What are the different channels of distribution ? Department stores Franchise Hypermarket Corner stores or convenience stores. often

family-owned run by minorities .

- closeness - long opening hours They are mainly used by people who:live

nearby or can't shop far away (no car, etc.) - in case of emergencies to save a trip to a

supermarket.

What are the main assets of the convenient stores

Main drawbacks

- little choice or variety (little stock) - high prices (their owners can't buy in

bulk).

DISTRIBUTION

1. What are the major differences between a department store and a hypermarket?

Characteristics Department stores are huge shops with many

departments on several floors: - on the ground floor, common and relatively

inexpensive items - clothes on the first and second floors (shoppers

can take their time to try clothes on in less crowded spaces)

- slow-selling goods, or goods which take up a lot of space, and the restaurant are located at the top of the store.

Nowadays, department stores are declining.

Can you name some department stores ? Marks and Spencer Dickens and Johns C§A

 Reasons for their decline?

- they have uncompetitive prices: shoppers prefer hypermarkets

- customers prefer to shop in specialist stores (expertise and choice)

- extra charges to park in city centres - lack of personality/brand identity for most

department stores - old-fashioned image (stores for mature

customers).

Some of them have reacted by

. creating "worlds", or specialist shops within the large store. The department store benefits from fashionable labels, takes a percentage of profits and rents,

. focussing on fashion (to try and attract more young customers)

. revamping the layout, to make it easier for customers to find their way around,

. paying attention to "visual merchandising"

- free delivery - car-parks - fashion consultancy (a free service for

time pressed women who simply telephone the store and ask for some outfits to be assembled by a "personal shopper"

- "gold" frequent buyer cards - exclusive lounges (where customers can

have tea)

Name some hypermarkets

Wal mart Tesco Asda Safeway

Reasons for the hypermarket ‘s success ? Consumers are money-conscious Supermarkets have chosen to set up on the

outskirts of towns because of: price: lower rents for wider spaces - car-parks: people do not have to look for a

parking space and can take huge shopping bags home

mall/shopping centre offer comfortable indoor shopping and numerous services (entertainment, banks, restaurants,etc.).

Reasons for success barcodes: stock management is rationalized -

scanning devices at check-outs to lay out products so as to make shoppers buy

more. impulse buying: head on the shelves. strategic places: the products to be promoted are

placed on eye-level shelves, near the check-out, or at end of aisles.

Innovations British supermarkets are currently launching

financial services for their customers to ensure their loyalty.  

What do you know about the franchise ? A franchise is an agreement between a

franchisor and a franchisee . The franchisee pays: -franchising fee to buy the right to operate a

business, - a percentage of the turnover to the franchisor

(royalties). The franchisee gets: - the brand and reputation - know-how and training - advertising campaigns.

Advantagesof the franchise ?

 on the domestic market: in a recession, franchising is a way to start up a business with less risk, with little capital and experience,

on foreign markets: franchising is a way to team up with local partners who know the target marketplace.

Drawbacks ?

some franchisors impose standard-format stores and a range of goods (Benetton),

- they may also oblige their franchisees to respect certain rules: dress-code, prices and opening hours, etc.

Home shopping , mail ordering

Advantages for the companies? low overheads: firms operate from warehouses in

low-rental areas, - automated warehousing and logistics. - Advantages for consumers: - very competitive prices, - savings in terms of time/transport: no opening

hours, better service thanks to phone/fax/computer ordering, delivery times cut to one day.

- Problems ?

Some consumers hesitate to buy from a catalogue, many goods are returned.

Poor quality of the goods Not the right size , colour. Customers are disappointed

CURRENT TRENDS ?

E commerce  Direct-to-home retailing - Door-to-door selling for books, insurance, etc. , - home parties (demonstrating products in a

friendly atmosphere) or multilevel distribution systems.

Consumers order the goods they have seen on TV through a computer network or via a toll-free number.

