Chapter 13 Retailing
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Transcript of Chapter 13 Retailing
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Chapter 13Retailing
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IntroductionAn intermediary involved
in selling goods and services to ultimate consumers (examples?)
Wholesaler
Retailer
An intermediary that takes title to the goods it handles and redistributes them to retailers, other distributors, and sometimes end consumers
•Employs 15 million people in the U.S.
•Accounts for $4.5 trillion to the U.S. economy
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STRATEGIC IMPLICATIONS: RETAIL MARKETING STRATEGY
A retailer develops a marketing strategy based on the firm’s goals and strategic plans
Two fundamental steps:1. Picking a target market: size and profit
potential. POSITION. 2. Developing a retailing mix to satisfy
the chosen target market1. 4Ps + Personnel & Presentation used to
create a retail image
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TargetTargetMarketMarket
ProductProduct
PricePrice
PlacePlace
PromotionPromotion
PersonnelPersonnel
PresentationPresentation
The Retailing Mix
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Choosing the Merchandising Mix
The mix of products offered to the
consumer by the retailer; also called
the product assortment or
merchandise mix.
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Merchandising (Product) Strategy
Category management: Retailing strategy which views each product category as an individual profit center.
Slotting Allowances: lump-sum payments by manufacturers for stocking new products.
Scrambled Merchandising: Combining dissimilar product lines to boost sales volume.
Growth of Store brands – Battle for shelf space
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Presentation of the Retail Store - Atmosphere
The overall impression
conveyed by a store’s physical
layout, décor, and
surroundings.
Five Senses.
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Suggestion SellingSuggestion Selling
Trading UpTrading UpTwo Common Two Common
SellingSellingTechniquesTechniques
Personnel and Customer Service
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Price
Price and payment options : how important?http://www.youtube.com/watch?v=kMimygVTgbU
Price and payment options : how important?http://www.youtube.com/watch?v=kMimygVTgbU
The amount of money the retailer
makes as a percentage of sales after
the cost of goods sold is subtracted.
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Classification of Retail by
1. Ownership (independent, franchise chain)
2. Service level (Nordstrom vs. Wal-mart)3. Assortment (CVS vs. Smith’s)4. Price (Tiffany vs. jewelry kiosk)
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Department Stores (1)
Assort-Assort-mentment PricePrice GrossGross
MarginMargin
Broad High High
Service Service LevelLevel
High
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Specialty Stores (2)
Specialty StoresSpecialty Stores
Assort-Assort-mentment PricePrice GrossGross
MarginMargin
Narrow High High
Type of RetailerType of Retailer
Specialty Store
Service Service LevelLevel
High
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Specialty Discount Stores (3) OR Category Killers
Specialty DiscountStores
Specialty DiscountStores
Assort-Assort-mentment PricePrice GrossGross
MarginMargin
Narrow Low Low
Type of RetailerType of Retailer
Specialty Discount Store
Service Service LevelLevel
Low
Deep Assortment
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Discount Stores (4)
Broad Assortment Low price Low marginDiscount Low Service
Shallow Assortment
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Off-Price Retailer (5)
Narrow Line PricesLow prices Low marginsOff-price Retailer Low service
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Supercenters (6)
Broad Moderate prices
Low marginsSupermarket Low service
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SupermarketsLarge, self-service retailer with grocery specialtySelf-scanning trend: what is your take?Self-scanning trend: what is your take?Competition: fierce, 1% profit on many items
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Warehouse ClubsWarehouse club / wholesale club (Sam’s,
Costco)No frills, members only (why?)Bulk purchases: price competition,
homogeneous shopping goods
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Convenience StoresConvenience productsOften with gas stations
Convenience stores: fill-in your “regular” shoppingCompetition (fast food also)24/7 is more importantWe pay for the convenience
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Non-Store RetailingVending: hi costs; hi prices (flat sales)Vending is a $40 billion U.S. marketCashless vending=wave of futureDirect Marketing (Mail, Catalog, Telemarketing)E-tailing (TV shopping, online)M-commerce: buy from mobile devices(e.g., cell phones)
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Comparison between Discount, Specialty and Specialty Discount
Attribute Specialty Specialty Discount
Discount
Example TCBY Yogurt
Toys R us Wal-Mart
Service High Low Low
Price High Low Low
Assortment Narrow Narrow Broad
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Comparison between Discount, Specialty and Specialty Discount
Attribute Specialty Specialty Discount
Discount
Margin High Low Low
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Wheel of RetailingNewer, low-price types of retailing arise to
challenge older established “bigger” retailers.
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No Frills No Frills MotelMotel
MotelMotel+ Free Breakfast+ Free Breakfast
MotelMotel+ Free Breakfast+ Free Breakfast+ HBO+ HBO
MotelMotel+ Free Breakfast+ Free Breakfast+ HBO+ HBO
+ Happy Hour+ Happy Hour
New EntrantNew Entrant
Wheel of Retailing
1
2
34
a theory to explain the institutional changes
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eTailing and DTCeTail= electronic retailDTC= Direct to consumerShrinking use of wholesalers? (bypassing
wholesalers more and more)eBay: hybrid etailer/online auction siteEven sells services online(examples of serviceson ebay?)
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eTailMore innovative e-tail sites Printing online www.printresponsibly.comNike ID http://nikeid.nike.comZappos http://www.zappos.com
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Future of re[E]tailinghttp://www.youtube.com/watch?
v=jtiJaX6q1i0