Wal-Mart or K-
2. Why are customers increasingly patronizing these extreme value retailer stores?
Consumers have increasingly come to trust extreme value retailers to provide good-quality
merchandise at low prices without the hassle of crowds and lines. Most consumable products are
Ancillary Cases and Teaching Notes
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3. How do extreme value retailers make a profit when their prices and average transactions are so
low?
Extreme value retailers incur lower costs of operations, opening at suburban strip malls and other
locations typically vacated by other retailers. Parking space and store layout costs are minimal. The
4. Can extreme value retailers defend themselves against general merchandise discount retailers
like Wal-Mart, or will Wal-Mart eventually drive them out of business? Why?
General merchandise discount retail stores such Wal-Mart need a larger customer base to be
profitable. As such, their location strategy is clearly oriented towards larger towns or centered in the
Ancillary Cases and Teaching Notes
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Case A3: Abercrombie & Fitch: Hiring for Looks
Clothing retailer Abercrombie & Fitch often recruited on college campuses and in the mall to find
attractive young people and then urged them to apply for jobs. This company, known for building an
attractive workforce, did so by aggressively hiring pretty young women and handsome young men to
match their all-American brand image. Abercrombie & Fitch refers to these great-looking sales
associates as brand ambassadors. They project the retailer’s brand and make the store a better experience
for customers.
In seeking good-looking employees, companies are risking lawsuits for discriminatory hiring practices.
Hiring attractive people is not illegal, but discrimination on the basis of age, gender, race, national origin,
disability, or ethnicity is. Employers may establish and enforce grooming and appearance standards.
Exceptions to Title VII are possible if the employer can prove that one of the protected characteristics is a
bona fide occupational qualification.
DISCUSSION QUESTIONS
1. Why would Abercrombie & Fitch want to hire employees with a certain look?
Ancillary Cases and Teaching Notes
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Teaching Notes
Case A3: Abercrombie & Fitch: Hiring for Looks
Synopsis: Clothing retailer Abercrombie & Fitch often recruited on college campuses and in the
mall to find attractive young people and then urged them to apply for jobs. This
They project the retailer’s brand make the store a better experience for customers.
Use: Chapter 9 Generate discussion about the retail hiring process.
Discussion Questions
1. Why would Abercrombie & Fitch want to hire employees with a certain look?
Hiring employees with a consistent look is one way to visually let the target market know you are the
2. From a business perspective, do you think this is a good idea? What about from an ethical
perspective or a legal perspective?
Ancillary Cases and Teaching Notes
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Yes, hiring for looks is an ethical
business practice.
No, hiring for looks is an unethical
business practice.
- Being plain or unattractive is not
considered a disability and therefore is not
covered under Title VII
- It is not a violation of federal anti-
discrimination laws to hire for looks
- Hiring for looks is another way to
discriminate against women, minorities, the
elderly, and people with disabilities
- Hiring should be on the basis of retail
skills, experience, ability and competency
14
Case A4: Salon-Only Hair Care Products Found Outside the Salon
High-end, salon-only hair care products have been showing up on the shelves at grocery stores,
discounters, and drugstores. Premium brands such as Nexxus, Paul Mitchell, Redken, Rusk, and
Sebastian are clearly marked with “For Sale in Professional Salons Only.” However, these
brands are being sold through mass-market chains in addition to the exclusive salon-only channel.
This practice is known as diverting products from the intended channel of distribution.
Is this practice illegal? Currently there is no legislation prohibiting mass retailers from selling
expiration, contamination, or substitution.
DISCUSSION QUESTIONS
1. How do customers, manufacturers, salons, and retailers react to the practice of diverting
“salon-only” products to discounters, drug chains, and grocery stores?
Ancillary Cases and Teaching Notes
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Teaching Notes
Case A4: Salon-Only Hair Care Products Found Outside the Salon
Synopsis: The describes the merchandising practice called “diverting”, moving products
from their intended channel of distribution to high-end, high-service salons to
mass merchandise discounters, drugstores and supermarkets. These products are
also available online at through online drugstore sites.
