Chapter 17 Retailing And Direct Marketing 17 | 3Copyright © Houghton Mifflin Company. All rights...

Chapter 17Retailing And Direct

Marketing

17 | 3Copyright © Houghton Mifflin Company. All rights reserved.

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


Retailing

All transactions in which the buyer intends to consume the product through personal, family, or household use


Retailer

An organization that purchases products for the purpose of reselling them to ultimate consumers


Importance Of RetailingIn The U.S. Economy


Retailers Enhance Value

• Provide services

• Assist in product selection

• Make shopping experience more convenient

• Location facilitates comparison shopping

• Demonstrate product


Retailers Create Utility

• Time

• Place

• Possession

• Form


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


General-Merchandise Retailers


Department Store

A large retail organization characterized by a wide product mix and organized into separate departments to facilitate marketing efforts and internal management


Department Store’s Total Product Could Include:

• Credit

• Delivery

• Personal Assistance

• Merchandise Returns

• Pleasant Atmosphere


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


Superstore

A giant retail outlet that carries food and nonfood products found in supermarkets, as well as most routinely purchased consumer products


Warehouse Clubs

A large-scale, members-only establishment that combines features of cash-and-carry wholesaling with discount retailing


Warehouse Showroom

A retail facility in a large, low-cost building with large on-premise inventories and minimal services


Characteristics OfWarehouse Showroom

• Large, low-cost building

• Warehouse materials handling technology

• Vertical merchandise displays

• Large on-premises inventories

• Minimal services


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


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


Nonstore Retailing

The selling of products outside the confines of a retail facility


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


Advantages OfCatalog Retailing

• Customer– Efficiency– Customer convenience

• Retailer– Remote , low-cost location– Save on store fixtures– Reduce

• Personal Selling• Store operating expense


Direct-Response Marketing

A type of marketing in which a retailer advertises a product and makes it available through mail or telephone orders


Telemarketing

The performance of marketing-related activities by telephone.


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


Benefits OfTV Home Shopping

• Product easily demonstrated

• Adequate time to show product

• Customer shop in convenience of home


Online Retailing

Retailing that makes products available to buyers through computer connections


Other Types OfNonstore Retailing

• Direct Selling- marketing products to consumer through face-to-face sales presentations

• Automatic vending- use of machines to dispense products


Franchising

An arrangement in which a supplier (franchiser) grants a dealer (franchisee) the right to sell products in exchange for some type of consideration


Top 20 U.S. Franchises And Their Startup Costs


Top 20 U.S. Franchises And Their Startup Costs (contd.)


Advantages Of Franchising (Franchisee)

• Start business with limited capital

• Benefit from others’ business experience

• Often assured customers at opening

• Guidance/advice

• Generally more successful


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


Drawbacks To Franchising

• Franchiser controls many aspects of business

• Franchisee must pay– Franchise fee– Royalty

• Uneven franchise agreements


Location OfRetailing Stores

• Freestanding

• Traditional business districts

• Shopping centers


Types And Characteristics Of Shopping Centers


Neighborhood Shopping Center

A shopping center usually consisting of several small convenience and specialty stores


Community Shopping Center

A shopping center with one or two department stores, some specialty stores, and convenience stores


Regional Shopping Center

A type of shopping center with large department stores, a wide product mix, and deep product lines


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


Lifestyle Shopping Center

A type of shopping center that is typically open-air and features upscale specialty, dining, and entertainment stores


Outlet Shopping Centers

A type of shopping center that features discount and factory outlet stores carrying manufacturer brands


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


Store ImageKey Determinants

• Store environment - atmospherics

• Category management

• Merchandise quality

• Service quality - reputation for integrity


Atmospherics

The physical elements in a store’s design that appeal to consumers’ emotions and encourage buying.


Category Management

A retail strategy of managing groups of similar, often substitutable products produced by different manufacturers


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


Strategy OfScrambled Merchandisers

• Convert stores into one-stop shopping centers

• Generate more traffic

• Realize higher profit margins

• Increase impulse purchases


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

Chapter 17 Retailing And Direct Marketing 17 | 3Copyright © Houghton Mifflin Company. All rights...

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