Learning Objectives
1. Discuss the importance of retailing in the economy
2. Explain the dimensions by which retailers can be classified
3. Describe the major types of retail operations
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Learning Objectives (continued)
4. Discuss nonstore retailing techniques
5. Define franchising and describe its two basic forms
6. List the major tasks involved in developing a retail marketing strategy
7. Describe new developments in retailing
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Learning Objective
Discuss the importance of retailing in the economy11
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Retailing
RetailingRetailing
All the activities directly related to
the sale of goods and services to
the ultimate consumer for
personal, non-business use.
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The Role of Retailing
Retailers account for 11.7 percent of U.S. employment
Retailing accounts for 13 percent of U.S. businesses
Retailers ring nearly 40 percent of the U.S. GDP
Industry is dominated by a few giant organizations, such as Wal-Mart
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Ten Largest Retailers2004 rank Company Revenue # of stores1 Wal-Mart $258.6 billion 4906
2 Home Depot $64.8 billion 1707
3 Kroger $53.7 billion 3774
4 Target $48.1 billion 1553
5 Costco $42.5 billion 420
6 Sears $41.4 billion 1970
7 Safeway $35.6 billion 1817
8 Albertson’s $35.4 billion 2305
9 Walgreen $32.5 billion 4227
10 Lowe’s $30.8 billion 9521 babasabpatilfreepptmba.com 7
Learning Objective
Explain the dimensions by which retailers can be classified
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Classification of Retail Operations
OwnershipOwnership
Level of ServiceLevel of Service
Product AssortmentProduct Assortment
PricePrice
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Classification of Ownership
IndependentRetailers
IndependentRetailers
Chain StoresChain Stores
FranchisesFranchises
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Level of Service
Full ServiceFull Service Self Service Self Service
Discount storesDiscount stores Exclusive storesExclusive storesFactory outlets Warehouse clubs
Factory outlets Warehouse clubs
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Types of Stores and Their Characteristics
Type of RetailerType of RetailerType of RetailerType of Retailer
Department StoreDepartment Store
Specialty StoreSpecialty Store
SupermarketSupermarket
Convenience StoreConvenience Store
DrugstoreDrugstore
Full-line DiscounterFull-line Discounter
Specialty DiscounterSpecialty Discounter
Warehouse ClubsWarehouse Clubs
Off-price RetailerOff-price Retailer
RestaurantRestaurant
Service Service LevelLevel
Service Service LevelLevel
Mod Hi-HighMod Hi-High
HighHigh
LowLow
LowLow
Low-ModLow-Mod
Mod-LowMod-Low
Mod-LowMod-Low
LowLow
LowLow
Low-HighLow-High
Assort-Assort-mentment
Assort-Assort-mentment PricePricePricePrice GrossGross
MarginMarginGrossGrossMarginMargin
BroadBroad
NarrowNarrow
BroadBroad
Med-NarrowMed-Narrow
MediumMedium
Med-BroadMed-Broad
Med-BroadMed-Broad
BroadBroad
Med-NarrowMed-Narrow
Med-NarrowMed-Narrow
Mod-HighMod-High
Mod-HighMod-High
ModerateModerate
Mod HighMod High
ModerateModerate
Mod LowMod Low
Mod Lo-lowMod Lo-low
Low-lowerLow-lower
LowLow
Low-HighLow-High
Mod HighMod High
HighHigh
LowLow
Mod HighMod High
LowLow
Mod LowMod Low
Mod LowMod Low
LowLow
LowLow
Low-HighLow-High
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Gross Margin
Gross MarginGross Margin
The amount of money the retailer
makes as a percentage of sales
after the cost of goods sold is
subtracted.
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Learning Objective
Describe the major types of retail operations33
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Major Types of Retail Operations
Department StoresDepartment Stores
Specialty StoresSpecialty Stores
SupermarketsSupermarkets
DrugstoresDrugstores
Convenience StoresConvenience Stores
Discount StoresDiscount Stores
RestaurantsRestaurants
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Categories of Discount Stores
Full-LineDiscounters
Specialty Discount Stores
WarehouseClubs
Off-PriceDiscount Retailers
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Mass Merchandising
Mass MerchandisingMass Merchandising
Retailing strategy using moderate
to low prices on large quantities of
merchandise and lower service to
stimulate high turnover of
products.
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Supercenters and Extreme Value Retailing
SupercenterSupercenter Retail store combining groceriesand general merchandise goods
with a wide range of services.
