Online Learning Center (OLC) Tutorials and Modules
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Online Learning Center (OLC) Tutorials and Modules
The student side of the OLC contains the following modules:
1) The Strategic Profit Model (SPM) (Chapter 6)
2) Multiattribute Model (Chapter 4)
3) Market Position Matrix (Chapter 5)
What are they?
The website modules are intended to give the student an “alternate” presentation of selected topics from
the text. Some of these topics have been selected because they have been a “stumbling block” for
Strategic Profit Model (SPM)
The SPM tutorial was designed to provide a refresher for the basic financial ratios leading to Return on
Assets. The tutorial walks you through it step-by-step. A calculation page is also included that will
Teaching Suggestions:
Online Learning Center (OLC) Tutorials and Modules
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1. As the SPM can create anxiety for students who forgot all the finance they were taught, inform
your class that the topic is coming a week or two before it will be covered in class. Since it is
Multiattribute Model
The multiattribute model is based on the notion that customers see a retailer or a product as a collection of
attributes or characteristics. The model is designed to predict a customer’s evaluation of a product or
retailer based on (1) its performance on several attributes and (2) those attributes’ importance to the
customer.
Market Position Matrix
A market attractiveness/competitive position matrix provides a method for analyzing opportunities that
explicitly considers both the retailer’s capabilities and the retail market’s attractiveness. The matrix’s
A department store chain is evaluating seven merchandise categories it sells:
1. Women’s clothing (target age group 30 to 60).
2. Juniors’ clothing (l3 to 30).
Online Learning Center (OLC) Tutorials and Modules
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To evaluate each merchandise category’s market attractiveness, management identified five market
factors, assigned weights to each factor, rated the merchandise category markets on each factor, and
calculated a market attractiveness score for each alternative (Exhibit 1). Here management assigned the
highest weight to social trends (25) and lowest to vendor power (l5).
Exhibit 2 shows the factors, weights, and ratings used to evaluate the retailer’s competitive position in
each merchandise category versus competition. In evaluating competitive position, management assigned
more weight to vendor relationships (25) and the store’s image for the merchandise category (25) because
it views these factors as critical for maintaining an assortment of high-fashion brands from which
customer loyalty develops. Buyers’ skills (10) are less critical because management felt that poor buyers
could be easily replaced by better ones.
The store location in a leading regional mall is appropriate for clothing but less so for consumer
electronics. Thus, management indicates a strong competitive position on location for women’s and
Online Learning Center (OLC) Tutorials and Modules
Exhibit 1: Opportunities’ Market Attractiveness Ratings
Weight Women’s Juniors’ Men’s Children’s Furniture Cons. Elec Soft Home
(l) (2) (3) (4) (5) (6) (7)
Factors
Market size 20 9 7 5 4 5 6 7
Growth 20 4 3 6 5 4 8 6
Exhibit 2: Opportunities’ Competitive Position Ratings
Weight Women’s Juniors’ Men’s Children’s Furniture Cons. Elec Soft Home
(l) (2) (3) (4) (5) (6) (7)
Factors
Location 20 9 9 8 6 4 2 4
Category Manageement
This exercise is designed to be used with chapter 12. In this exercise, students are to assume the role of
the wrench category manager in hardware store chain. The student can download the excel spread sheet
with data about each wrench stocked in the hardware chain. The data for each of 35 wrench SKUs from 5
vendors includes: the vendor, retail price, annual sales, cost of goods sold, gross margin$, gross margin
Online Learning Center (OLC) Tutorials and Modules
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• Might drop the 18 and 24” sizes. This is a strategic decision. If Star wants to be know for its
complete stock of wrenches, then it wants to keep these sizes. However, is Star is a price-
oriented hardware store and caries a limited assortment to get cost and inventory low, it could
these large sizes.
Merchandise Budget Plan
When students first see a merchandise budget in Chapter 13, the rows and columns of numbers seem
overwhelming. Clicking through the examples in this module helps students see that as they break the
Vendor Evaluation Model
The vendor evaluation model is a different application of the multiattribute model discussed in Chapter 4.
Instead of a customer evaluating different stores, a buyer is evaluating different vendors. The Get Out
Location Case Exercise
The “Location” link on the Online Learning Center includes an Excel spreadsheet tutorial to accompany
“Get Out and Do It” Exercise Number 7 in Chapter 8.
Student Assignment: Go to the Online Learning Center and click on “Location.” You will see an
EXCEL spread sheet that contains the sales for 40 retail locations of a sporting goods retail chain plus
characteristics of each location – number of households in trading area, percent of households with
Online Learning Center (OLC) Tutorials and Modules
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Analysis: Students can estimate the weights for predicting the dependent variable (sales) by using
Sites
A
B
C
Households
60,000
40,000
30,000
% of households with children under 18
0.4
0.45
0.6
% of household in target lifestyle segments
0.3
0.25
0.65
Distance from Wal-Mart in driving minutes
20
5
10
Distance from Sports Authority in driving
minutes
5
25
15
Estimated
coefficients
45,542
Households
% of households with children under 15
% of household in target lifestyle segments
Distance from Wal-Mart in driving minutes
54,911
Distance from Sports Authority in driving
minutes
To estimate the potential sales for each site, enter the site characteristics in to the regression equation with
the estimated coefficients. For example, the regression equation is:
Sales = 45,542 + 14* household + 1,325,809 * % of households with children under 15
Online Learning Center (OLC) Tutorials and Modules
The estimated sales for each of the three locations is:
Store A B C
Constant
45,542
45,542
45,542
Households
854,623
569,749
427,312
% of households with children under 18
530,324
596,614
795,485
% of household in target lifestyle segments
distance from Wal-Mart in driving minutes
minutes
Pricing
The pricing module contains four sections that complement Chapter 14, Pricing.
1. Markup Percentage
2. Maintain Markup and Initial Markup
Calculate initial markup, given maintain markup, planned reductions, and planned sales. Use with
Discussion Questions 6 & 7.
3. Breakeven Analysis