Advantage for companies ?

a new distribution channel without shops, especially in industries where the choice is so wide that a web site offers added value,

- advantage for consumers: they can surf and order worldwide, from home, at any time,

- limit: E-commerce is much talked about, but it does not represent a high volume of sales yet: only 5% of mail ordering transactions and about 1% of total commerce.

Vending machines : Advantages and drawbacks

They concern many products and services: elaborate automatic teller machines :food, newspapers, videos, cigarettes, etc…

Advantages: quick return on investment, profitable in travel-related areas (stations, airports, hotels, cinemas}.

- Reasons accounting for their development: no staff, no overheads, round-the-clock sales.

Main drawbacks: breakdowns and vandalism.

what are their main characteristics ?

They buy in bulk: a group centralizes the orders, obtains the best conditions with suppliers and stocks the merchandise.

low prices: reduced profit margins, low-price generics or store-brands instead of famous brand names.

- the staff (minimum number of employees} does everything: shelf-filling,

warehouse-like shops: limited number of brands, products displayed on pallets or in delivery cases,

few facilities for customers: rare credit card payments, long queues.

- money-cautious consumers that get the best quality-price ratio.

Development of entertainment-oriented stores

- Who: famous brands (Nike, Donna Karan, Warner Bros)

- what: fun stores, with many entertaining activities (multimedia games, video clips, etc.)

- goal: attract consumers back to stores and hope they will spend some money there instead of resorting to home-shopping.

What are the regulations against Sunday shopping  

Germany, Denmark, Greece and Holland: strict. France, ltaly: Sunday trading is allowed in tourist-

related areas. lreland, Portugal: shops can open whenever they wish

to. Spain: a 1996 trading law forbids the opening of stores

on Sundays and public holidays. Britain: a December 1993 law allows the opening of

small shops at any time, and the opening of large shops and supermarkets between 10 and 4 p.m. on Sundays.

- U.S.A.: shopping is legal 24 hours a day, 7 days a week.

State your opinion , are you for or against Sunday opening Against Sunday opening – unions fear the workers will have to work

on Sundays without extra pay, - small shop-owners are afraid they will not

be able to face the cost of Sunday double pay,

- church officials claim that Sunday shopping is a danger to family life and social relationships.

For Sunday opening

- some working mothers welcome the opportunity to do their shopping,

- store-owners can enjoy flexible working hours and increase profitability .

some employees welcome part-time jobs.

Finding the right marketing mix

What is the marketing mix ?  The marketing mix is made up of 4

elements: - product - place- price – promotion

The goal is to get the best possible combination of the 4 Ps of the mix.

Product 

. Different types of products - white/brown/ grey goods - staple goods: basic products - durables: products that last - disposables: products that you throw away after

use - fast-moving consumer goods (FMCGs): they are

bought often, so they move quickly.

Brands

Products are defined by a brand which can be famous or not:

- the most famous brands (Coke, Barbie, Michelin, Disney, McDonald) have become household names, icons of the 20th century.

- some brands, such as KIeenex, Walkman, Hoover, etc., have become generic names. Today they are part of our daily environment.

- in the current recession, many stores (discounters, supermarkets, etc.) have launched their own brands for foods, apparel, computers, detergents, jewellery, etc. They are called own-label products or store-brands.

Life cycle

five stages. introduction: development of product and market growth: production costs are lower maturity: competition becomes fiercer saturation: too many suppliers decline: demand eventually dies out despite

promotional efforts. At each phase of the product's life cycle,

companies try to get the most out of it and adopt different selling techniques.

new trend

Nowadays, products must be "politically correct": consumer watchdogs and activists are more powerful than before. They can lobby political groups, organise boycotts or campaigns to make people aware of wrongdoings, especially where child labour or animal cruelty are concerned .

Packing and packaging

They are also part of the product mix: - packaging must be eye-catching - for certain products it must indicate the

contents or ingredients - a product must satisfy standards and

regulations (quality, safety warnings)

PLACE  Different strategies can be chosen: they

determine which channel(s) of distribution will be used :

Intensive: goods are available in the highest possible number of stores.