Retail store combining groceriesand general merchandise goods
with a wide range of services.
Extreme-valueExtreme-value Smaller stores with a narrower product selection emphasizing daily necessities at rock bottom prices.
Smaller stores with a narrower product selection emphasizing daily necessities at rock bottom prices.
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Learning Objective
Discuss nonstore retailing techniques44
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Nonstore Retailing
Automatic VendingAutomatic Vending
Direct RetailingDirect Retailing
Direct MarketingDirect Marketing
Electronic RetailingElectronic Retailing
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Direct Retailing
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Door-to-DoorDoor-to-Door
Office-to-OfficeOffice-to-Office
Home SalesParties
Home SalesParties
Direct RetailersDirect Retailerssell products:sell products:
Direct RetailersDirect Retailerssell products:sell products:
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Types of Direct Marketing
TelemarketingTelemarketing
Catalogs & Mail OrderCatalogs & Mail Order
Direct MailDirect Mail
Electronic RetailingElectronic Retailing
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Types of Electronic Retailing
On-Line RetailingOn-Line Retailing
Shop-at-Home NetworksShop-at-Home Networks
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Learning Objective
Define franchising and describe its two basic forms55
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Basic Forms of Franchising
Business FormatFranchising
Business FormatFranchising
Product and Trade Name Franchising
Product and Trade Name Franchising
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Largest U.S. Franchisers
1 McDonald’s 6 Pizza Hut
2 Southland (7-Eleven) 7 Tandy (Radio Shack)
3 Subway 8 Jani-King
4 Burger King 9 Taco Bell
5 KFC 10 Dairy Queen
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Basic Forms of Franchising
Product and Trade Name Franchising
Product and Trade Name Franchising
BusinessFormat
Franchising
BusinessFormat
Franchising
Dealer agrees to sell certain products provided by a
manufacturer or wholesaler.
Dealer agrees to sell certain products provided by a
manufacturer or wholesaler.
An ongoing business relationship between a franchiser
and a franchisee.
An ongoing business relationship between a franchiser
and a franchisee.
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Learning Objective
List the major tasks involved in developing a retail marketing strategy
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Retail Marketing Strategy
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Define & Select a Target Market
Develop the “Six Ps”
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Defining a Target Market
STEP 1:Segment the Market
STEP 1:Segment the Market
DemographicsDemographics
GeographicsGeographics
PsychographicsPsychographics
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Choosing the Retailing Mix
STEP 2:Choose the Retailing Mix
STEP 2:Choose the Retailing Mix
ProductProduct
PricePrice
PromotionPromotion
PlacePlace
PersonnelPersonnel
PresentationPresentation
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The Retailing Mix
TargetTargetMarketMarket
ProductProduct
PricePrice
PromotionPromotion
PlacePlace
PersonnelPersonnel
PresentationPresentation
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Product Offering
Product OfferingProduct Offering
The mix of products offered to the
consumer by the retailer; also
called the product assortment or
merchandise mix.
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Retail Promotion Strategy
AdvertisingAdvertising
Public RelationsPublic Relations
PublicityPublicity
Sales PromotionSales Promotion
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Factors to Consider in Site Selection
Economic growth potential
Economic growth potential
Area competitionArea competition
GeographyGeography
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Location Decisions
Freestanding StoreFreestanding Store
Shopping Center TenantShopping Center Tenant
Mall TenantMall Tenant
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Shopping Center and Mall Locations
• Design attracts shoppers• Activities and anchor stores
draw customers• Ample parking• Unified image
• Expensive leases• Failure of common
promotion efforts• Lease restrictions• Anchor store domination• Direct competitors
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Advantages Disadvantages
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Price
QualityImage
QualityImage
High PriceHigh Price Low Price Low Price
Good ValueGood Value
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Presentation of the Retail Store
Employee type and densityEmployee type and density
Merchandise type and densityMerchandise type and density
Fixture type and densityFixture type and density
SoundSound
OdorsOdors
Visual factorsVisual factors
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Personnel and Customer Service
Suggestion SellingSuggestion Selling
Trading UpTrading Up
Two Common Two Common SellingSelling
TechniquesTechniques
Two Common Two Common SellingSelling
TechniquesTechniques
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Customer Service for On-Line Retailers
Easy-to-use Web site Easy-to-use Web site
Product availabilityProduct availability
Simple returnsSimple returns
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Learning Objective
Describe new developments in retailing77
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New Developments in Retailing
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InteractivityInteractivity
m-Commercem-Commerce
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Thank you
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