Use: Chapter 14 Examines the merchandising practice of diverting and its impact on
supply chain relationships.
Discussion Questions
1. How do customers, manufacturers, salons, and retailers react to the practice of diverting “salon-only”
products to discounters, drug chains, and grocery stores?
Customers
- Found their favorite brands for a lower price at a more convenient location
Manufacturers
- Lost sales
- Diminished brand equity when their products are distributed in an intensive manner
- Lowered expectations of status and quality
Salons
- Have to sign contracts with the manufacturers that they will carry the full professional line and
that they will sell only to individuals and not resell to other channels
Ancillary Cases and Teaching Notes
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- Like offering a full line of professional hair-care products; it improves the status of the salon
- Margins are good on these products
Retailers
- Want to offer a full line of hair-care products
2. Will the education campaign launched by Paul Mitchell change where consumers shop for professional
hair care products?
- Some customers will be motivated to save a few dollars or not make another trip to the salon to
Ancillary Cases and Teaching Notes
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Case A5: SaksFirst Builds Customer Relationships
It’s Wednesday afternoon, and as usual, Gwendolyn has a fitting room ready for Mrs. Johnson.
She has picked out some of the new items in Mrs. Johnson’s size that came in the previous week.
She has everything from scarves to jewelry to shoes ready to go along with the outfits.
“Good evening, Mrs. Johnson. So how was your birthday?” Gwen asked.
“It was wonderful. My husband took me to Italy. Thank you for the card.”
“I pulled some new items for you to try on.” Gwendolyn said.
“Thank you, Gwen. You are the best!” replied Mrs. Johnson.
To become a member, a customer has to have a Saks Fifth Avenue credit card, and once she or he
spends at least $1,000 a year, the customer is automatically enrolled. For every dollar spent, the
customer will receive a reward point. At the end of the year, preferred customers receive 2, 4, or
6 percent in bonus points based on how much they charged that year above $5,000 at Saks.
SaksFirst customers receive many exclusive benefits. The tangible benefits include the points,
rewards, and discounts. Customers also receive complimentary shipping and delivery for catalog
and online orders, advance notice of sale events, the SaksFirst newsletter, catalogs, promotions
and giveaways, double- and triple-point events, and double points on their birthdays. The
intangible benefits include recognition and preferential treatment.
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DISCUSSION QUESTIONS
1. How does SaksFirst build loyalty for Saks Fifth Avenue versus other upscale retailers (such
as Nordstrom)?
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Teaching Notes
Case A5: SaksFirst Builds Customer Relationships
Synopsis: SaksFirst is a customer loyalty program in which enrolled customers obtain a lot of
additional benefits, including a preferred and a personal relationship between the
customer and a sales associate. Preferred customers also receive points that could be
Discussion Questions
1. How does SaksFirst build loyalty for Saks Fifth Avenue versus other upscale retailers (such as
Nordstrom)?
In order to become a SaksFirst member, consumers have to charge at least $2,000 dollars a year. This
eligibility criterion by itself ensures that consumers make repeated trips to the store and buy more
2. How effective is the SaksFirst program in developing customer loyalty?
The effectiveness of any customer loyalty program, including SaksFirst can be evaluated using the
Ancillary Cases and Teaching Notes
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1. Tiered – Rewards should be tiered according to the volume of purchase to motivate customers to
increase the level of their purchases. In the case of SaksFirst, the minimum charge of $2000 or
$50 for eligibility may be incentives for customers to spend the required minimum to avoid
3. Whom should Saks target the SaksFirst program toward?
Saks should target the program primarily towards the segment of customers who value customer
4. Is the SaksFirst program worth what it spends giving back to customers?
Since there are no hard figures in the case, the question can be answered by evaluating the various
sources of costs and revenue.
