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Chapter ObjectiveszTo contrast single-channel and multi-

channel retailing

zTo look at the characteristics of thethree major retail institutions involvedwith nonstore-based strategy mixes:direct marketing, direct selling, and

vending machines with an emphasison direct marketing

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Chapter Objectives_2zTo explore the emergence of electronic

retailing through the World Wide Web

zTo discuss two other nontraditionalforms of retailing: video kiosks andairport retailing

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Figure 6.1 Approaches to

Retailing Channels

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Figure 6.2 Home Depot

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Nontraditional Retailing Nontraditional retailing also

includes formats that do not fit into

the store and non-store basedcategories:

Video kiosks

Airport retailing

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6-8

Direct Marketing Customer is first exposed to a good or

service through a nonpersonal medium

and then orders by mail, phone, fax, orcomputer

Annual U.S. sales exceed $235 billion

Other leading countries include

* Japan* Germany

* Great Britain

*France*Italy

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6-9

Characteristics of Direct

Marketing Customers

Married

Upper middle class

36-50 years old

Desiresconvenience,

uniquemerchandise, goodprices

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Direct Marketing CategoriesGENERAL

offer full lines ofproducts from clothingto housewares

J.C. Penney QVC

SPECIALTY

offer narrow productlines

L.L. Bean Franklin Mint

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Figure 6.3 Micro Warehouse

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Strategic Business Advantages

of Direct Marketing

Reduced costs

Lower prices

Large geographic coverage

Convenient to customers

Ability to pinpoint customer segments

Ability to eliminate sales tax for some Ability to supplement regular business

without additional outlets

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Strategic Business Limitations

of Direct Marketing Products cannot be examined prior to

purchase

Costs may be underestimated Response rates to catalogs under 10%

Clutter exists

Long lead time required

Industry reputation sometimes negative

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Database Retailing Collection, storage, and usage of

relevant customer information

* name* address

* background

*shopping interests

* purchase behavior

Observation of 80-20 rule

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Emerging Trends Evolving activities

Changing customer lifestyles

Increasing competition

Increasing usage of dual distributionchannels

Changing media roles, technologicaladvances, and global penetration

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Selection Factors Company reputation and image

Ability to shop whenever consumer wants

Types of goods and services Availability of toll-free phone number or Web site

for ordering

Credit card acceptance

Speed of promised delivery time Competitive prices

Satisfaction with past purchases and good returnpolicy

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TV Retailing

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Figure 6.4 Executing a Direct

Marketing Strategy

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Media Selection Printed catalogs

Direct-mail ads and

brochures Inserts with monthly

credit card and otherbills (statementstuffers)

Freestandingdisplays

Ads or programs inmass media

Banner ads or hotlinks on the Web

Video kiosks

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Table 6.1 Snapshot of

U.S. Direct Selling IndustryMajor Product Groups % of Industry

Home/ family care products 33.7

Personal care products 26.4

Services 16.9

Wellness products

16.5Leisure/ educationalproducts

6.5

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Table 6.1 Snapshot of

U.S. Direct Selling IndustryPlace of Sales % of Industry

In the home 64.4

Over the phone 14.7

In a workplace 8.7

Over the Internet

5.5Other 6.7

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Figure 6.5 Direct Selling

and Mary Kay

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The Role of the Web Project a retail presence

Enhance image

Generate sales

Reach geographically-dispersedcustomers

Provide information to customers Promote new products

Demonstrate new product benefits

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The Role of the Web_2 Provide customer service (e.g., e-mail)

Be more personal with consumers

Conduct a retail business efficiently

Obtain customer feedback

Promote special offers

Describe employment opportunities Present information to potential

investors, franchisees, and the media

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Figure 6.8 Five Stages of Developing

a Retail Web Presence

1. Brochure Web Site

2. Commerce Web Site

3. Integrated Web Site

4. The Webified Store

5. Site Integrated withManufacturer Systems

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Reasons

Using the Web

information

entertainment interactive

communications

Shopping Online

selection

prices convenience

fun

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Reasons NOT to Shop OnlineTrust

Fear

Lack of security

Lack of personal communication

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Recommendations for

Web Retailers Develop or exploit a well-known,

trustworthy retailer name

Tailor the product assortment for Webshoppers

Enable the shopper to click as little aspossible

Provide a solid search engine

Use customer information

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Figure 6.12 Borders

Title Sleuth Video Kiosk

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Features of Airport Retailing Large group of prospective shoppers

Captive audience

Strong sales per square foot of retailspace

Strong sales of gift and travel items

Difficulty in replenishment Longer operating hours

Duty-free shopping possible

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Figure 6.13 Airport Retailing

and Waldenbooks