TABLE 3

Results of Analysis of Variance of Merchants in Hostile Environments (N = 122)

  Retailing Type    
  ________________ ________________ ________________ ________________    
Performance Measure Innovative
Pricer
(I)
Variety
(V)
Target
Marketer
(T)
Aggressive
Pricer
(A)
Univariate
F - Value
Tukey
Paired Comparison
Net income after taxes 3.74 2.75 2.90 3.83 6.71*** A>T; A>V
I>T; I>V
Three year sales growth 3.96 2.75 3.87 3.25 4.91*** I>V; T>V
Overall store performance 3.90 3.03 4.03 3.25 2.68* T>V

* p < .05 ** p < .01 *** p < .001

Aggressive Pricers and Innovative Pricers reported significantly higher net income after taxes than Target Marketers and Variety Discounters. In terms of sales growth, both Innovative Pricers and Target Marketers outperformed Variety Discounters. Finally, the overall store performances of Target Marketers were significantly higher than Variety Discounters. One noticeable conclusion can be drawn from these results. Variety Discounters, firms exhibiting the competitive behavior most similar to Wal-Mart, experienced the lowest performance across all three measures.

 

Retailers Not Impacted by Wal-Mart

Three distinct patterns of competitive behavior with eigenvalues greater than one were identified when this subsample of retailers was analyzed (see Table 4). However, two measures, concerted effort to be innovative and carrying a variety of products, failed to load on any factor. A well-balanced emphasis on the presentation of high quality merchandise by well trained employees characterizes factor one -- "strong merchandising." These retailers also enhance their overall image of quality by providing superior post-purchase service and through their civic involvement. Factor 2 -- "sophisticated target marketing" -- represents retailers that offer a combination of unique and highly recognized merchandise. These merchants use computers to track this product mix and strive to keep abreast of their competitor’s promotional activities. The final factor -- "low prices and advertising" -- depicts a competitive behavior in which retailers carry lower priced items and strive to set low prices. These firms also use considerable advertising but tend to use the less expensive manufacturer’s sponsored co-op programs.

TABLE 4

Factor Analysis of Competitive Methods Used by Local Retailers in a Benign Environments

 

  Factor Loadingsa  
  _____________ _____________ _____________  
Competitive Methods Factor
1
Factor
2
Factor
3
Communalities
Buying convenience .80     .63
High quality merchandise .79     .76
Employee training .76     .74
Carrying higher priced products .70     .63
Store layout and merchandise presentation .68     .66
Civic involvement .67     .61
Post-purchase service .67     .66
Maintaining high inventories .66     .67
Holding sales .57     .44
Sales promotion programs .51     .52
Stocking unique products   .75   .70
Stocking highly recognized products   .74   .57
Using computers to track sales and inventory   .74   .61
Monitoring competitor’s promotional activities   .70   .61
Depth of product line   .65   .57
Advertising     .79 .72
Monitoring competitor’s pricing     .76 .72
Use of co-op advertising     .67 .68
Carrying lower priced products     .62 .57
Stocking private label brands     .55 .66
Pre-purchase service     .50 .56
Pricing below competitors       .49
Concerted effort to be innovative       .42
Carrying a variety of products       .20
Eigenvalues 4.24 2.01 1.26  
         
a These three factors accounted for 60.5 percent of the total variance.        

A cluster analysis of the items comprising each of the three factors produced a three cluster solution (with a pseudo F statistics of 28.7 and a CCC of 3.5). Narrative profiles of each cluster are provided in Table 5. Small retailers in Cluster 1 -- "Target Marketers" -- are geared toward offering a combination of unique and highly recognized products. The merchants also carry deep product lines and monitor their sales and inventories through the use of computers. The retailers also monitor competitor's promotional activities. These attributes depict firms that concentrate on servicing well defined market niches rather than price. Cluster 2 retailers -- "Price Matchers" -- exhibit a desire to compete on price, and are concerned with carrying lower priced merchandise. They also emphasize advertising but frequently use manufacturer-subsidized programs. These firms do not, however, emphasize strong merchandising practices. Cluster 3 -- "Strong Merchandisers" -- emphasize high quality merchandise and service. They stress product presentation and employee training and tend to carry higher priced goods.

TABLE 5.

Cluster Profiles of Merchants in Benign Environments (N = 116)

Cluster 1: Target Marketers (n = 27 )

The competitive orientation of this group seems to be geared toward offering a combination of unique and highly recognized products. The merchants in this group carry relatively deep product lines and use computers to track their sales and inventory levels. These merchants also keep abreast of their competitor’s promotional activities.

Cluster 2: Price Matchers (n = 41)

The competitive orientation of this group seems to be rooted in a desire to remain price competitive. The merchants in this group exhibit a concern for the competition’s prices and carry lower priced merchandise. These merchants emphasis advertising but utilize cooperative advertising programs offered from private label manufacturers.

Cluster 3: Strong Merchandisers (n = 48)

The competitive orientation of this group seeks to emphasis buying convenience, high quality merchandise, and merchandise presentation. The merchants of this group also place considerable emphasis on civic involvement, post-purchase service and employee training, all of which may cause them to tend to charge relatively higher prices.

 

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Last Updated 4/9/97 by Cheryl Ann Lopez

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