Post on 26-Dec-2015
Chapter 17Retailing And Direct
Marketing
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Objectives
• Understand purpose and function of retailers in the marketing channel
• Identify major types of retailers
• Understand direct marketing and two other forms of nonstore retailing
• Examine major types of franchising and benefits and weaknesses of franchising
• Explore strategic issues in retailing
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Retailing
All transactions in which the buyer intends to consume the product through personal, family, or household use
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Retailer
An organization that purchases products for the purpose of reselling them to ultimate consumers
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Importance Of RetailingIn The U.S. Economy
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Retailers Enhance Value
• Provide services
• Assist in product selection
• Make shopping experience more convenient
• Location facilitates comparison shopping
• Demonstrate product
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Retailers Create Utility
• Time
• Place
• Possession
• Form
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Keys To Retailing Success
• a strong customer focus
• a retail strategy that provides the level of service, product quality, and innovation that consumers desire
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General-Merchandise Retailers
A retail establishment that offers a variety of product lines that are stocked in considerable depth
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General-Merchandise Retailers
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Department Store
A large retail organization characterized by a wide product mix and organized into separate departments to facilitate marketing efforts and internal management
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Department Store’s Total Product Could Include:
• Credit
• Delivery
• Personal Assistance
• Merchandise Returns
• Pleasant Atmosphere
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ConvenienceStore Characteristics
• Less than 5,000 sq. ft.
• Open
• 24 hours
• 7 days/week
• Stock about 500 items
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Supermarket
A large, self-service store that carries a complete line of food products, along with some nonfood products
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Superstore
A giant retail outlet that carries food and nonfood products found in supermarkets, as well as most routinely purchased consumer products
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Warehouse Clubs
A large-scale, members-only establishment that combines features of cash-and-carry wholesaling with discount retailing
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Warehouse Showroom
A retail facility in a large, low-cost building with large on-premise inventories and minimal services
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Characteristics OfWarehouse Showroom
• Large, low-cost building
• Warehouse materials handling technology
• Vertical merchandise displays
• Large on-premises inventories
• Minimal services
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Catalog Showroom
A warehouse showroom in which customers use catalogs to place orders for products, which are then filled directly in the warehouse area and picked up by buyers in the showroom
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Direct Marketing
The use of the telephone, Internet, and nonpersonal media to communicate product and organizational information to customers, who can then purchase products via mail, telephone, or the Internet
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Nonstore Retailing
The selling of products outside the confines of a retail facility
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Catalog Marketing
The type of marketing in which an organization provides a catalog from which customers make selections and place orders by mail, telephone, or the Internet
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Advantages OfCatalog Retailing
• Customer– Efficiency– Customer convenience
• Retailer– Remote , low-cost location– Save on store fixtures– Reduce
• Personal Selling• Store operating expense
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Direct-Response Marketing
A type of marketing in which a retailer advertises a product and makes it available through mail or telephone orders
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Telemarketing
The performance of marketing-related activities by telephone.
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Television Home Shopping
A form of selling in which products are presented to television viewers, who can buy them by calling a toll-free number and paying with a credit card
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Benefits OfTV Home Shopping
• Product easily demonstrated
• Adequate time to show product
• Customer shop in convenience of home
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Online Retailing
Retailing that makes products available to buyers through computer connections
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Other Types OfNonstore Retailing
• Direct Selling- marketing products to consumer through face-to-face sales presentations
• Automatic vending- use of machines to dispense products
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Franchising
An arrangement in which a supplier (franchiser) grants a dealer (franchisee) the right to sell products in exchange for some type of consideration
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Top 20 U.S. Franchises And Their Startup Costs
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Top 20 U.S. Franchises And Their Startup Costs (contd.)
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Advantages Of Franchising (Franchisee)
• Start business with limited capital
• Benefit from others’ business experience
• Often assured customers at opening
• Guidance/advice
• Generally more successful
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Advantages Of Franchising (Franchisor)
• Fast/selective product distribution
• No major financial outlay
• Capital devoted to production and advertising
• Franchisee held to standards
• Franchisee highly motivated
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Drawbacks To Franchising
• Franchiser controls many aspects of business
• Franchisee must pay– Franchise fee– Royalty
• Uneven franchise agreements
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Location OfRetailing Stores
• Freestanding
• Traditional business districts
• Shopping centers
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Types And Characteristics Of Shopping Centers
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Neighborhood Shopping Center
A shopping center usually consisting of several small convenience and specialty stores
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Community Shopping Center
A shopping center with one or two department stores, some specialty stores, and convenience stores
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Regional Shopping Center
A type of shopping center with large department stores, a wide product mix, and deep product lines
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Superregional Shopping Center
A type of shopping center with the largest department stores, the widest product mix, and the deepest product lines of all shopping centers
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Lifestyle Shopping Center
A type of shopping center that is typically open-air and features upscale specialty, dining, and entertainment stores
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Outlet Shopping Centers
A type of shopping center that features discount and factory outlet stores carrying manufacturer brands
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Retail Positioning
Identifying an unserved or underserved market segment and serving it through a strategy that distinguishes the retailer from others in the minds of consumers in that segment
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Store ImageKey Determinants
• Store environment - atmospherics
• Category management
• Merchandise quality
• Service quality - reputation for integrity
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Atmospherics
The physical elements in a store’s design that appeal to consumers’ emotions and encourage buying.
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Category Management
A retail strategy of managing groups of similar, often substitutable products produced by different manufacturers
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Scrambled Merchandising
The addition of unrelated products and product lines to an existing product mix, particularly fast-moving items that can be sold in volume
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Strategy OfScrambled Merchandisers
• Convert stores into one-stop shopping centers
• Generate more traffic
• Realize higher profit margins
• Increase impulse purchases
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Wheel Of Retailing
A hypothesis holding that new retailers usually enter the market as low-status, low-margin, low-price operators but eventually evolve into high cost, high price merchants