Selective: several stores (according to criteria of size, location, image and know-how) sell the product without having an exclusive agreement.

exclusive: the dealer or franchisee must not sell competing brands.

Supplying the various points of sales is of considerable importance: repeat orders must be answered quickly.

Price

The price paid by the general public always includes VAT (value-added tax) in Europe or sales tax (U.S.A.).

market surveys help fix the minimum and maximum psychological prices for a product, generally just below a round figure.

the money-conscious consumer looks for the best value for money (quality-price ratio).

what’s the main purpose of the Promotion

  inform consumers about a new product, the improvement of a well-known item, or a special offer.

- make people more aware of the brand: the brand, the logo and the design of the packaging help consumers differentiate one product from rival brands. Slogans are repeated.

- create (or strengthen) the brand image convince consumers to buy: advertising surrounds the

product with connotations of happiness, health, well-being to persuade consumers that one brand is better than the others,

- promote the "philosophy" of the company

What’s usually a

firm ‘s first concern

How to choose an advertising medium give examples. according to the target. posters (stuck on hoardings/billboards) in

the street, Underground or bus shelters press advertisements commercials on TV or radio endorsements by famous stars sponsoring - surprise media: buses.

What’s the hiden message here?

State wether those statements are false or right.

1. Durables are products that you throw away after using them.

2. Coca-Cola is called an icon brand. 3. During the maturity phase in the life cycle of a

product, the suppliers are too numerous. 4. Selling techniques are similar from the

introduction of a product on the market to its decline.

5. There is less disposable packaging than before. 6. The psychological price is generally a round

figure. 8. The quality-price ratio is considered as

important nowadays.

What is the situation of counterfeiting worldwide ?

It is a booming industry : there are lO to 20 times more copies of luxury brand articles sold than are produced by the companies themselves ! In computing ,3/4 of the software used in Europe are copies ! Counterfeiting also represents 5 % of world trade , which is huge !

What are the most popular products being counterfeited ? CDs,videotapes,Ray-ban sunglasses ,

software ( Microsoft ) , games ( Nintendo ) , toys , clothes (Levi's , Adidas , Nike , Lacoste) , luggage ( Vuitton , Chanel) , perfume , watches ( Rolex , Cartier) , medical drugs , airplane and car spare parts branded foods and drinks = any kind of product but quite often luxury goods .

Who makes the rip - offs ? 

The Third World , NICs and a few European countries but the 12 main counterfeiting nations are : South Korea , Taiwan, Hong Kong, China, Thailand , Singapore , India , Turkey , Morocco, Mexico , Spain and Italy .

What are the reasons for making such goods ?

  Some are too expensive to be affordable

and their notoriety and prestige make them attractive.

the counterfeiters are often from poor or developing nations and steal the ideas from foreign firms which are an ideal to them and it allows them to find a lucrative job more easily.

What are the consequences for firms consumers and countries ?

  Firms spend a lot on Research and development - without a real return - and on the protection of their interests (Vuitton , Lacoste and Cartier spend around I % of their turnover to fight against counterfeiting

These copies mean financial tosses for them as weIl as a loss of prestige and notoriety in a way .

What are the consequences for users ?

they could benefit from cheaper goods , on one side (CDs, software etc ... )

the quality is often poor , on the other side . some fake items may be dangerous (fake

medicines which killed some people in Cambodia or toys which led to domestic accidents because they did not comply with EU norms) : so look for the safety labels before buying some goods !

Now this trend can lead to trade wars between countries (China and the USA )

What are the solutions ?

  suits fines , ( equivalent to one or two times the

value of the genuine merchandise ) confiscation of the goods at the customs Jail, emprisonment burning the pirated goods closing down the underground factories (in

Thailand… ).

Are they efficient measures?

Don’t t you think this phenomenon is amplified thanks to the use of new technologies and devices such as CD recorders which make copycats easier ? Should we therefore ban them to stop the problem or is it an everlasting issue which cannot be solved anyway ? Who should intervene ,each government confronted with the problem or the WTO ... ) ?